Benefits are any perks offered to employees in addition to salary. The most common benefits are medical, disability, and life insurance; retirement benefits; paid time off; and fringe benefits.
Benefits can be quite valuable. Medical insurance alone can cost several hundred dollars a month. That’s why it’s important to consider benefits as part of your total compensation. Make sure you understand which ones you will receive.
Medical Insurance
Medical insurance covers the costs of physician and surgeon fees, hospital rooms, and prescription drugs. Dental and optical care might be offered as part of an overall benefits package. It may be offered as separate pieces or not covered at all. Coverage can sometimes include the employee’s family (dependents).
Employers usually pay all or part of the premium for employee medical insurance. Often employees pay a percentage of the monthly cost. The cost of insurance through an employer.
Disability Insurance
Disability insurance replaces all or part of the income that is lost when a worker is unable to perform their job because of illness or injury. This benefit is not commonly offered. There are two main types of disability insurance:
–Short-term disability insurance begins right away or within a few weeks of an accident, illness, or some other disability. For example, someone hurt in a car accident would be offered a few paid weeks to recover.
–Long-term disability insurance provides benefits to an employee when a long-term or permanent illness, injury, or disability leaves the individual unable to perform his or her job. For example, an employee with spinal injuries could be entitled to long-term disability benefits until retirement age.
Life Insurance
Life insurance protects your family in case you die. Benefits are paid all at once to the beneficiaries of the policy — usually a spouse or children.
You can get life insurance through an employer if they sponsor a group plan. Company-sponsored life insurance plans are standard for almost all full-time workers in medium and large firms across the country. You can also buy it privately, but this is usually more expensive.
Retirement Benefits
Retirement benefits are funds set aside to provide people with an income or pension when they end their careers. Retirement plans fit into two general categories:
–In defined benefit plans (sometimes called pension plans), the benefit amount is pre-determined based on salary and the years of service. In these plans, the employer bears the risk of the investment.
–In defined contribution plans (such as a 401k plan), employer or employee contributions are specified, but the benefit amount is usually tied to investment returns, which are not guaranteed.
Domestic Partner Benefits
Some employers offer benefits to unmarried domestic partners, while others do not. Requirements to qualify vary from simply signing a form to showing proof of domestic partnership or financial interdependence.
A common domestic-partner benefit is access to family health insurance, but that benefit is considered taxable income by the federal government.
Paid Time Off
Paid time off (also referred to as PTO) is earned by employees while they work. The three common types of paid time off are holidays, sick leave, and vacation leave.
Most employees earn these as separate benefits. About 10 percent of Minnesota employers offer consolidated PTO. This combines sick leave and vacation into one account for the employee to use as needed.
Fringe Benefits
Fringe benefits are a variety of non-cash payments are used to attract and retain talented employees. They may include tuition assistance, flexible medical or child-care spending accounts (pre-tax accounts to pay qualified expenses), other child-care benefits, and non-production bonuses (bonuses not tied to performance).
Tuition reimbursement can be an especially important benefit if you plan to take classes in your personal time. This can be a great way to advance in your career. Most firms offering tuition assistance require that courses are related to job duties.
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