By Christopher Flis, CFP®
Starting work at any new employer is stressful. The stress is further complicated if you are transitioning from a military career, via an Active Duty Retirement or otherwise. Fortunately, Amazon is a very military-friendly company with outstanding benefits. The following are some considerations for when you make your choices.
As I alluded to before, Amazon has some wonderful benefits. For those who retired from Active Duty, some of the benefits may not be necessary, but this is most definitely not true for everyone. Each individual and his/her situation is unique and so too should their choices be.
As a Retiree from Active Duty, you are covered by TRICARE. Don’t overcomplicate what TRICARE is; it’s medical insurance, pure and simple. You can choose between TRICARE Prime and TRICARE Select. The maximum out-of-pocket expenses are $3,000 per year, exclusive of the TRICARE Select Annual Premium of $300.
If you are happy with your TRICARE coverage and your doctor accepts it, then there is no need to double-up on insurance coverages.
If, however, you are unhappy with the coverage and want to explore Amazon’s, by all means, look into it and make the best choice for you and your family.
Personal Note: I have been retired from Active Duty for 5 years now and have TRICARE Select coverage. I could not be happier with the experience. Obviously, some may differ with this opinion, so please don’t take my assessment to mean that TRICARE is infallible.
For the Non-Military folks, you can choose between several plan options at Amazon. This is a highly personal choice, of course; however, financially speaking, among the plan options is one that allows participation in a Health Savings Account (HSA). These accounts are among the best deals going in today’s Income Tax Code, so if you have access to it, I’d give it a good look.
The dental coverage to which Military Retirees have access is expensive. My suggestion here is to consider Amazon’s coverage. Dental insurance is a kind of a wash for most people; the premium gets you access to a cleaning and a check-up, which is about the same as if you paid cash.
As opposed to medical coverage, which has maximum out-of-pocket expenses for you, dental plans have maximum benefit caps that the insurer pays…the difference is subtle, yet significant.
Amateur Tip: Without going into gory details, I recommend an electric toothbrush and flossing twice daily. I’m not a dentist, though I think if you take this advice, you won’t be seeing one for much more than a check-up.
This coverage is highly dependent on the individual. If you have had few vision issues in the past, maybe you can skip vision coverage. If the converse is true, consider it. As with dental coverage, vision insurance typically results in a bit more out-of-pocket expense than it would seem. If in doubt, maybe try it and you can always decline the coverage next year.
Healthcare Flexible Spending Account (FSA)
If you are a Military Retiree covered by TRICARE, you are not eligible for an FSA. Otherwise, you are likely eligible and should consider participating in Amazon’s FSA. These funds go into your FSA pre-tax, which is a wonderful benefit as the menu of items for which you can use the funds is pretty wide. The 2021 Contribution Limit is $2,750. These funds are typically “use or lose,” so estimate your annual expenses and be sure not to contribute more than you will spend in a year. In 2021 you can “carry over” $550 to the following year. These rules frequently change, so be sure to stay current on plan changes.
Dependent Care FSA
Again, if you are a Military Retiree, you cannot participate in an FSA program. If you are not a Military Retiree and you have a dependent who qualifies you for coverage under this program, participation should be strongly considered. The funds set aside for the Dependent Care FSA are pre-tax, which is, of course, a wonderful benefit.
Basic Life and Accidental Death and Disability (AD&D) Coverage
This is provided by Amazon, and the coverage is twice your annual salary. Since this coverage is provided, you naturally want it! Please be sure to nominate your beneficiaries for the payout and remember to revisit your selections at least annually.
Supplemental Life Insurance
This is optional life insurance you are not required to take. There is no underwriting for the coverage, which is up to three times your annual salary.
Everyone’s life insurance needs are unique, so it is impossible to give a blanket recommendation here. However, if you do need life insurance and insurability is an issue for you (for whatever reason), supplemental life insurance may make a lot of sense for you. It is critical to note that this life insurance is not portable—meaning, if you leave Amazon, you cannot take the insurance with you. Therefore, if you have a permanent need or know you will have a life insurance need that will outlast your employment tenure, explore other options rather than relying solely on this coverage.
When considering your life insurance needs, it might make a lot of sense for you to consult a financial professional who can assist you in making the best decision for you.
