Put focus on fringe benefits

Fringe benefits are in the forefront of discussion lately. Fall is the traditional

time employees can sign up for or change benefit plans. And with the tight

labor market, private-sector employers are offering generous fringe benefits

to attract workers.

Despite this emphasis on fringe benefits, many workers — particularly

younger ones — don't pay as much attention as they should in this area,

according to Dennis Filangeri, a certified financial planner in San Diego,

Calif. So here's a guide to reviewing your options carefully, especially

if you're being tempted by the private sector.

Retirement benefits

If a private-sector employer you're considering switching to offers

a company-sponsored retirement plan such as a 401(k), snap it up. Social

Security won't provide much of a retirement life all by itself, and pension

plans like the Civil Service Retirement System or the defined benefit portion

of Federal Employees Retirement System are harder to find in the private

sector. Building your retirement nest egg is up to you. Smaller employers

don't always offer 401(k) plans, but most midsize and large employers do.

Your contributions and earnings are tax-deferred, and company plans that

match your 401(k) contributions are an especially good deal.

Health insurance

The vast majority of employers offer some kind of health care coverage.

You may have a choice of plans. Review major life changes over the past

year, such as getting married or having a child. A different plan than you

had last year might be a better choice. Before switching, though, see if

your doctor is covered under the new plan and find out how other employees

fared under the plan.

Flexible spending accounts

FSAs can be used to pay for medical or dependent care expenses on a

tax-favorable basis, but many employees fail to take advantage of them.

Here's how they work: You tell your employer how much to deduct from your

paycheck each month for deposit in the account. When out-of-pocket expenses

occur — for medical bills, for example — you withdraw money from the account

to cover them. The money set aside in the account is not subject to income

or Social Security tax, so the government in essence helps underwrite your

expenses. The only tricky part is that if you don't spend all the money

in the account for legitimate expenses by the end of the benefit year, you

forfeit the leftovers to the employer. Still, "With careful planning," Filangeri

said, "FSAs are an excellent benefit."

Although dependent care accounts are used most commonly for children,

they sometimes can be used to cover expenses for anyone you claim as a dependent

on your income taxes, such as an aging parent or a disabled spouse.

Disability insurance

You're more likely to be disabled during your working years than to

die. Even if you already receive some disability coverage at work, you probably

should have additional coverage, which you may be able to buy through your

employer's benefits plan, Filangeri said.

Life insurance

You'll want this if people depend on you financially. You also may be

able to buy coverage for your spouse or children. Plus, group coverage is

often easier to get than buying on your own.

Miscellaneous benefits

Employers increasingly are offering valuable benefits you might not

even be aware of. For example, one-third of large employers offer adoption

benefits, according to a recent study by the management consulting firm

Hewitt Associates LLC. Such benefits pay for your expenses when adopting

a child up to an average maximum of $3,100, according to Hewitt.

Elder care programs also are on the rise. Besides dependent care accounts,

companies are providing such assistance as referral services and counseling

and the option of buying long-term care insurance. However, many planners

suggest comparing company-sponsored long-term care insurance with outside

sources. You may find better deals.

Though numbers remain small, some companies provide financial planning

programs, such as seminars on retirement, specific personal advice or hotlines.

Prepaid legal advice for basics such as wills or telephone advice on specific

issues also is on the rise.

Companies offer other "small print" benefits too numerous to discuss

here, such as frequent flyer miles, discounted airline or hotel fares, cell

phones and computers, and concierge services. To find out what benefits

are offered, read the benefits information from your new employer and question

the human resources department.

As for choosing which benefits make the most sense for you — such as

which health care option to choose — talk with a certified financial planner.

These benefits can be worth thousands of dollars.

—Zall, Bureaucratus columnist and a retired federal employee, is a freelance

writer based in Silver Spring, Md. He specializes in taxes, investing, business

and government workplace issues. He is a certified internal auditor and

a registered investment adviser. He can be reached at miltzall@starpower.net.