When you tell someone you’ve been offered a position, you’re bound to be asked two very important questions: what’s the salary and what are the benefits? Yet, while many people seem to get super-sharp hearing when an employer talks about the paycheck they’ll bring home, too many go deaf—or just don’t listen carefully enough—when they start discussing the benefits. This is usually because they’re so busy calculating what they can buy with the money they’re offered.
Employee benefits—sometimes called “fringe benefits”—are items of compensation that are given to an employee in addition to a salary. Whether an employer offers a benefits package and the extent of their offering is often a major determining factor in whether someone will accept a job—as it should be. Most established companies will offer their employees some type of benefits package; start-ups or those with only a handful of employees may not offer benefits because they can’t afford to. Usually, only full-time employees are eligible for benefits. When applying for jobs and choosing the best offer, pay attention to the benefits package an employer provides, and think carefully about choosing a job solely based on salary.
Most Common Benefits
Health insurance: Health insurance is by far the most important benefit an employer can offer. When companies offer health insurance, they either pay your entire monthly premium themselves or pay a portion of your premium. Either way can save you a tremendous amount of money. According to recent research from the Kaiser Family Foundation, the average cost of employer-based health insurance for a single person was $5,429 per year, of which the employee paid only $921. Also, a report from eHealthInsurance found that the average monthly premium paid for individual coverage was $183—which may be a lot to pay on your own each month.
Health insurance plans cover many services, including hospital, medical, dental, vision, and mental health services. Also, many employers are able to offer disability, life, and long-term care insurance.
Retirement savings: Retirement savings benefits are funds set aside to provide people with an income when they end their careers. Given that at age 65, the average American doesn’t have enough money saved to live on comfortably, this is a very valuable benefit. The type of plan companies offers differ, but they generally fall into two types: defined benefit (often referred to as a pension) and defined contribution. Under a defined benefit plan funded by the employer, you are promised a specific monthly benefit upon retirement. The amount is most often calculated through a formula that includes factors such as your salary, age, and the number of years you worked at the company. You tend to have to work a certain number of years to be eligible for this type of benefit. Through a defined contribution plan offered by an employer, such as a 401(k), you contribute money toward your individual account in the plan. Many companies match a certain percentage of your contribution, often after a certain number of years. Upon your retirement, you receive the balance in the account—withdrawing money before retirement incurs fees.
Paid annual/vacation leave: Paid annual/vacation leave is the number of days per year that you may take off for any reason. The number is usually determined by the length of time you have worked for the company. For example, you may be eligible for 10 days annual leave your first year and 15 after your fourth year. Many companies that offer annual/vacation leave require a person to complete the first 90 days of employment (referred to at the Introductory Period) before they can receive this benefit. Some allow you to begin accruing paid leave on your first day.
Paid sick leave: Sick leave days are used when you are unable to work for health reasons. The days normally accrue on a weekly or monthly basis. The number of days given varies by employer.
Paid family sick leave: This type of sick leave allows you to take time off from work for health-related reasons—including to take care of your own health problems, care for a newborn or adopted child, and to care for a family member than is unwell. The number of leave days offered and how they are accrued depends on the employer.
Maternity leave: This allows women, and sometimes men, to take a leave of absence for and after the birth of a child. It also tends to cover caring for a child after adoption. The amount of time given varies per employer, and a woman or man may or may not receive her/his monthly salary as part of this employee benefit.
Telecommuting: Employees are able to work from home a certain number of days or even full-time. Once pretty rare, giving employees the ability to telecommute has become increasingly common—and makes a lot of business sense—given how easy it is now to communicate and get things accomplished via email, phone, and video conferencing. Not only does working from home allow people to better juggle the demands of their home lives and save precious time from being stuck in traffic, it can also lead to more productivity, since there are less interruptions from co-workers and the like.
Stock options: Employees are given stock in the company they work for or are offered them at a discounted price. Sometimes companies match the number of shares of stock an employee buys.
Educational: The employer may pay a portion or all of the costs for work-related coursework and degree programs.
Professional development: The employer may pay the cost of work-related workshops, seminars, conferences, and any training that will provide you with more knowledge in your field.
Child care: The employer pays some or all of the cost of child care or offers onsite child care facilities.
Employee discounts: The employer provides discounts or waives fees on the products or services the company offers. For example, many people who work for airlines are able to fly practically for free, and retail employees can usually expect a discount off the company’s merchandise.