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3rd Quarter 2017

Smart Employee Benefit Decisions This Fall

This is the time of year to make choices about employee benefits for 2018. These steps may help you save money, cut your tax bill, build your retirement savings, stretch your health care dollars, pay for child care, and make the most of other benefits.

Save more for retirement. Take a serious look at whether you can afford to boost your 457 contributions for next year. Increasing your contributions by even a small amount can make a big difference over time. See the Savings Boost calculator to find out how much of an impact your extra contributions can make.

Choose a health plan. You may be offered several health insurance options. Consider not only premiums, but also total out-of-pocket costs for medical care and prescription drugs you're likely to use, including deductibles and copayments. Also make sure the network in the plan you choose includes your doctors and hospitals.

Get a triple tax break for health care costs. If you choose a health insurance policy with a deductible of at least $1,300 for single coverage or $2,600 for families, then you may be eligible to contribute to a health savings account, which can give you a triple tax break: Your contributions are pre-tax, the money grows tax-deferred, and you can withdraw money from the account tax-free anytime in the future for out-of-pocket medical expenses, including deductibles, copayments and other costs that aren't covered by health insurance, such as vision and dental care (there is no time limit for using the money). You can contribute up to $3,450 to a Health Savings Account (HSA) in 2018 if you have single insurance coverage or $6,900 for family coverage (plus an extra $1,000 if age 55 or older).

Take advantage of a flexible-spending account if you don't have an HSA. If you don't have a high-deductible health insurance policy, find out if your employer offers a flexible-spending account (FSA). You can set aside up to $2,600 pre-tax in the account for the year. The money set aside avoids federal income taxes and Social Security taxes. You usually must use the money in this type of account by the end of the year (or may be able to roll over $500 to the next year, or have until March 15 of the following year to spend it; check with your plan), but you can use the money tax-free for many medical expenses, including your deductibles, copayments, expenses that aren't covered by health insurance (such as dental and vision care, prescription glasses, and contact lenses), prescription drugs, and certain drugstore items such sunscreen with an SPF of 15 or higher, bandages, contact lens solution, and breast pumps.

See if you're eligible for a dependent-care FSA. If offered by your employer, you can set aside up to $5,000 pre-tax in a dependent-care flexible-spending account. The money can be used to pay the cost of caring for children under age 13 if you and your spouse work (or if one works and the other is a full-time student). You can use the money for preschool, daycare, a nanny, before- and after-school care (but not for school expenses for kindergarten or older), and even day camp in the summer or during school breaks.

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