Issue #56: Benefits Season: Maternity Leave, Student Loans & Life Insurance

As we continue to grow and continue to be Loud, will always appreciate you for taking 5-10min of your day to read what I have to say, thank you!

This week I encourage you to focus on your plan not the plan of the media or others, your wealth is not their wealth!

The holiday season is rapidly approaching, and I can hardly believe it's that time of year again. But you know what? There's something more pressing on my mind, something that isn't as festive but is essential – it's the state of America's #maternityleave and #paternityleave policies, or as I like to put it, our "not-so-jolly" reality.

Now, I'm sure many of you are aware of this, but let me just say it outright – these policies are, for lack of a better word, trash. While other countries offer their employees anywhere from 3 to 12 months of paid time off to bond with their newborns, we're left with a system that relies on something called Short-Term Disability. Yes, you read that right; we need insurance just to make sure we don't eat up our hard-earned PTO or, in some cases, end up with nothing during this crucial bonding time.

But you know what? Businesses have the power to change the game, and that's what I want to talk about today. So, let's dive in.

What Can Businesses Do? In order to make Short-term disability an option for employees, the employer needs to sign the company up for the policy. But there's more flexibility here than you might think. Employers get to decide on things like the elimination period (the waiting time before benefits kick in), benefit period (how long benefits pay out), and the percentage of salary the policy covers (usually around 60%, depending on state law).

Here's where it gets interesting – businesses can also choose to forgo the insurance policy entirely and instead set aside capital for PTO or create their own Maternity Policy. While this may not work for all businesses, it can be a fantastic solution for some. I recently worked with a client who decided that disability insurance wasn't the way to go for their all-female staff. Instead, they "self-insured" by saving up the money needed to provide 100% PTO during an 8-week maternity leave. Not only was this an incredible benefit for their employees, but it also proved to be cost-effective for the employer. The savings they made went into a high-yield savings account, earning them around 2.25%. As it continues to grow and not all women go on maternity leave at the same time, it will become a self-sustaining resource.

The key takeaway here is that employers can get creative to match their company culture and meet their employees' unique needs. It takes some consulting, an accountant, or an HR professional with the right mindset, but the possibilities are endless. So, if you're a business owner and want to get creative, you know where to find me! (Shameless plug, but I couldn't resist.)

Advice for Employees: For employees, it's pretty straightforward. Take full advantage of the employer-paid policies. If there are options for long-term plans and you're unsure if you should pay for them, go for it. It's a safety net you'll appreciate if your short-term disability turns into something longer. Otherwise, you're at the mercy of your employer's policies.

Here's a bit of free advice for you. When you're considering a job, make sure to acquire all the policies from the company handbook before accepting the position. And when they're required to send it to you annually, take a few moments to read through it thoroughly, especially the policies that matter most to you.

Money-Saving Tips: Now, before I let you go, here are a couple of quick money-saving tips for you. First and foremost, everyone, you've got to check this out: Student Loan Repayment There's an incredibly simple application that could reduce your monthly payments to $0 while still on track for forgiveness plan!

And for those of you lucky enough to have a benefit that either pays your student loans or your tuition, make sure to take FULL advantage if it makes sense in your situation. These benefit plans can do some pretty remarkable things, like matching your student loan payment and putting that match amount into your 401k. Imagine having your 401k growing while your student loans are being paid down – it's a win-win. Some employers will even offer a bonus if you reach a certain level, say, $15k towards your MBA. So when you're hunting for a new job, keep your eyes open for these opportunities. And if you're ever in doubt about the benefits on the table, don't hesitate to seek help!

Life Insurance: Now, a quick one for employees – most companies provide up to $50k in death benefit for you, with an option to add more at a discounted rate. However, there's a big red flag to watch out for. Since it's an EMPLOYER plan, your coverage could be at risk if you're terminated, disabled, or if the company decides to drop it. So, be sure to read the fine print and consider getting your own life insurance outside of work for more control.

For business owners and employers, we've got some exciting topics to cover in the coming weeks – Key Employee, Buy/Sell, and split-dollar insurance plans, premium finance plans, and how they can be a massive tax advantage for you as the owner. Stay tuned for our upcoming business owner series!

Next Week’s Issue

Retirement Plans for Employees

#NoBSWealth Clip of The Week

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