Benefits

Traditionally, only full-time employees are eligible for benefits. However, more companies have started providing various benefits for part-time and temporary employees. Be sure to review your employee handbook and make sure you understand the benefits available to you and take advantage of them.

Health insurance, 401(k) plans, social security, and life insurance policies may seem pointless now, but having a plan will make the difference between retiring comfortably or having to work well into your 70s. Right now, taking a position that offers no benefits may seem fine—you’re in good health, don’t need glasses, and are cavity-free. It may not always be that way, so make sure you’re protected and thinking ahead.

Up until now, you’ve probably had insurance provided for you either through your school or by your parents. Under current laws, young adults to 26 years of age can remain on their parents’ insurance plans. Young adults between 19 and 26 are eligible for this regardless of finances, living arrangements, and student, employment, or marital status.

Whether you decide to start your own benefits plan or stay on that of your parents, you should have a basic understanding of employee benefits. The following list is not comprehensive and reflects only some of the more common options available.

Health Insurance

Health insurance is the most common benefit and will cover medical expenses, such as doctor visits, lab tests, and prescriptions. Most companies have a variety of medical coverage plans to choose from, such as HMOs and PPOs. An HMO (health maintenance organization) plan allows you to use only doctors that have been preapproved by your insurance company. A PPO (preferred provider organization) plan allows you to see the doctor of your choosing, but plan deductibles may be higher.

Dental and Vision Insurance

Not every organization will offer a complete benefits package. Often times, employers cut dental and vision insurance plans from employee benefits packages to save money. Most dental and vision insurance policies will cover emergencies and routine checkups.

Retirement

Retirement benefits typically are offered as a 401(k) or 403(b) plan. However much money you decide you want to contribute per pay period is taken from your paycheck pretax (see Note below). This money is stored in a separate interest-bearing account to use once you’ve worked a certain number of years or reached 65 years of age. You can use this money earlier but a penalty fee of 20 percent will be charged.

Note: When money is taken out pretax, it means the money is taken out before taxes have been applied. You are not responsible for paying taxes on that money. For example, if your gross pay for a pay period is $1,100, and you choose to contribute $100 per paycheck toward retirement, income tax will be assessed only on the $1,000 ($1,100 gross pay minus the $100 contribution). Thus, if income taxes in your state are 5 percent, you would pay $50 ($1,000 × 0.05) toward income tax. If the money is taken out after taxes, you would pay $55 ($1,100 × 0.05) toward income tax and then pay the $100 into your retirement fund. In short, any money taken out pretax, saves you money. Retirement distributions are taxed later.

Life Insurance

Life insurance provides money to your beneficiary in the event of your death. Your beneficiary is usually a family member, and the money is used to cover essential expenses and other financial needs.

Disability

Disability benefits pay income lost because of extended illness or disability. Coverage varies from state to state, so make sure to check your employee handbook. These benefits would also be deducted from each paycheck.

Short-term Disability

Short-term disability is temporary income insurance that pays a percentage of your salary. This includes a physician-documented illness, accident, or a planned pregnancy. Coverage is intended to assist with normal expenses in your temporary work absence, for three to six months.

Workers’ Compensation

Workers' compensation is a form of insurance provided by the employer to provide wage replacement and pay medical benefits to employees injured during the course of employment. The employee who takes advantage of this insurance agrees that he or she will not sue the employer for negligence.

Long-term Disability

Once your short-term disability expires, you can request long-term disability pay until you are able to return to work. Long-term disability is usually 50 to 60 percent of your annual salary.

Paid Leave and Sick Days

Paid vacations, sick days, and personal days usually are accrued per pay period. After your probationary period (often 90 days), you will start accruing sick and vacation days. Depending on the organization, these days may roll over or build over the years. Make sure you keep track of your leave and report discrepancies as soon as you notice them.

Some employers offer additional benefits to employees, such as flexible spending accounts, tuition reimbursement, employee assistance programs, and alternative work schedules. Check with your supervisor and the human resources department to discuss all of the options available to you.