It's almost November and that's when most employees have to sign up for next year's company benefits. No one says that's easy. There's usually a multitude of options that you may or may not understand.

Benefits don't come cheap. According to the Bureau of Labor Statistics, it costs your employer roughly 30% of its full-time payroll to cover benefits.

Health insurance is what is foremost in most employees' minds today. Since 1992-3 the average monthly contribution required of employees for health insurance has risen approximately 75% for both family and single coverage. (For more on the Bureau of Labor's news release, go to http://www.bls.gov/news.release/pdf/ebs2.pdf.)

If you're lucky enough to have benefits--health insurnace or otherwise--make sure you're taking advantage of everything you can.

1. Don't assume you know all the details of your health-insurance package.
I received a letter from a recently retired teacher who had undergone heart surgery. The bills for one operation and 11 weeks of recovery topped $500,000--and that didn’t include the surgeon's fees! This reader’s lifetime-maximum coverage under his employer’s plan was $1,000,000, and he was worried about hitting that ceiling. Moral of the story: Check to see what the lifetime-maximum coverage is in your plan.

While you’re at it, make sure you really understand your health-insurance plan--and your plan choices. At most companies, you’ll have a choice between a traditional medical plan and managed care. With a traditional plan, you’ll be free to choose your doctor, and you’ll be reimbursed for a percentage of any expenses. Often, however, preventative care is not reimbursed under a traditional plan.

Managed-care plans generally pay the majority of preventative-care costs, too. The downside: You either have to use a plan-approved doctor or pay extra to visit a doctor outside of the plan. If keeping costs low is a priority for you, choose the managed-care plan. If choosing your own doctor is a higher priority, opt for the traditional type of health-care plan.

With the burden of having to cover more of the total health costs falling on the employee, be sure to examine both spouses' coverage (assuming you are married and you both have a plan). It may be time to change how you use each of your health plans. For example, it may be much less expensive to cover only one spouse at one company and the rest of the family at the other spouse's employer.

2. Don't leave any "free" retirement match money on the table.
Having a good retirement plan is the second most important benefit, in my book. Socking those dollars away from an early age, tax-deferred, can pay off big at retirement.

An ideal retirement plan will offer a company match, great investment choices in at least three asset classes, low expenses, and a strong education and advice program to help you make the best choices.

If your employer will match all or part of your contribution, you must take advantage of it. If you don't contribute enough to get your match, you're leaving money on the table. That's not a smart move. If your budget is tight right now, contribute just 2% to 5% of your salary. Each year, increase your contribution by at least 1% until you're setting aside the maximum allowed.

Some companies also allow you to make after-tax contributions to your retirement plan. Do this only after you've invested as many pre-tax dollars as you can. If you're eligible for a Roth IRA, you should contribute to that before you make after-dollar contributions to your retirement plan.

If you are lucky enough to also have a pension plan in addition to your 401(k) or other retirement-savings plan, learn exactly how the company will calculate your benefits. It's usually based on a formula that factors in years of service and average pay when you retire. 

I recently had a call from an airline pilot who was concerned he might lose hundreds of thousands of dollars if the rate that they use to calculate his pension lump sum went up. If you are close to retirement, make sure you know how a change in interest rates will affect your benefit. It may make a difference in when you decide to retire.

3. Don't neglect to plan for disability contingencies. 
I’ve intentionally listed disability insurance before life insurance. That’s because the odds of becoming disabled are higher than the odds of dying while you’re employed. One in seven people become disabled for at least five years before reaching age 65.

Being out of work for an extended time can have a devastating financial impact on your family. Think about it. Who would make sure your mortgage was paid? How would your kids meet those tuition payments? Even if you cut back drastically on discretionary spending, it's still tough to pay the bills without a regular income. 

The good news is that many employers offer disability insurance. And if you buy this insurance through your employer, you’ll usually pay less than if you purchased it on your own.

The bad news is that only 28% of employees sign up for long-term disability coverage. For white collar workers, that number goes up to 40% but that's still not enough. You may think nothing will ever happen to you, but you'd be surprised how often people need to take advantage of this benefit.

Short-term disability typically covers benefits for one year or less. Many times your employer will automatically cover any short-term disability. Long-term coverage typically replaces 50% to 70% of your former salary, and is not an automatic benefit for every employee the way short-term disability is. Be sure to sign up.

Finally, understand whether you’re paying for disability insurance with pre-tax or after-tax dollars; it can make a big difference if you ever need to tap into the benefit. If you pay for your coverage with after-tax dollars, future benefits would be tax-free. If you are paying premiums with pre-tax dollars, however, benefits will be taxable. Naturally, it’s better to have these benefits paid on an after-tax basis--who needs to be worrying about taxes when you’re disabled? If your company’s policy uses pre-tax dollars, talk to your human resources department to see if they will change their policy.

4. Don't leave your family unprotected without life insurance.
Not everyone needs life insurance. If you're single and have no dependents, you may be able to skip this benefit. But if you have a spouse and/or children, you'll need to consider how much insurance is enough.

Think about your family situation now and what could happen if you’re not around. If your spouse stays at home to care for young children, you may want to cover the family's living expenses for a number of years. You may need enough insurance to pay off the mortgage, or to fund college.

In general, the critical years for owning higher amounts of life insurance are when your children are still at home. After they are in college, you may want less coverage.

Term-life insurance is by far the most common form of company-offered life insurance. This type of policy pays the beneficiary a predetermined amount of money. Term-life insurance just covers the basics--it doesn't offer the ability to build up cash savings the way whole-life policies do.

Many employees have access to a "cafeteria" approach to benefits--you get a certain number of credits to use on benefits. You may be able to find term insurance that is less expensive than company insurance and use your credits towards something else--like health insurance (especially if the cost has gone up).

Other Benefits to Investigate
I've discussed four of the most important benefits. If you're lucky, you'll have other options, too: dental insurance, eye-care coverage, flexible-spending accounts, stock options, stock-purchase plans, employee stock-ownership plans, and more. Choose wisely. Employer benefits will not only protect you from financial disasters, they can become a major source of wealth.

This article originally appeared November 16, 2000.