Your benefits and ways to save money: 5 simple tricks

Welcome to the third installment of WEX’s six-part series on navigating the economic rollercoaster. In September, we explored strategies for trucking companies to handle economic volatility, and in November, we delved into cost-saving measures for small businesses. This time, we’re focusing on you, unveiling five straightforward tactics to maximize your benefits and bolster personal savings.

A striking CNBC headline from late last year read, “Expect a ‘bumpy landing’ for the economy in 2024—and a ‘very bullish’ year for stocks.” Financial reporter Ryan Ermey echoed the sentiments of leading economists in his analysis, painting a picture of a robust American economy characterized by record-low unemployment and a narrowly averted recession – a feat akin to economic sorcery. Impressively, the inflation woes of 2023 seem to be self-correcting, setting us on a smoother path into 2024. While Ermey’s article might initially alarm, it ultimately suggests a predominantly positive outlook for 2024, albeit with a few potential hiccups. In light of this forecast, it’s prudent to prepare for any eventuality. The wise among us always save for a rainy day, facing future challenges head-on, and it’s in our best interest to emulate such foresight.

So, what does a sensible and prudent approach entail when it comes to managing your benefits? The answer lies in adaptability, flexibility, and leveraging various safety nets and cost-saving tools. Keep reading to discover five effective strategies to optimize your personal benefits, ensuring you’re making the most of everything in your benefits package.

Tip #1: Take advantage of preventive care

Determine what your preventive care benefits are and use them. The cornerstone of preventive care is regular health screenings. These screenings can detect diseases like cancer, diabetes, and heart conditions in their early stages when they are more treatable and less costly. For instance, the cost of managing diabetes in its early stages is substantially lower than treating its advanced complications, such as kidney failure or heart disease.

Maintaining a healthy lifestyle is also a form of preventive care. Habits such as eating a balanced diet, getting regular exercise, and avoiding tobacco and excessive alcohol can prevent or delay the onset of chronic diseases. These lifestyle choices can decrease the need for expensive medications and treatments in the future.

Mental health is an equally important component of preventive care. Regular counseling or therapy sessions can help manage stress, anxiety, and other mental health issues before they escalate into more serious and costly conditions.

Lastly, preventive dental care, such as regular cleanings and check-ups, can circumvent the need for expensive dental procedures. Gum disease and tooth decay, when caught early, are much less expensive to treat than advanced dental issues.

Your health plan probably covers the full cost of preventive care benefits such as annual physicals, screenings, and immunizations for you, your spouse/partner and any dependents, and investing in preventive care is not just a health choice; it’s a financially savvy decision. By taking proactive steps towards health maintenance, you can enjoy a better quality of life and avoid the high costs associated with treating advanced medical conditions.

Tip #2: Sign up for an HSA

Sign up for a health savings account (HSA), if eligible. If you have a high-deductible health plan (HDHP) through your employer, you can participate in and contribute to an HSA. Signing up for an HSA is another strategic way to save money while managing healthcare costs. HSAs offer a triple tax advantage, making them an attractive option for those with high-deductible health plans (HDHPs). Understanding how HSAs work can help you leverage their benefits for significant financial savings.

Firstly, HSAs offer tax-deductible contributions. Every dollar you contribute from your paycheck to your HSA is a tax-free dollar, every HSA dollar you spend on qualified medical expenses is a tax-free payment, and any interest earned on your HSA is tax-free. These triple tax benefits can save you a significant amount of money over time.This immediate tax break can lower your overall taxable income, potentially placing you in a lower tax bracket. Some states also allow HSA contributions to be deducted from state income taxes, offering additional savings.

Secondly, HSAs feature tax-free growth, meaning any interest, dividends, or capital gains accumulate without being subject to tax. This benefit is akin to what retirement accounts like 401(k)s or IRAs offer, but HSAs are specifically earmarked for medical expenses.

The third advantage to signing up for an HSA is that tax-free withdrawals are an option to pay for qualified medical expenses. Withdrawals from an HSA to pay for qualified medical expenses, including deductibles, copayments, prescriptions, and some over-the-counter medications, are not taxed. This feature makes HSAs an excellent tool for managing out-of-pocket healthcare costs.

An often-overlooked aspect of HSAs is the role they play in retirement planning. Unlike flexible spending accounts (FSAs), HSAs have no “use it or lose it” policy. The funds roll over annually, allowing you to build a substantial nest egg for healthcare costs in retirement. After the age of 65, you can withdraw funds for non-medical expenses without penalty, although these withdrawals are subject to income tax.

Furthermore, HSAs provide flexibility and control. You decide how much to contribute (within IRSl limits), how to invest the funds, and when to use them. This control can be particularly beneficial for those with fluctuating medical expenses.

An HSA is a powerful financial tool for managing healthcare expenses. With its triple tax advantage, flexibility, and role in retirement planning, an HSA can provide significant savings and peace of mind in managing both current and future healthcare costs.

Tip #3: Take advantage of any and all employer matches

Incorporating employer matching funds into your financial strategy can greatly amplify your savings, particularly in the context of health and retirement benefits. This feature, where employers match a portion of the contributions you make into accounts like 401(k)s or HSAs, essentially hands you free money, bolstering your savings without extra effort on your part. 

