Understanding Your Employee Benefits

By: Jessica Chou

At the beginning of the week, I started seeing a flood of excited posts on Instagram about the long holiday weekend. Some were looking forward to a 5-day weekend (you heard me, FIVE. DAYS.), while others have Thursday (July 4th) off, but have to go back to work on Friday. Poor souls. While the government has established public holidays, that doesn’t mean all employers are required to give employees days off or pay employees overtime to work on holidays. Yes, there are common holidays that we all get off like New Years’ Day, Thanksgiving, and Christmas, to name a few, but it’s really up to the companies to decide how much time off to give around these holidays.

Just as companies differ when it comes to offering time off, they also differ when it comes to offering employee benefits.

If you’re applying for a new job or received a full-time job offer, be sure to consider the whole offer and not just the salary. This means, take into account all the employee benefits that are part of the offer package.

Here are a few common employee benefits and what they mean:

Health Insurance

The most common benefit is health insurance. Some companies may cover 100% of your medical, dental, and vision insurance, while others may only cover a certain percentage. Some companies may give you the option between PPO insurance (allowing you more flexible and wider coverage) or HMO insurance (more affordable, but limited network), while some companies may only offer one of the two. Even further, some companies may allow you to cover a significant other and family members. This could also be why some of you have health insurance through your parents until the age of 26 in the States. Health insurance is a basic and important employee benefit, so make sure you understand what your company is offering when it comes to medical, dental, and vision and what you would be expected to cover, if anything.

PTO (Paid time off)

Paid time off is exactly what it sounds like — you’re able to take days off while still getting paid. Pretty sweet, right? Oftentimes, companies have you earn PTO. That means, you earn more PTO, the longer you’ve worked. PTO usually comes in 3 forms - holidays, vacation days, and sick days. Some companies will spell out their PTO for you - like 10 paid holiday days, 10 vacation days, 8 sick-leave days, 2 personal days. While other companies might a bit more flexible.

However, a lot of newer companies and startups are now offering unlimited paid time off to compete with more traditional, larger companies. Unlimited paid time off sounds too good to be true, doesn’t it? Well, that’s because it sort of is. Don’t think that you can work 1 day out of the year and make a full salary. That’s just not going to happen. The idea of unlimited paid time off can actually do more harm than good in the sense that when employees are given free rein to decide when and how much time to take off…they don’t end up doing it at all!

401k and Employer Match

Ohhh those 4 mystery characters…401k. What is it and why does it matter? A 401k is a company-sponsored retirement plan. Think of it this way — your company wants to encourage you to save for retirement, so essentially, they’ll allow you to automatically take a percentage out of your pay check and put it into a retirement account, called a 401k. In fact, some companies will match what you put in as an added incentive.

How does it work? Some companies offer dollar-to-dollar matching up to a certain percent. Other companies will match a percentage of what you put in. Here’s an example: Let’s say you make $50,000 a year and your company offers 100% match, up to 3% of your income. What the heck does this mean?! Well, 3% of your income is $1,500. So your company will contribute $1,500 to your 401k, IF you contribute at least $1,500 (that’s where the “matching” comes in). Of course, you can totally go above and beyond and contribute more than $1,500…but know that only $1,500 will be matched by the company. Long story short, it’s free money from your company, so you should absolutely opt-in to your company’s 401k plan if you’re able to!

Companies differ quite a bit when it comes to their 401k & employer matching plans, so be sure to clarify with your HR department what your company offers.

Misc

Some newer benefits I’ve been hearing about include gym stipends, mental health stipends (yasssss, so important), education stipends (money to cover any courses that are relevant to your work), and even egg-freezing coverage (!!).

As you look for a new job or consider a job offer, be sure to take all of these employee benefits into account. If the salary isn’t your desired salary, ask yourself if the benefits make up for it. Employee benefits can quickly add up to a several thousands of dollars a year.

Have questions or comments about employee benefits? Leave them below!

A few extra reads:

ElleVest - How Does Employer 401(k) Matching Work?

The Balance - Understanding Your Employee Benefits