A Millennial’s Guide to Employee Benefits
- October 28, 2016
- Posted by: Jeff Gitlen
- Category: Personal Finance
Are you looking to go to work for a company that offers great benefits? Have you landed the perfect position to start your career, but are not sure what type of benefits the company offers?
If you’re starting a new job, one of the first things you’ll need to do is select from among the many benefits plans your employer offers.
In this guide, we introduce you to the types of employee benefits plans that are offered by private, non-profit, and government employers.
Depending on the type of employer you go to work with, you’ll be offered one of four types of retirement plans.
401k or 403k
Most companies offer a 401k plan. You’ll contribute a portion of your pre-tax earnings to your plan and many employers will match 2%-5% of your contributions. 401k plans are offered by major corporations and small local companies. But many millennials are not familiar with retirement plans offered by tax-exempt non-profit organizations, known as a 403b. Churches, schools, some hospitals, and most charitable organizations offer 403b plans. They work just like the 401k plans, allowing you to contribute pre-tax dollars, receive employer matching contributions, and enjoy tax-deferred growth.
457 or Thrift
If you become a state or local government employee, you’ll enroll in a 457 plan. Federal government employees and military service members can enroll in a Thrift Plan. Unlike 401k and 403b, 457 plans have different contribution limits and different guidelines for early withdrawals.
The Affordable Care Act, known as Obamacare, requires companies with 50 or more employees to make health insurance available. Most companies offer 2-3 options to choose from. You’ll want to consider which plan offers the benefits you need at the most affordable premium. If you have pre-existing health conditions, ask your benefits coordinator or plan representative about coverage limitations that may apply to you. You’ll also want to consider the prescription deductible and check the ancillary guide to make sure your medications are covered.
Optical and Dental
Your health plan may have optical and dental riders or your employer may offer separate plans to cover different levels of dental services, glasses and contact lenses, as well as ophthalmology and eye surgery.
Life and Disability
You may be able to select from several life insurance plans. If you choose a term life insurance plan, you’ll want to know if coverage continues after you leave your employer or if coverage limits reduce upon retirement. Many employers offer short- and long-term disability insurance. Many millennials confuse Worker’s Compensation with disability insurance. Disability insurance covers you if you get hurt and cannot work, while Worker’s Compensation only covers for injuries while on the job.
Other types of plans pay you money if you get sick or injured. While different from traditional insurance, many of these plans will pay you directly for transportation and other expenses you incur during your illness.
Flexible Spending and Health Savings Accounts
You can enroll in a flexible spending account, or FSA to help pay for items not covered by your health plan or to cover dependent child care costs. If your health plan has a high deductible, a health savings account, or HSA can defray some of those costs. Unused dollars in your HSA can be rolled over for use in the next calendar year but funds in your FSA will expire at the end of the year.
Other Types of Employee Benefits
Vacation and Sick Pay
After a qualifying period, most employers will offer paid time off that you can use for vacation, sick days, or personal days. Some plans allow you to earn time, for example, 1 hour of paid off-time for every 40 hours worked. Other plans for salaried employees may include 5 vacation days every year.
Family Medical Leave
You can take unpaid time off, often up to 6 months, during a personal illness or care for a family member. The Family Medical Leave Act of 1993 defines yours and your employer’s rights and responsibilities under FMLA.
Reservists on Active Duty
If you are a member of the Reserves or National Guard, your job is protected. USERRA spells out your job rights and your employer's responsibilities while you are on active duty.
Many companies have an employee assistance plan, EAP in place to help employees struggling with issues that could impact their job. Training, counseling, rehabilitation not covered by your health insurance are examples of services offered by an EAP.
Some employers pay for or reimburse your cost of parking or the cost of transit services that you need to get to work. If you’re in sales and use your car, employers may offer mileage reimbursement or a standard vehicle allowance.
Find out if your company offers a tuition reimbursement plan. This is a great way to complete your degree or earn an advanced degree while reducing the need for student loan debt.
Creative Trends in Employee Benefits
Pets are family too, so some companies make pet insurance available as a payroll deduction. Many offer shopping and fitness memberships. Some companies even offer assistance with student loan repayment as an alternative to tuition reimbursement.
Talk to Your Benefits Coordinator
You’ll get some basic information during your orientation, but you’ll want to sit down with your benefits coordinator and learn more about the benefits your employer offers. If you prefer to read online, ask your coordinator to email a list of links to the options you’re interested in. Many employers also have a dedicated resource page on the company website or intranet that offers all of the information you’ll need. Remember, you’ll have the opportunity to change and add options at least once a year. Now that you know what to look for, you can choose your benefits wisely.