While it’s common practice and widely understood that in some instances employers match employee 401(k) contributions, this trend also extends to healthcare accounts. Many employers match contributions into an HSA or FSA up to a certain limit. For FSAs, employers can contribute up to $500. Your employer may also offer a health reimbursement arrangement (HRA), whereby they set aside a monthly allowance of tax-free money to reimburse you for out-of-pocket medical expenses and personal health insurance premiums.

The primary benefit of employer matching is the immediate boost to your savings. For instance, if your employer offers a 50% match on the first 6% of your salary that you contribute to your 401(k), and you earn $50,000 a year and contribute 6% ($3,000), your employer will add an additional $1,500. This match effectively increases your savings rate and accelerates the growth of your funds.

Moreover, these contributions from your employer compound over time, significantly increasing your retirement or health savings accounts. The power of compounding means that not only your contributions but also the matched funds from your employer, grow, leading to a much larger sum over the years.

Employer matching also encourages a disciplined savings habit, as many employees aim to contribute at least enough to get the full match. It’s a win-win situation where employees are incentivized to save, and employers can offer this as a benefit to attract and retain talent.

Taking full advantage of employer matching funds can completely alter your financial future. Employer matches provide an immediate increase to your savings, involve compounding funds, and promote a healthy saving habit, all of which are instrumental in building a robust financial future.

Tip #4: Join a commuter benefits program

Commuter benefits are an often-overlooked employee benefit that can lead you to realize significant savings – – you can save as much as 40% of monthly costs. This is especially appealing in the current commuter era where costs are steadily rising. These benefits, offered by many employers, allow employees to use pre-tax dollars to pay for expenses like commuting to and from work for mass transit, vanpooling, transit passes, tokens, fare cards, vouchers, and parking passes. By setting aside pre-tax dollars for commuting costs, your overall taxable income is improved and you have discovered a new way to save money. 

The primary advantage of commuter benefits is the tax savings. When you allocate a portion of your salary to a commuter benefits program, that amount is deducted from your gross income before taxes are applied. This reduction in taxable income means you pay less in federal, and in most cases, state, and local taxes. For example, if you’re in the 22% tax bracket and allocate $100 monthly to commuter benefits, you save $22 in taxes each month, adding up to $264 annually.

Another key advantage to commuter benefits involves budget management. By setting aside a specific amount for commuting, you can better manage your monthly budget. This pre-planned approach to transportation expenses ensures that commuting costs are covered without affecting other areas of your budget.

Additionally, these benefits are not just limited to daily vehicle commutes. Some programs also cover bike-sharing programs and other eco-friendly commuting options, promoting sustainable transportation choices.

Commuter benefits are a practical and effective way to reduce commuting costs. By lowering your taxable income and providing a subsidy for various transportation methods, these benefits not only save money but also encourage smarter, more sustainable commuting choices. For employees looking to maximize their earnings and minimize expenses, taking full advantage of commuter benefits is a smart financial move. 

Commuter benefits is one of several voluntary benefits plans that you may not have considered but provide great value – – similar to pet insurance, supplemental life insurance, and critical illness benefits, these voluntary benefits are prudent to consider when looking for ways to economize.

Tip #5: Make use of a prescription discount card

If your insurer doesn’t cover a certain medication or you’re in an HDHP, you may benefit from using a prescription drug discount card. Prescription discount cards offer a straightforward and accessible way to save money on medication costs, a significant concern for many, especially in the face of rising healthcare expenses. These cards, often available for free or at a minimal cost, can be a lifeline for those without insurance or with high deductible health plans, and even for those with insurance facing high co-pays for certain medications.

One of the key benefits of prescription discount cards is their ability to provide substantial discounts on the retail price of medications. These discounts can range from a few percentage points of savings to as much as 80% off the medication’s retail price. This can translate into significant savings, especially for expensive or long-term medications.

Another advantage to prescription discount cards is their wide acceptance. Many major pharmacy chains and independent pharmacies accept these cards, making them a convenient option for most consumers. This widespread acceptance ensures that you can use the card at your local pharmacy without having to travel further for discounted medications.

Prescription discount cards are also remarkably user-friendly. They can be obtained easily online or through healthcare providers, and there is generally no extensive paperwork or eligibility criteria involved. This ease of access makes them a practical choice for immediate savings, especially for those who need medication urgently but are concerned about the cost.

Furthermore, these cards often cover medications that are not typically included in insurance plans, such as certain lifestyle drugs or pet medications. This breadth of coverage ensures that you can save money on a wide range of prescriptions, not just those that are medically necessary.

Prescription discount cards are a valuable tool for managing healthcare costs. Their ability to provide significant discounts, wide acceptance at pharmacies, ease of use, and broad coverage make them an essential resource for anyone looking to reduce their medication expenses. Whether you’re uninsured, underinsured, or simply facing high medication costs, a prescription discount card can offer substantial financial relief.

This is the third in a six-part series about how to ride the shifts and unpredictability of our global economy. In September we gave three tips on how trucking companies can ride waves of economic uncertainty, in November we talked about how small businesses can save, and today we covered how benefits can provide individuals great savings opportunities. Stay tuned for another edition coming in March of 2024!

WEX is a leading, global fintech solutions provider, simplifying payments and back-end business processes in the fleet management, benefits management, and corporate payments areas. To learn more, please visit the company’s About WEX page.