Disability insurance is one of the most overlooked coverages in ALL people’s financial lives. We usually consider death as a possibility, while frequently ignoring the prospects of being disabled altogether. The facts point to how twisted this logic is; for EVERYONE, the chances of becoming disabled EXCEED the chances of dying until well into your 60s. Therefore, disability insurance should be considered by everyone. This is NOT a blanket recommendation; rather, it is a blanket suggestion that you should consider what you will do if you become disabled.
1. Long-Term Disability
Amazon provides this coverage at 60% of your monthly earnings up until you are age 65. This is outstanding coverage. The benefits will be taxable as you are not paying the premiums; however, even if the unthinkable happens and you cannot work, you will have an income stream.
2. Short-Term Disability
This coverage is a little less important as short-term disabilities are obviously “short.” Nevertheless, Amazon provides the coverage at no cost to you.
These are the “big ticket” items in Amazon’s “Benefit Cafeteria”; other coverages are available that may be of use to you. Among these are legal services; child/elder/pet care referrals and assistance; prescription drug coverage.
In addition to these “standard” benefits, Amazon also has benefits for those seeking fertility treatment or adoption. Either avenue is quite expensive, so any benefit is likely to bring some welcome financial relief.
Amazon also offers pregnancy and parental leave programs. This is another amazing benefit for any new parent. Moreover, there is also a “Ramp Back” program that allows new parents to ease back into work after the new arrival.
And last but not least, Amazon provides a discount code for 10% discount on Amazon merchandise—there’s not much to add on that benefit!
Military Retiree Considerations
1. Health Insurance
If you are happy with your health insurance through either the VA or TRICARE, you may elect to pass on Amazon’s offerings. If you do want to use other services, like fertility treatment benefits, for example, you may want to inquire if Amazon’s health coverage is a prerequisite.
2. Dental & Vision
There is no provided dental or vision benefit via TRICARE. Therefore, if you want coverage, you must secure it separately. Amazon’s plan is not very expensive, though you may want to shop around.
3. Life Insurance
Coordinating life insurance upon retirement from Active Duty can be dicey. For example, the window for securing coverage with no underwriting through VGLI is only 240 days after your retirement date. So if insurability is an issue for you, then you will want to secure VGLI coverage during that period…you can always cancel coverage later if it is not needed. Then you can consider the various options with Amazon if more coverage is needed. This is probably an area where talking to a financial planner is advisable as the professional can walk through a life insurance “Needs Analysis” and then assist with securing coverage.
We’re Here to Help
Amazon has outstanding employee benefits, and for Military Retirees, retiree benefits and Amazon employee benefits are a dynamic combination—and come at a reasonable cost. It is important to make the best choices amongst the panoply of benefits so that your personal finances are not upended by an unforeseen circumstance, so it’s wise to consult a financial planner to help you craft your best benefit posture. We at Resilient Asset Management are here to help. Schedule a 30-minute introductory meeting or contact us at email@example.com or (901) 318-3423.
Christopher Flis is founder and financial planner at Resilient Asset Management, a fee-only Registered Investment Advisor (RIA) based in Tennessee. Chris graduated from the United States Naval Academy with a bachelor’s degree in computer science, earned a Master of Science in Computer Science from the University of Minnesota, and attended flight school in Pensacola, FL, launching a fulfilling and distinguished military career. Chris spent 20 years in the Navy as an F/A-18 Strike Fighter Pilot, which included tours in Japan, Australia, and California, combat missions in all areas of the Persian Gulf and Afghanistan, and time spent as the Executive Officer of Naval Base Guam and Director of Navy Casualty in Millington, TN. When Christopher was ready to make a career change, he turned to a passion he held since high school when he attended a lecture on personal finance and started managing his own investments. He earned his Certified Financial PlannerTM (CFP®) designation and now combines his passions and experience by serving military, retired military, business owners, and retirees. Chris provides comprehensive, customized financial services, helping his clients overcome their challenges and take opportunities so they can achieve financial independence.Chris lives in Downtown Memphis with his wife, Christine, and his son, Emerson. He is an avid runner and when he is not jogging for exercise, he is usually chasing his son around or walking his 3 dogs. To learn more about Chris, connect with him on LinkedIn.