Facing unemployment or managing a $200 monthly commute can be challenging. While we can’t offer a magic solution, we can provide practical advice on utilizing pre-tax benefits to improve your situation.
Managing Job Loss with COBRA
Job loss can be a stressful experience, especially when it comes to maintaining coverage for you and your family. You have options through both COBRA and the Marketplace. It’s possible to mix and match coverage from these programs. For instance, you might choose medical coverage from the Exchange and opt for COBRA for your dental plan and medical FSA. Understanding the fundamentals of COBRA coverage can help you make informed decisions.
Efficient Commuting with a Commuter Plan
If you’re dealing with the high costs of commuting, a Commuter Benefit Plan (CBP) can be a valuable tool. CBPs typically include a Mass Transit Account and a Parking Account. If you rely on public transportation signing up for a Mass Transit Account through your employer can help you manage these costs. Additionally, if you use parking services at your place of employment or a transit authority, a Parking Account can cover those expenses. Keeping your CBP accounts funded ensures you won’t run out of commuting funds.
Adjusting Benefits After Marriage
Marriage is an opportunity to review and potentially adjust your benefits if both partners have benefits through their employers. This includes updating and possibly increasing contributions to pre-tax accounts. Other life events may also allow you to change your benefit elections, so it’s important to stay informed about these opportunities. Don’t forget to check with your employer to see if election changes are eligible under your benefits plan.
Reducing Premiums with a Health Savings Account
High insurance premiums can be burdensome. Enrolling in a Health Savings Account (HSA)can help manage these costs. To qualify for an HSA, you need to be enrolled in an HSA qualifying High Deductible Health Plan (HDHP). While an HDHP means lower monthly premiums, the deductible will be higher. Assessing your annual savings with lower premiums versus higher deductibles can guide you in making the best choice for your situation.
For example, if Cindy chooses a health plan with a monthly premium of $150, she would pay $1,800 annually. Alternatively, selecting an HDHP with a monthly premium of $120 results in $1,440 annually, saving $360.
Family Planning with Flexible Spending Accounts
If your employer allows election changes, welcoming a new family member is a qualifying life event, allowing you to update or enroll in new benefits plans. If your employer offers a Dependent Care Flexible Spending Account (DCFSA), it can help manage childcare costs. FSAs come in various forms, including Medical FSAs and DC FSAs, and you can have both simultaneously. Understanding the rules and limitations of these accounts ensures you maximize their benefits.
Financial Well-Being Through Pre-Tax Benefits
While the typical workweek may not be magical, leveraging pre-tax benefits can significantly improve your financial well-being and provide a more secure and manageable experience. By effectively utilizing these benefits, you can lower your healthcare costs, manage commuting expenses, and support dependent care needs, all while enjoying tax advantages.
The material in this blog is presented for informational purposes only and such information is believed to be accurate as of the publication date; however, it is subject to change.
Benefit Resource, LLC is an affiliate of Inspira Financial Health, Inc. and Inspira Financial Trust LLC. Benefit Resource, LLC and its affiliates do not provide legal, tax or financial advice. Please contact a professional for advice on eligibility, tax treatment and other restrictions.
