Many Medtronic employees are not using other key benefits outside health insurance

>> Matt Nelson: You work at Medtronic and you use the 401k, but are you using these three other important and valuable benefits? We regularly meet with professionals to help with their personal finances and see common mistakes they're making. One of those is not using other key benefits outside their health Insurance and their 401k plan. Most employees are going to be familiar with their 401k plan. It's like one of the most well known benefits outside of health insurance. And even if they are not using it ideally, or the most efficiently, at least they're contributing to it. So I made another video all about the best way to use the Medtronic plan. Here, check it out. So what else should you be paying attention to? In this show, we're going to review three commonly underappreciated benefits that most employees need to take a second look at in Medtronic.


Matt Nelson: Many people overlook the value of employee stock purchase plans

Welcome back to the show everybody. I'm, uh, Matt Nelson and my team And I at Perspective 6 Group have been helping people retire for 25 years. We created this show to share what's working and to help professionals in the med tech industry make smarter decisions with their money. So let's just get into it. Number one, employee stock purchase plans. The espp. I think of the value of this plan gets overlooked because it's just misunderstood. And even when it's utilized, I think people often miss the opportunities to capture the low risk income or use the plan tax efficiently. So how does it work? Okay, well with Medtronic's plan, you can contribute from 2 to 10% of your compensation. And this is on an after tax basis. Meaning unlike your 401k plan, it doesn't reduce your taxable income. But the benefit is you get a 15% discount on your purchases of Medtronic stock at the end of each quarter. I mean, where else can you buy shares of your stock at a 15% off coupon? So this is a pretty excellent deal and you can think of it like a discount that both adds to your potential return or just simply reduces the risk of purchasing the Medtronic stock. The plan can be used as a, uh, relatively low risk way to build a position in Medtronic that you might want to hold over time. Or think of the immediate gain you capture because of the discount to create additional income and diversify into other investments. If you want to download a paper I wrote on how to make the most of your ESPP plan, the link is in the comments section below. Number two, Health savings account. The problem here is people are not maximizing the Contributions and the tax efficiency of their healthcare savings accounts. So if you're with Medtronic and using the consumer health plan, the chp, then you're able to contribute to a health savings account, HSA for short. The account gets an initial funding boost from the company contributions and then you can contribute your own funds on a tax deductible basis up to IRS maximums. For 2025 you can contribute up to $4,300 for self only coverage or up to $8,550 if you have family coverage. If you're over age 55 you've got an additional thousand dollar catch up you can do. The money you save in the healthcare savings account is initially tax deductible just like your 401 plan. But it's even better because you use the money later for medical expenses. You can take it out tax free. And so this is basically the best of both worlds. A uh, tax deduction upfront, tax free later. Now uh, traditionally the money in this account is thought of to cover your medical insurance co pays deductibles used on medical expenses throughout the years they come. But since you own the money in the account, you can take this remaining balance with you when you leave Medtronic. So I think the best practice here is to invest and grow this account balance a lot like you do with your 401k plan. And then instead of paying medical costs out of the plan, just pay them out of pocket. It has two benefits. So number one it acts like a forced savings mechanism. It's another place you've saved money like your 401k plan because you've already contributed the money and you leave it there. There you go. But more importantly, it preserves the tax free growth of that account and it can become one of the most valuable financial accounts you're going to own. I mean you're going to definitely use the money later in retirement to pay for everything from Medicare premiums, everyday medical expenses, even long term care expenses. In fact I think it's really a great way to build up your own long term care savings bucket. You can do this ahead of time as an alternative to or at least supplement purchasing long term care insurance later in life which can get really expensive.


Number three is optional long term disability insurance. So let's just look at how this works in practice

Now number three is optional long term disability insurance. Now the base Medtronic paid coverage provides 50% of your annual benefits base rate. This ABBR is your January 1st salary level plus a three year average of any variable pay like your commissions and your Medtronic incentive plan. So the important part to understand here is if you have a lot of fluctuation in your income and your variable income, you need to pay attention because it may be difficult to understand fully what your coverage is. It is also important to understand that the maximum coverage is capped at 12,500amonth. So if you're earning over 300,000 a year, your base income replacement is going to be capped out. So let's just look at how this works in practice and why it's so important to be considering these optional plans. First you get company paid salary continuation, so that's the short term disability for 26 weeks and that's at 100% of salary for the first nine weeks, essentially first couple months and then 70% for the remaining time. That means the first half year is covered at a relatively high level, but then you're going to drop to 50% of your income being replaced. For most people that's just not going to work. It's going to be very difficult to handle such a huge cash flow cut. And then consider on top of that having other expenses like extra medical, home care expenses, maybe childcare challenges you have to take care of. And then if that isn't enough, these are taxable benefits because Medtronic paid for them. And so your net is going to be a lot lower than you think of. The worst part I think is that for most people the reduction means they're not going to be able to keep saving for retirement. And that's a real problem because these plans really only take you out to age 65. So if you stop saving or worse, dip into your 401k and uh, other retirement benefits, it's going to be a real issue as you get older. So what's the solution? Well, you can purchase the optional plans through Medtronic to kind of close that gap. So option one covers 60% of your ABBR. So 60% of your income up to 15,000amonth, it raises the cap. And then option two gets you up to 66 and 2/3% of your income and raises the cap even further to 23,002,50. It's uh, you know, in my opinion, like paying for option two coverage is almost always the right choice, especially for high earners. Uh, in fact, I'd maybe advise with high earners that they purchase some supplemental personally owned coverage to close that gap even further. You need to think about the money spent on additional income protection as foundational level planning. It isn't going to matter if you've been maxing out your 401k for the last 15 years. If suddenly you can't work and you need to rely on 50% of your income, you're going to probably spend through your retirement plans. Or, at best, you're not saving any additional. So to recap, Medtronic provides a very robust benefits package, but there are some key options that are either underutilized or skipped altogether. So in your planning, make sure you're considering adding income with the ESPP plan, the tax savings from the hsa, and then increasing your income protection with the optional disability insurance plans. If you found this helpful, give us a like and subscribe. You can download our white papers in the comments section and then check out our other videos in the channel. As always, thanks for watching. Remember, financial freedom takes more than money. M so make your plan to live your life well. If you need any help, we're here for.