When dealing with your career, it is no doubt that the first talking point almost always revolves around your salary, both when you are employed and during negotiations. But it may come as a surprise that every employee does not take into consideration the many other benefits that come with their package. Employee benefits like health insurance, contributions to retirement accounts, leave days, and many others can drastically improve an employee’s financial standing as well as their work-life balance. Learning to maximize these benefits can not only help employees improve their current financial state but also ensure them long-term financial security.
In this article, we’ll show you step-by-step how to evaluate and leverage your employee benefits and compensation package.
1. Understanding The Full Scope of Benefits
Your compensation package comes with a lot of benefits aside from your salary. Consider steps to maximize them by examining every detail of your benefits package. That means looking at their health plans, retirement options, PTO, and other supplemental benefits a little closer.
- Health insurance: This almost always is one of the top benefits and can have a major impact. Make sure to check the plans offered (HMO, PPO, etc.), coverage levels, and what you will pay. Also look for extras like dental, vision, or mental health coverage.
- Retirement plans: These are also becoming very common, especially at larger firms. Employers usually have 401(k) plans or pensions these days. See if your company matches contributions; it’s best to maximize this with employer contributions.
- Paid time off (PTO): This is the catch-all term for vacation days, personal days, parental leave, and even sick leave. Some employers offer paid Sick and volunteer leave.
- Bonuses and Incentives: Many employees get bonuses for goal achievements, profit-sharing, and stock options. Get as much detail as you can on all of these and how to qualify for them.
- Flexible spending accounts (FSAs) or health savings accounts (HSAs): These accounts provide the option to save money for dependent care or medical expenses with tax benefits attached. Make it a point to study how to use these accounts if your employer provides them.
- Education assistance: Available in some firms is tuition reimbursement and also payment assistance for student loans. If you are in need of furthering your education or decreasing your debts, this is financially helpful.
- Life and disability insurance: Life insurance and temporary/ permanent disability coverage are provided by a good number of employers. Make sure you know what you are covered under, but if you need additional coverage, then consider buying.
Go through your benefits documents and highlight the ones that will be most advantageous to you. Take note that most benefits include healthcare and retirement options which are likely to have tax implications or financial benefits in the future.
2. Make Contributions to Your Retirement Plan(A Special Note For Matching Contributions)
Very often in a compensation package, there is one benefit which stands out above the rest, and that is the chance of saving for retirement. This is essential as many companies will likely offer a 401K plan or something similar to a retirement savings structure.
- Be Sure To Make The Most Out Of Employer Matching: Matching contribution 401K plans are common in many companies. Make sure to contribute enough to meet the full offer match multiplier to maximize the perks. This is free money. So for example, if your employer matches 50 percent of the first 6 percent of your contributions in a four-oh-one k plan, then by contributing 6 percent for that portion, you will effectively double your retirement savings. Not contributing enough to get the full match is stupid.
- Other Retirement Accounts: Check what other options your employer provides. These can include pensions or even a 403b plan if it is towards an education non-profit. Look at current numbers and compare how this affects your 401K plan and contribute accordingly for the best return.
3. Maximize Health Benefits and Maintain Preventive Care
The selection of health insurance benefits is always an intricate decision. If the scheme you pick caters to your ideal requirements, then make it your topmost priority.
- Choose the best plan applicable to you: Your organization has given you options regarding the healthcare plans available to you. Make sure you look at the premiums, deductibles, copayments, and even the area covered in the network. If you are usually on the healthier side, you could take advantage of a high-deductible health plan (HDHP) along with a Health Saving Account (HSA) as it greatly reduces the premium while allowing you to save money for future healthcare needs tax-free.
- Take advantage of preventative healthcare services: Numerous preventive care services are now offered by health insurance plans at no cost. Services include annual checkups, immunizations, and active screenings. By using these services earlier on graspable health issues, you can truly ensure avoidance of complex and expensive health procedures later on.
- Make the most of your employer provided Health Spending Accounts (FSA/HSA): Remember to utilize the FSA or HSA offered by your employer. Flexible Spending Accounts (FSA) allow you to save pre-tax money on certain medical expenses. Health Savings Accounts (HSA) have tax free growth and can be used tax free for specified medical spending. HSAs are unique because the funds don’t expire and can even be used in retirement for health care spending.
4. Optimize Other Paid Time Off (PTO) Leave Benefits
A lot of employees do not capitalize on their paid time off (PTO) benefits. PTO is critical and part of your overall compensation so ensure you are leveraging it efficiently.
- Use your vacation days: Letting vacation days add up is not a good practice. Regular holidays help in the reduction of stress, improved work-life balance, and increase productivity towards work. In case your employer has a “use-it-or-lose-it” policy, non-utilization of vacation days is essentially monetary loss.
- Look for rollover policies: Certain employers allow PTO to extend into subsequent years, while others operate under a “use it or lose it” system. Make sure you learn your company’s policy and use it to your advantage. If your employer gives you additional PTO days, consider taking a long weekend or a short staycation to relax and rejuvenate.
- Think about family or sick leave: If dealing with personal or family health matters, research the possibility of add-on paid or unpaid leave options such as family medical leave (FMLA) or short term disability benefits. Certain employers provide generous paid leave to new parents and caregivers. Understanding these options can enable you to retain financial resources during trying times.
5. Maximize Professional Development and Educational Benefits
Education assistance is often offered, but it remains one of the most overlooked perks in employee compensation packages. If you are eligible for tuition reimbursement or professional development programs, your associated expenses for further education or skills development opportunities will greatly reduce.
- Pursue certifications or degrees: Make sure to claim any professional certification courses or tuition reimbursement offered by your employer. A new degree or professional certification can help you advance in your careers at little to no additional costs.
- Attend seminars or workshops: Employers often provide stipends for attending professional conferences, seminars, or workshops. These events can help you improve your skillset and expand your professional contacts with friendly employer financial assistance.
6. Review Your Insurance Coverage and Consider Additional Needs
Most people have life and disability insurance as part of their benefits package, but it’s vital to determine if you have the right amount of coverage needed.
- Evaluate life insurance: Check the level of life insurance your employer provides. If you are financially responsible for others, you may want to purchase additional coverage beyond what your employer offers through an individual policy.
- Thinking about disability insurance: Both short-term and long-term disability insurances can cover part of your income if you cannot work because of some illness or injury. If this benefit is not part of your package or if you think the benefit is insufficient, consider getting additional coverage.
7. Understand Tax Implications and Optimize Your Withholdings
Lastly, don’t forget to improve your tax situation. Your employer may provide benefits that are taxed favorably, such as FSAs, HSAs, or 401(k) contributions. Look at the amount of money being withheld from your paystub in relation to your tax situation. You might want to change your withholding so that you’re neither over paying, nor under paying taxes.
Conclusion
Your financial well-being, both in the short and long term, can be improved with the right approach to your employee benefits and remuneration packages. Knowing how to navigate and utilize your retirement accounts, health care plans, leave benefits, educational support, and insurance can make a difference in your financial well-being. Being proactive and well-informed helps you to make smarter choices that enhance your overall compensation. Don’t be passive when it comes to your entitlements like $10,000 – spare time to know the full scope of what is offered and positioned to work towards financial stability.