Making Money

Benefits: Keeping up with health-care costs

Fall means shorter days and putting the kids back in school, said Jean Chatzky in MSNBC.com. But salaried workers should realize it’s also when most companies offer open enrollment for benefits, giving employees the chance to review and change them. While you may be tempted to keep the status quo, “you’re doing your wallet an injustice if you let open enrollment pass you by,” as options and fees often change subtly from year to year. “Two hours tops should be plenty of time to see how your current benefits stack up against the alternatives.” Unfortunately, less than half of all employees even bother to read through their benefits packages each year, according to Tom Billet, a senior consultant at Watson Wyatt.

Don’t be surprised if you pay more for health coverage next year, said Russ Wiles in The Arizona Republic. The average employee will shell out about $3,600 in premiums and out-of-pocket costs in 2008, or about $330 more than in 2007, according to Hewitt Associates. “One way to stretch health-care dollars is with high-deductible insurance policies.” Pairing these with a tax-sheltered health savings account can ensure you enjoy better benefits and still easily meet your deductible. Or, if your employer offers a flexible spending account, use that to save pretax dollars for miscellaneous medical costs. FSAs “can be good deals if you incur a lot of out-of-pocket costs, but you need to estimate outlays carefully because unused funds can’t be transferred from year to year.”

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Many employers are also rolling out financial incentives or penalties for certain healthful or unhealthful behaviors, said Michelle Singletary in The Washington Post. Nonsmokers who maintain a healthy weight may qualify for discounts. Smokers, however, could pay between $50 and $100 more a month. Such measures, intended to keep employers’ costs down, may seem rather harsh. But employees could ultimately benefit from the growing emphasis on preventive care. Many plans cover the cost of vaccinations, cholesterol checks, and breast, colon, and cervical cancer screenings. Nearly half of all large companies are even footing the bill for socalled health coaches.

What the experts say

401(k) loans on the rise

Large money management firms say they’ve seen a small but noticeable uptick in 401(k) borrowing, said Jilian Mincer in The Wall Street Journal. What’s behind the trend isn’t clear, but “financial advisors say it could be due to the effects of the credit crunch and slumping housing prices.” Every 401(k) plan is different, but most let you borrow up to 50 percent of your vested assets or $50,000—whichever is the smaller amount— for tuition, a home, medical expenses, funeral expenses, or to avoid foreclosure. You have to repay the loan with interest—typically prime plus about one or two percentage points—within a designated time. Otherwise you face early withdrawal penalties and taxes. All that may sound easy enough, but think twice before tapping your nest egg. “It could significantly reduce your savings at retirement and create an expensive tax bill if you can’t repay the loan when it is due.”

Healthy housing markets

Nationwide, home prices are falling, sales are sluggish, and the number of foreclosures is mounting, said Matt Woolsey in Forbes. com. But some cities aren’t so bad off. Seattle, Pittsburgh, Dallas, and Columbus, Ohio—to name a few—should see increases, albeit modest ones, in home prices this year, according to research by Forbes and Moody’s Economy.com. Most of these stable cities boast strong job growth, low price volatility, and relatively low inventories of houses for sale. “These markets never went through the boom and aren’t going through the severe bust,” said Mark Zandi, chief economist at Economy.com. That’s not to say homeowners are getting house rich. Even in Seattle, the market has been “very strong, but conditions are weakening, and this year, at best, will be an okay year.”

A new way to buy munis

Retail investors often struggle with “the most notorious shortcoming of muni bonds: pricing,” said David Bogoslaw in BusinessWeek. In the municipal bond market, the gap between what dealers charge buyers and pay sellers is often $20 to $30 per $1,000 bond. New exchange-traded funds claim to reduce that to about $1 per share. ETFs generally track underlying indexes, but these ETFs “hold just a fraction of the bonds in their bogeys.” In fact, however, an ETF may not necessarily be the cheapest means to buy munis. Vanguard Group offers six tax-exempt mutual funds with expense ratios between 0.14 percent and 0.17 percent, versus 0.20 percent for an ETF. Before you rush out and invest in this latest flavor of ETF, see how it stacks up against old-fashioned mutual funds.

Workplace

Selling yourself

Getting the most out of a job fair takes a little planning, said Anne Fisher in Fortune. Start by obtaining a roster of the companies that will be at the fair. With a pencil, rank your favorites. Doing so will force you to “think hard about why you’d like to work for these particular companies, which will come in handy if a recruiter happens to ask.” Before the big day, prepare a “one-minute elevator pitch” that introduces you to employers, tells them what you’re looking for, and lets them know what makes you unique. When talking to a potential employer, it’s okay to temper the seriousness of a conversation with a joke or two, said Matthew Kirdahy in Forbes. “Just don’t overdo it by drafting your own press release welcoming yourself as the newest member of the company” or breaking into song or bringing your mother along to answer questions for you. These are just a few of the wacky stunts senior executives have been privy to, according to staffing and consulting firms RHI and Accountemps. While such efforts might get a laugh—behind your back—they probably won’t get you a job.