Employer benefits packages are often overlooked by job searchers. Once you have found your dream job or your dream salary, the questions pretty much stop there. But if you are considering more than one job offer, or deciding whether to leave your current job for a lateral move, employer benefits may factor heavily in your decision.
What Benefit Packages Include
Benefits packages—including health insurance, retirement plans, vacation and sick leave, and life and disability insurance—can represent up to 30% of your compensation.
How to Compare Employer Benefits Packages
Great benefits can help increase job satisfaction and help you make or save more money over time. Here’s what to pay attention to when comparing employer benefits:
There are different types of retirement plans, and companies may offer a combination that includes more than one. You can start to evaluate them by defining your terms.
Some companies offer what is known as defined benefit plans, which most people would call traditional pensions. Employers offering defined benefit plans make regular contributions to the plan, and the plan guarantees a certain amount of monthly income for the employee in retirement.
The other common option is a defined contribution plan, which includes plans like the 401(k). In this type of plan, employees make regular contributions to the account through their pre-tax paychecks. The money is invested and may grow over time, but there is no guaranteed return, and the employee manages both the investment and the distributions.
Small companies may instead offer an individual retirement account (IRA), SEP IRA, or SIMPLE IRA. These work like a 401(k), but may have different contribution limits. Roth IRAs may also be offered, into which you put after-tax dollars, but the money is not taxed again when the money is withdrawn at retirement.
When an employer offers a defined contribution plan or IRA, the employer may also match contributions, which is an added benefit. Some employers will match 50% of the amount you put into the account, up to 6% of income. The plan also may be vested, which means the amount of benefits you receive accrues over time.
If you are considering a full-time job at a mid-size or large company, health insurance will likely be part of the benefits offered. A full 83% of full-time employees at U.S. companies with more than 100 workers have health insurance through work, according to the Bureau of Labor Statistics.
The average employer in 2018 paid about $6,715 for individual coverage, with the employee contributing about $1,427. Employers paid an average $19,565 for family coverage, with workers contributing about $5,431 of that in 2018, according to Kaiser Family Foundation.
Numbers like those explain why employer health coverage is so valuable. If you have an option, look for the coverage you need, check if your doctor is in-network, and compare how much each plan costs in terms of monthly paycheck deductions as well as deductibles, co-payments, and prescriptions.
Dental and Vision Coverage
Around 60% of Americans still get dental coverage and around the same number have private health insurance that includes vision. Dental and vision coverage will not likely sway your job choice, but if you are considering two offers, check to see if your providers are in-network and how much you will pay in annual premiums, co-pays, and deductibles.
Nearly two-thirds of full-time employees are offered life insurance through work, and it’s one of the most popular benefits. About 97% of people participate in the company’s life insurance benefits. It’s inexpensive, and often available without any physical tests, and typically pays at least a year’s worth of salary should something happen to you. Find out if the company pays for coverage and how much, and if you as an employee can purchase additional coverage at a discounted rate.
Companies with more than 100 employees will probably offer some sort of disability insurance benefit. But most of it is short-term disability, which covers a percentage of your salary if you are out of work for a period of time that goes beyond your allotted vacation or sick time.
The less common option is long-term disability, which is offered by less than half of U.S. employers, according to LIMRA, a financial services trade association. Since an estimated one in five employees will miss work due to disability, insurance that covers months or years of missed work if you become ill or injured outside of work is a valuable benefit.
Vacations are not guaranteed in the United States, but Americans with five years of tenure at a company get an average of 15 days of paid vacation time per year. A job offer that includes more than that may be worth considering if time off is important to you. Remember to verify if sick days and holidays are included in vacation time.
Some companies now offer “paid time off” (PTO) days that can seem very generous on the surface. Remember, PTO can include all vacation, personal, sick, and holiday time.
Whether you have kids now or not, on-site or company-sponsored daycare is a valuable benefit. Daycare is proven to increase employee retention, productivity, and referrals. The availability of on-site daycare is a big influence on prospective employees who could be excellent co-workers. When considering a job at a company offering daycare, you can ask to tour the daycare facility and speak to parents who use it.
Quality of life is more difficult to quantify, and it may be difficult to get a clear picture from a prospective employer of how life will be on the job. Learn about the hours you are expected to put in each week and speak with others at the company. Remember, your time has value. If your workweek is 40 hours, you are earning more per hour than if you put in 60-hour weeks.
If a company extends a degree of schedule flexibility to hard-working employees, the job may be worth more than another offering a few thousand extra dollars in salary.