If you’re looking for a new job, evaluating offers, or just started a new job, the topic of employee benefits has probably come up. Many companies even list the benefits that they offer in job postings. However, if you’re new to the workforce, understanding all of the different types of employee benefits can be a little confusing. What should a company offer? What do you really need? Why are there so many options?! Don’t panic, we are here to help. To make navigating your potential or offered employee benefits easier, we’ve compiled a list of the benefits commonly offered and an explanation of what each one actually means for you.
This is the employee benefit that you are probably most familiar with. You were probably on your parent’s employer’s health insurance throughout your childhood and possibly even through college. You may also have heard about healthcare coverage in political discussions over the past decade. If you’re looking for or working a full-time job (30-40+ hours), your employer will most likely offer you health insurance. Some part-time jobs also offer health insurance or a healthcare stipend. Some employers cover 100% of the cost of an employee’s health insurance, and some will require the employee to pay a percentage. Coverage for dependents can also be attained through your employee healthcare benefits.
Many jobs offer different options for their employees’ medical insurance. Here are some terms you should know so that you can effectively evaluate your options.
PPO: This is a Preferred Provider Organization. This is a type of health insurance that gives you more flexibility in choosing where you receive healthcare.
HMO: This is a Health Maintenance Organization. This is a type of health insurance that has more restrictions on which healthcare providers you can see. One example of an HMO is Kaiser Permanente. Most of your care in an HMO will be coordinated through a primary care doctor, though some HMOs will let you self-refer to select departments or services.
Premium: The amount that you will pay per month for your insurance plan. The premium is taken out of your paycheck.
Co-Pay: This is the amount that you will need to pay out of pocket for medical appointments. Prescription drugs, lab tests, hospital stays, and specialty care will also have a copay. To find out what your copay.
Deductible: The deductible is the out-of-pocket costs that you pay before your health insurance kicks in. You can often still access preventative services for free or with a copay (depending on the service and health plan) before hitting your deductible.
The 401K is the most common form of retirement savings and employers’ assistance in today’s work environment. Previously, pensions were more commonly offered. A 401K is a company-sponsored savings plan that allows you to contribute a percentage of your salary straight to a retirement savings account. Funds are deducted from your income on a pre-tax basis, lowering the income tax that you will pay in the present, but you will be taxed on withdrawals from your 401K when you retire and start taking out money.
Employers can then choose to match your contribution. Employers will match 0-6% of your salary, provided that you contribute that amount on your end. Some will only match a portion of your contribution. For example, if they match half of your contribution up to 6%, you could contribute 6% of your salary to your 401K, and your employer would contribute an amount equal to 3% of your salary and deposit it into your 401K.
The 401K has replaced the pension as the most common form of retirement assistance offered by employers. However, government employees and employees covered under a labor union may still qualify for pensions. A pension is an employer managed and funded program. The employer contributes to a fund, invests it, and then pays out a set monthly amount to employees who have hit the required years of service with the company and retired.
PTO is your paid time off. It includes holidays, sick days, and vacation. Sick leave is to be used when you need time off due to illness, injury, or medical care. This can be used for various things such as calling out sick if you wake up feeling poorly, for a mental health day, attending medical appointments, or recovering from a medical procedure. Some companies combine sick leave and vacation into one pool of PTO, but they are commonly separated. Some states and major cities require sick leave to be provided for all employees, including temporary and part-time staff.
Vacation days can be scheduled and taken to go on vacation or for any other reason you choose, as long as your vacation request is approved by your supervisor and employer. Two weeks is the average vacation amount allotted to employees in the U.S. Employees that have been with a company for a long time or are in higher-level positions often are allotted more vacation time.
Holidays are paid holidays off that the employer has designated. Not all government holidays are considered paid holidays for every company. The major ones such as New Years Day, 4th of July, Thanksgiving, and Christmas Day are generally given. There is some variation on whether President’s Day, Memorial Day, Veterans Day, Columbus Day, and other government holidays are granted as paid holidays.
You may also see the term floater mentioned in regards to PTO. Many companies will give you floaters or floating holidays so that you can take significant personal days like your birthday, anniversary, or child’s birthday off as a holiday.
An EAP is an Employee Assistance Plan. It is a free service offered to employees as a resource for counseling, referrals, and other well-being services. An EAP can help you access mental health care, legal services, childcare services, elder care services, and more.
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