By Alan Eskandari, JD, CFP®
MaineHealth is the largest healthcare organization serving the state of Maine, with a facility in New Hampshire. As a not-for-profit committed to delivering affordable care to the communities it serves, MaineHealth also offers an excellent benefits package to its employees. Here is a high-level overview of some of the potential benefits offered through the company. At Harvest Asset Group, we enjoy working with the MaineHealth community and helping you get the most value from your benefits package.
Retirement Benefits
MaineHealth offers several different retirement plan options, depending on your classification and income level:
- A 403(b) plan (administered by Lincoln Financial). The 403(b) plan allows you to make a salary deferral into a tax-deferred retirement account. The company will match a portion of your contribution. You can choose a pre-set investment allocation based on your risk preferences, or you can self-direct investments based on a limited number of available fund options.
- A 457(b) plan (also administered by Lincoln Financial). Available only to certain highly compensated employees, this plan can be advantageous for employees who max contributions to the 403(b) and still want to make additional tax-deferred retirement contributions. The 457(b) plan is similar to the 403(b) in that it is tax-deferred and allows for self-direction with the same menu of available investment options. However, the company does not match contributions. More importantly, unlike the 403(b), where contributions vest, 457(b) funds could be subject to forfeiture should the company run into financial trouble. In addition, planning your retirement income strategy from your 457(b) can be more difficult as the 457(b) does not offer the same flexibility as the 403(b) when making withdrawals at retirement. Although on its face the 457(b) plan looks and smells a lot like the 403(b) plan, they are very different, and navigating the nuances of the 457(b) plan can be significantly more complex.
- A Traditional Defined Benefit Pension Plan. This plan is frozen, but some employees have accrued benefits from previous years. The pension is 100% company-funded based on years of service and compensation level, and it offers an annuity or a lump-sum payment option at retirement. If you are a participant in the Traditional Defined Benefit Pension Plan, better understanding whether you are still accruing benefits, eligible to withdraw benefits (even if still working but over the plan normal retirement age), and impact of choosing different survivor options or a lump-sum distribution are key to maximizing benefits.
- A Cash Balance Pension Plan. This plan is only available to certain employees hired before 2014. Like the Traditional Defined Benefit Pension Plan, it is 100% company-funded with the option to take an annuity or a lump-sum payment option at retirement. If you are a participant, ongoing contributions from the company are based on your age, years of service, and compensation level (with contributions accelerating significantly as you approach retirement age), plus accrued benefits receive an annual 5% credit. Like the Traditional Defined Benefit Pension Plan, the key to maximizing benefits is better understanding what benefits you are still accruing, withdrawal eligibility, and impact of annuity/survivor options versus lump sum. In addition, if you are a participant in both pension plans, this analysis can be even more complex as you do have the option to take one pension as an annuity and the other as a lump sum, if so desired.
- A Supplemental Executive Retirement Program. Sometimes available to certain highly compensated employees in lieu of pension benefits, this option provides cash payments up to 10% of the employee’s total compensation, in addition to benefits provided under the 403(b) plan.
Health Benefits
Here is an overview of the health benefits offered by MaineHealth:
- Group health (Anthem BCBS), dental (Delta Dental), and vision (Anthem Blue View Vision). Premiums for the plans are partially paid by the employee and partially paid by the company (the company covering a higher portion). Employees can extend coverage to a spouse or domestic partner and children under 26 years of age. Importantly, if you want to save on premium dollars, the health plan requires a negative tobacco test result within 60 days of enrollment; otherwise, you will have to pay a $1,200 annual tobacco fee.
- Health Savings Account (HSA) (administered by HealthEquity—although you are free to select another provider). HSAs are available to those employees who choose to be covered by the high-deductible health plan option, and the company provides a partial contribution. Like a 403(b), contributions to HSAs can be invested based on a limited number of available fund options. HSAs allow for a distinct tax advantage unlike any other savings account: you can make a pre-tax contribution (meaning you get a current tax break like your 403(b)), earnings grow tax-deferred (also like your 403(b)), but unlike your 403(b) where withdrawals will eventually be taxed, withdrawals from HSAs are tax-free if made for qualified medical expenses. Many people miss the value of having an HSA, and if you are eligible to do so, it is often the first account you should consider contributing to given its unique tax advantage. In addition, more advanced planning strategies include paying unreimbursed medical expenses from other sources while building your HSA as a retirement account for future health expenses. This can be extremely beneficial due to the long-term tax benefits, plus the fact that HSAs can be used to pay for certain qualified long-term care insurance premiums and certain Medicare premiums.
