How to Hack Your Job Benefits
Increase your paycheck, even without a raise.
Last updated: December 14, 2021
It’s nearing the end of the year, and everyone is thinking about job reviews and next year’s raise. For many of us, there will be a small raise of 2–3%. This is just enough to keep inflation at bay but not move the needle all that much.
However, there are other ways to increase your take-home pay, or at least have your job pay for some expenses.
What’s this secret source of miracle money? Your employer’s benefits.
It’s not sexy, but you can save some serious cash by taking your benefits more seriously.
Medical
Medical expenses are a leading cause of bankruptcy, and medical insurance is also a leading cause of headaches during open enrollment. So many people just go with the option that takes the least amount out of their paycheck without ever doing the math.
Tax-Advantaged Health Accounts
There are two main flavors of tax-free medical expense accounts, the Flexible Spending Account (FSA) and the Health Savings Account (HSA). The biggest difference between the two is that the FSA is a use-it-or-lose-it deal, while the HAS stays with you.
Regardless of which option you go with, you are saving money by using them.
These accounts work by being funded with pre-tax dollars. Then, when medical expenses occur, you can pay with pre-tax dollars. This reduces the tax burden on your paycheck, increasing your total take-home pay.
For instance, say you go to the ER, with everything covered except your $100 copay. If you pay with pre-tax money, you only need to earn $100 to pay that bill. However, if you use post-tax money, that same $100 bill means you will need to earn $128.
Now, let’s apply that same math to your annual non-premium health expenses of $2,000. Paid with pre-tax money, you need to earn $2,000. If you use post-tax money, you will need to earn $2,564.
That is over $500 in extra savings, and all you needed to do was spend an hour doing the math during open enrollment.
- The 2020 limit for a medical FSA is $2,750.
- The 2020 limit for an HSA is $3,550 for individuals and $7,100 for married couples.
Other Health Insurance Benefits
Many companies have been offering a “wellness” option with your health insurance plans that give a discount to your premiums. Wellness programs usually include a mandatory physical and wellness consultation. Some may include participation in health-related activities (e.g. going to the gym, tracking your steps, attending nutrition classes).
My last job offered a $35/month discount, which is $420/year. Not too shabby in trying to be healthy.
The opposite side of reducing costs for insurance is paying employees NOT to take insurance. This is what happened just this past year. My wife moved to a job that has a better set of health plans, so we went with one of those.
We ended up with a double bonus.
First, we avoided the $70/month spousal surcharge that my job incurred. A spousal surcharge is a penalty when your spouse is offered a health insurance plan but chooses to go on your plan. The insurance companies will tell you that it’s a way to offset the risk they take on when covering your spouse who could otherwise be on some other company’s books, but what it feels like is a slap in the face.
Second, my job offered a bonus of $130/month for refusing their health insurance, the opposite of the spousal surcharge. The company was so excited to get that risk off of their books, that they pay me to go elsewhere. Such is the state of health insurance in America.
In short, we got $200/month, or $2400/year (and better insurance coverage), by switching providers.
Childcare
Childcare expenses are eligible for their own, separate FSA. This is huge, as childcare expenses can cost as much as college tuition.
Now, this FSA benefit is not just for someone to watch little Tommy when he is a baby. On the contrary, I’ve used this sucker for 8 years now, from birth through 3rd grade.
It can also be used for summer camps, before/after school daycare, and several other categories of “childcare” for your kids. One thing to remember is that it cannot be used for tuition at a private or charter school.
Also, the technical term for this FSA is “dependent care”. IRS Publication 503 spells out what a qualifying dependent is, but the long and short of it is that pretty much anyone who depends on your for at least 50% of their care qualifies.
So if you are shelling out $10,000/year for a part-time nurse to help with your live-in, house-bound grandmother, you can use the dependent care FSA to help offset the tax burden of those costs.
The 2020 limit for a dependent care FSA is $5,000.
Tuition/Education
Let’s face it, the days of a company paying for your MBA as part of their management track program are over, aside from a few billion-dollar, multi-national corporations. However, that does not mean that there aren’t any educational benefits at all.
Take a deep dive into your HR manual, and I’m sure you will find all sorts of goodies.
Get Schooled
For example, most universities allow their employees and spouses one free class per semester. You won’t get your Ph.D. in under 20 years, but you can take an appropriate class to expand your technical skills. Bosses LOVE to see after-hours education.
If formal higher education tuition is not an option, check for any technical training reimbursements. If you work in a formal trade, your company may pay for one or more classes that could lead to additional certification.
If that fails, see if there are any general education (i.e. books) reimbursements that are available. Ask HR what you need to provide to either get it paid for in advance or get the costs reimbursed.
Pay Off Your Student Loans
I have written about paying off your student loans in several articles (here, here, and here), so this section will be brief.
If you have student loans, many companies have started offering to help pay them off as part of their overall benefits package. Even the military has the Student Loan Repayment Plan, which pays up to $15,000/year for 6 years.
Also, regardless of the wailing and rending of cloth, PSLF is not the mega-problem the media is making it out to be. Yes, there are problems, but it’s a really good program. If you work at a government or non-profit, take a look to see if this is the right option for you.
If you would like more information on the PSLF program, read some of my past articles (here, here, and here).
Life Insurance
No one likes to think about dying, but people do it every day, even young people. For example, the death rate for people 25–34 years old was 0.105%. Given there were 45.69 million people in that cohort, that means almost 48,000 of them died.
The death rate doubles in the 35–44-year range, and quadruples in the 45–54-year range.
Most companies offer free life insurance up to one or two times your salary. This won’t send your kids to college, but it will cover your funeral and any daily expenses while your loved ones pick up the pieces.
Discounts
Most companies of any size have a list of discounts that are given to their companies from certain retailers. Some of the most common include cell phone subscriptions, travel destinations, and local restaurants.
They normally run in the 10–20% range, which you may not think is that much. But then again, you pay your cell phone bill every month. This starts to add up.
Here’s my example. My wife’s employer allows for a 17% discount on our ATT subscription. Our total bill has run about $120/month for the past 9 years that we have been married.
This discount has taken off $20 of our bill every month for the past 96 months, giving us almost $1,960 in that time.
$20 doesn’t sound like much. $2,000 sounds like a lot.
Retirement
This is the biggie of free work money: the 401k match.
If you haven’t check to see if your company offers a matching contribution towards your retirement account, you need to do that ASAP. It’s one of the most common but also most overlooked source of cash for many people.
The fun part about all of this? If you have a 401k match but “couldn’t afford” to contribute, you can use your newly freed up funds to start. Then you can have your company match those contributions, which were sourced with their money, with more of their money!
Truly the definition of win-win.
The Takeaway
All of the examples above follow the axiom that “every little bit adds up.”
These sources of money are here for the taking. All you need to do is take a few minutes to explore your options. Talk to HR or do a deep dive into the company policies.
If you want to keep moving toward your ultimate goal in life, these small steps add up in a big way.
One of the best ways to use this newly found money is to pretend it didn’t even happen. Take the funds you save and put them directly into a savings or investment account. You will be amazed at how much you have after 10 years.