Why you should take advantage of your employee benefits

Many employers tout their benefits package as a reason prospective employees should consider working for them. Of course, this implies that these benefits are valuable enough to warrant influencing someone’s employment decision. But just how important are these benefits, and what are their advantages? Learn how these employer benefits benefit you and what you should consider in a benefits package.

What you'll learn:

• The benefits of a benefits package
• Downsides to employee benefits
• What to look for in a prospective benefits package

The benefits of a benefits package

Group rates

It’s well-known that buying in bulk can save money in the long run, and this same principle also applies to an employer’s benefits package. An organization with many employees can negotiate group rates with insurance companies and benefits providers that exceed any price you are likely to get on your end.

Employer subsidized

Many employers partially subsidize certain benefits, which drastically reduces the price employees pay. This is commonly seen with health insurance and is a big reason why plans through the Health insurance Marketplace are often much more expensive than what an employer offers.

Tax advantages

Many employers offer benefits that provide tax incentives for employees. A common example of this is a 401(k), which allows you to contribute and invest pre-tax money for retirement. While someone who is self-employed can open a self-employed 401(k), the overall package offerings tend to be better at large employers with many people enrolled in the plan. By taking advantage of these benefits, you can reap the rewards of these tax advantages. This can have a huge positive financial impact and makes reaching financial goals easier.

Employer match

As an incentive to help employees save, many employers offer matching funds with some benefits. 401(k) matches are the most common and well-known. For example, an employer could offer a 5% matching contribution to your 401(k) if you contribute 5% of your salary. Health Savings Account (HSA) matches are also common. Matches vary across employers but are a clear financial win for employees. A match essentially boosts your pay, with the primary downside being that new employees may not be able to keep their full match if they leave the company within a few years. Employer matches should be prioritized and are always worth it unless you need the money for immediate basic needs.

Reimbursements and other programs

When thinking of employee benefits, many people think of health insurance, a 401(k), disability insurance, etc. These are certainly important, but employers often offer smaller benefits that are still well worth it. Compared to the standard benefits options, these will vary dramatically across employers, so check your employer’s benefits package to see what is offered. There may be fitness reimbursements, public transportation reimbursements, discount programs, financial wellness and more.

Simplicity

Employee benefits are selected either shortly after starting to work for a new employer or annually during the Open Enrollment period. Going through and selecting benefits this way is much simpler than if you had to do everything on your own. If you have a major life event, like getting married or having a child, you may have the option to update some of your employee benefits, such as health care, outside of the Open Enrollment period. Many employer portals will walk you through the process step-by-step, and your employer’s HR department can assist with any needs or questions you have.

Downsides of employee benefits

Limited options

Because employers negotiate group rates with benefits providers, employees have limited options on the providers they can choose. An employee may only have a couple of health insurance plans to pick from and will need to determine which comes closest to their needs and financial situation.

Varies across employers

Because employers choose what benefits they offer, the quality of benefits packages varies dramatically. Some benefits packages may not provide much of a financial advantage to you, while others provide an extremely high value. There’s not much you can do to improve your current employer’s benefits package (though you can try!), but if you’re currently job searching, you can research and ask about what a prospective employer offers.

What to look for in a prospective benefits package

What is offered

When interviewing for a job, prospective employers should be happy to share what is included in their benefits package. This is important to know, especially for benefits like health insurance that you need.

Insurance costs

In addition to what is offered, try to find out the cost of various insurance plans in a prospective employer’s benefits package. This is just as important as finding out what benefits are offered, as a benefit could cost several times more at one employer than at another.

Matching offers

Because any employer matches essentially boosts your overall pay, you should ask about matching programs a prospective employer offers and consider them in the context of your overall compensation.

Whether you’re looking to get more out of your current employee benefits or evaluating a prospective employer’s benefits, it’s important to know why you should take advantage of benefit offerings. Benefits can have a huge positive impact on your finances, but they do vary drastically across employers. Know what to look for in a benefits package to determine its impact on your finances.