Benefits Packages - Salary is not the only thing! (Part I)
November 18, 2009
When evaluating a job offer it is important to consider the total compensation package in addition to the starting salary. If you are weighing the relative merits of more than one offer, really drilling down to the fine print of your benefits package can make the difference between accepting one offer over another. Also be sure to take into account the bonus structure for the position and how often you will be eligible for a pay raise.
Here are some basic elements of a standard benefits package...
Medical Insurance - Find out the details of the coverage, what your out-of-pocket costs will be both up front - i.e. What are they taking out of your paycheck and how often and what your costs will be each time you need to use the plan (for example, office visit co-pays and deductibles). Other key points to compare are when the date of coverage starts - some companies will cover you under their plan from your date of hire, while others have a 30, 90 or even 180 day waiting period. Longer waiting periods will mean added cost to you to purchase short-term insurance coverage.
Dental Insurance - Is this offered as a separate benefit through your employer or rolled into a total healthcare benefits package? What are the costs and how often are they taken out of your paycheck? What services are covered under the plan i.e. how often are X-Rays covered?
Vision Insurance - Often offered alongside health and dental, this is usually a nominal fee and will cover annual exams and periodic coverage of eyeglasses and/or contacts. Check to see what's covered under the employer's plan.
*Some employers now offer coverage for Lasik and other corrective eye surgery - check to see if this perk is part of your prospective employer's plan!
Life, Accidental Death, Travel and Other Insurance - Some employers offer a combination of these different types of insurance - the general rule if you have no dependents is to have enough basic life insurance to cover any expenses, but otherwise not to purchase additional amounts until you feel like you need it. The one exception to this is Disability Insurance.
Disability Insurance - Long-term and Short-term. Pay careful attention to how this benefit is offered and paid for by your employer. It may seem like something you don't need, but consider how you will pay your bills, rent etc. if you are unable to work for an extended period of time, such as 30 days or more, and do not have enough sick and vacation time accrued to cover the time off. Short-term disability usually bridges the gap between the initial period off work and when long-term disability coverage kicks in - usually at 90 days. Usually it's paid out as a percentage of your salary: look at what percentage your salary is paid, on what timetable and for what reasons i.e. many employers use short-term disability as their maternity leave benefit. Another important factor, find out the qualifications for enrollment - many plans require you to enroll in short-term disability during your initial benefits enrollment period.
Vacation, Sick Leave, Personal Days and Holidays - How many days will you accrue a year and how is vacation time accrued? Sick time? Personal Days? Some employers pro-rate vacation time from the date of hire and give each employee a pre-determined amount of vacation each year based on years of service etc. Others have each employee accrue vacation time for each pay period that they have worked. Find out how you can take vacation, if there are any restrictions and if the time will be paid out upon termination of employment with the employer. Also find out if you can purchase additional vacation time and if unused vacation time rolls over from one year to the next. There are several major holidays in the calendar year - find out which ones are observed by your prospective employer and how many there are. Many employers now combine sick days with personal days and will give employees a pre-determined amount of "personal time off." Find out the policy for your prospective employer - how many days are you allotted each year? How is time accrued? If you use it all for vacation, what happens if you get sick?
Retirement Plans, Pension Plans and 401(k) Options - Start saving for these plans from day one on the job and you will never miss the portion of your salary that is being socked away each month to go toward your retirement. While pension plans are a thing of the past for most employers, some companies still have them in place. Look over your different retirement plan options carefully and pay attention to details such as company match - what percentage of your contributions will the company match and be sure to max out on these offers as they are essentially free money. Also pay close attention to the vesting period for each plan - at what point can you walk away with the money if you choose to leave the employer?
Profit Sharing, Stock Options and Employee Stock Purchase Plans-The type and size of the employer that you are considering will determine to a large extent if some of these benefits will be available. If they are part of your offer, consider each one carefully as they can be incredibly lucrative. They are almost always a bit of a gamble, however, and depend on such variables as company performance, the economy and stock market returns.
Stay tuned next week for Part II of this installment which will discuss additional perks associated with benefits packages.
"It's not hard to make decisions when you know what your values are."
Authored by Elisabeth Zimowski.