- Flexible Savings Account (FSA). There are three different FSAs available: qualified medical; dependent care; and transit expenses. Depending on your circumstances, you can choose to participate in all, some, or none of the plans. Unlike HSAs, you are not required to enroll in a high-deductible health plan to participate. Like HSAs, FSA contributions provide a current tax deduction, however, importantly, funds cannot accrue over time for future tax-free gains. This is due to the fact that FSAs are “use it or lose it,” where funds not used by year-end are lost (subject to a minimal amount that can be carried over into the next year). So, FSAs should be considered more pass-through accounts that will allow you to get a tax break for certain current, known expenses; however, an FSA will not provide the long-term tax-planning opportunities an HSA may allow for under the right circumstances.
Group Disability Insurance
MaineHealth provides a 100% company-paid basic group disability insurance benefit. In case of disability, this benefit provides income replacement equal to 60% of compensation. However, highly compensated employees should take note that this benefit is capped at a maximum benefit amount of $10,000 per month. In addition, the definition of disability under the plan is not pure “own-occupation,” meaning in certain circumstances or after a certain amount of time, benefits may not be paid, even if the disability prevents you from continuing in your area of specialty. Therefore, it is generally a good idea for specialists and highly compensated employees to explore supplementing group benefits with a private disability insurance policy.
Group Life Insurance
MaineHealth provides a 100% company-paid basic group life insurance benefit. The death benefit is generally equal to one year’s salary. You have the option to purchase additional supplemental group coverage, with benefit amounts increasing in increments of $10,000 and a maximum benefit option equal to five times salary. Premium amounts will increase based on your age and tobacco use.
- Spouse/domestic partner coverage: You may also purchase life insurance coverage for your spouse or domestic partner in benefit increments of $5,000, usually capped at a maximum amount not to exceed your own coverage amount or $500,000 (whichever is less).
- Child coverage: You have the option to purchase life insurance for your children in increments of $2,000, usually capped at $10,000 per child.
Depending on life stage, overall income level, and accumulated savings level, many specialists and highly compensated employees may want to explore supplementing with a private life insurance policy due to the group policy’s max benefit caps.
Additional Benefits Offered
In addition to the benefits listed above, MaineHealth employees may consider the following elective benefits, as desired:
- Adoption expenses. You can receive up to $3,000 to cover qualified expenses related to the adoption of a child.
- Identity theft protection. Intended to protect your credit, Social Security, driver’s license, and other sensitive information commonly targeted in identity theft schemes. Should you elect this benefit, the company will cover part of the cost.
- Legal Services Plan. This benefit provides legal services at a monthly cost instead of an hourly rate. This benefit is also partially subsidized by the company.
- Pet insurance. This benefit is offered at a 5% discount from a national carrier.
A big part of our role at Harvest Asset Group is helping you understand your benefits and how they fit into the big picture of your financial life. If you have questions about any of your benefits or would like help walking through which options best support your family and your future, we are here to help. Call us at (207) 775-1151 or email us at info@harvestassetgroup.com to schedule an appointment.
About Alan
Alan Eskandari is the planning advisor at Harvest Asset Group, LLC, an independent, fee-only financial planning and investment management advisory firm in Portland, Maine, where he is responsible for leading the firm’s operations. On a mission to help families achieve financial independence, Alan is focused on building long-term relationships and developing customized strategies that help physicians and pre-retirees reach their goals.
Prior to taking on his role at Harvest Asset Group, Alan practiced law at a global firm with offices in Washington, D.C., and New York. He leverages his experience as a corporate lawyer to find creative solutions that help his clients take control of their complex financial situations so they can live out their life’s passions.
Alan completed his CFP® requirements through New York University. He holds a Juris Doctor from Georgetown University Law Center and a Bachelor of Science from the University of Colorado, Boulder. Alan lives in the Portland, Maine, area with his wife and two children.
