You just got the call you’ve been waiting for, and they offered you the job! Before you rush to accept, it’s important to make sure you know what you agree to! You may have discussed the salary in the interview but do you understand how much the employee benefits package that comes with the position is worth?
When you think about career options, accepting your first job, or seeking advancement in your field, salary may play a significant role in decisions you make. Data from the Bureau of Labor Statistics would suggest shifting your focus to the total compensation offered instead.
Total compensation is equal to the salary plus the value of the employee benefits package. When you learn the average benefits package essentials are over 30% of an employee’s compensation, it makes sense to weigh the total compensation of different jobs when making an employment decision.
Employee Benefits Package Offerings
Some benefits are organization-oriented and defined by the employer. They could include employer-sponsored retirement plans, traditional health insurance offerings, and even corporate wellness programs.
Consumer-oriented benefits are funded by your employer but selected by you. Examples of these benefits include retirement options and insurance plans where an employer defines their contribution rather than sponsoring specific plans.
Whether they are employer-sponsored, defined contribution, or other fringe benefits – the types of benefits and the value of the benefits package you are offered can affect your job satisfaction and your bank account! Make sure you take time to become informed.
Here are some of the benefits employers offer as part of an employee’s total compensation package. You should consider the benefits that matter most to you. And how much those benefits are worth when making your decision on whether to accept the job.
It’s no surprise quality health insurance is one of the most significant benefits people look for when applying for a job. But health insurance isn’t the only type of coverage many companies offer; especially those trying to attract top talent.
Paid Time Off
Earning a salary while you are not at work is definitely a benefit. But how generous is this employer with paid time off? How many weeks of vacation will you have in this position? If you aren’t working on a legal holiday will you get paid for it?
Are personal and bereavement days a part of your compensation package? What about sick time for you or to take care of family members? What is this company’s maternity, paternity, or medical leave policy?
Understanding when you will be paid when not at work is essential. When you first accept a job offer, you might not be thinking about all the times you could need time off, but you’ll undoubtedly be happy to get paid when you need to.
Your employee benefits package may offer a variety of different employer-sponsored retirement savings plans. Traditional retirement plans such as defined benefit pensions have mostly been replaced by defined contribution plans.
Some employers supplement employee retirement savings by matching employee contributions to 401(k), 403b, 457, or similar plans. Profit-sharing is another way some employers contribute to retirement plans for employees.
When reviewing retirement savings plans look at when you’re eligible to begin contributions? What is the vesting schedule for any employer contributions? Who administers the plan? What are the fund options and the associated fees?
Some companies offer employee stock options as part of their employee benefits. These option plans provide employees the right to buy a specified number of company shares at a predetermined price within a specified period. The hope for you as an employee is to profit by exercising your options to buy shares at a fixed price when the shares are trading at a higher price.
Flexible Spending and Health Savings Accounts
Some employers choose to offer Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA). These plans are like personal savings accounts. But funds in the accounts can only be used for qualifying medical expenses.
An FSA can be used to pay for eligible medical, dental, or vision care expenses that aren’t covered by insurance. HSA’s can only be used with High Deductible Health Plans (HDHP) and are similar to a 401(k). According to HealthCare.gov, an HSA can be used “to pay deductibles, copayments, coinsurance, and some other expenses.” This includes the ability to save money for future healthcare expenses too.
As an employee, you can determine the amount you want to contribute. And the funds are deposited to the account on a pre-tax basis which reduces your tax liability. Employers are not required to contribute to FSA or HSA plans, but they may as an additional employee benefit.
One other employer-sponsored benefit is an HRA. This Health Reimbursement Account can be used to reimburse an employee for out-of-pocket medical expenses. These accounts are funded by your employer, and you may even be allowed to roll the money over from year to year if funds are not depleted.
If you’ve just finished an undergraduate degree, you may be thinking about how much of your salary will go toward paying back student loans each month. If your benefits package offers tuition reimbursement or stipends for continuing education, it may reduce your expenses for furthering your education or pursuing an advanced degree.
Don’t dismiss the importance of this benefit if your career path will require you to go back to school or if you are interested in pursuing a Master’s or Ph.D. programs.
Telecommuting and Flexible Schedules
How long is your commute? Will you be sitting in traffic for a few hours each day? If the position you are considering offers a flexible schedule, it may save you hours of unproductive time each week. Is telecommuting an option for this job, even for part of the work week? If this is something important to you, you may put a high value on the benefit.
If you have to go into the office each day, does the employer provide parking or assistance with paying for parking each month? Some employers choose to work with companies like Commuter Benefit Solutions.
These plans benefit employers by helping them offer tax-free benefits while reducing payroll taxes. Employees save by not having to pay income tax on funds they set aside for commuting expenses. Some employers offer transit passes to employees as a benefit too.
Depending on the company, the position you are applying for, and the demand for employees, some employers will provide funds to help you relocate. Others may pay a housing allowance each month or provide employee housing. This may even include furnished housing.
With the average American spending more than a third of their take-home pay on housing, any housing benefit offered by an employer can help minimize one of the most costly parts of your monthly budget.
Child care costs for a baby average almost $1,000 per month in the United States. And in some of the most expensive areas in the country, the cost is double that amount each month. If your potential employer has on-site childcare as an option, this may answer many of your child care concerns.
You will likely pay less than you would for other center-based care and your child will be at or near your place of work. This is incredibly important to many parents.
A Dependent Care Flexible Savings Account (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services for a child or adult dependent, while you and your spouse if married, are working, looking for work, or attending school full-time.
Can You Negotiate an Employee Benefits Package?
During your final interviews, you may have negotiated the salary for your position. Unless the company you are applying to has a strict defined benefits plan, you may be able to negotiate some benefits in your package too.
What matters most to you? If a flexible schedule means that your child won’t have to be in daycare for many hours each week, that might be something you try to negotiate. And If you were only offered a week of paid vacation, ask for two and see how the employer responds.
If you’ve made it to the point where you are negotiating, they want you for the job. Do your homework on your benefits package and determine where you might ask for more than what you’re initially offered.
Perhaps there are other benefits or perks not offered which you could negotiate for; a cell phone, paid internet services, transportation allowance, or organization membership fees.
What is An Employee Benefits Package Worth to You?
Salary is important but taking time to look at the entire employee benefits package (and comparing them if you have more than one job offer) matters too. Consider the total compensation you’ve been offered and look at the value of each benefit and how it will impact your budget, your day to day life, and your future.
And once you are employed make sure you don’t leave any benefits you’re eligible for on the table.