In today’s competitive job market, a generous benefits package is critical to attract and retain top talent. Approximately 60 percent of people report that benefits and other perks are a major factor when deciding whether to accept a job offer, according to a Glassdoor Employment Confidence Survey. The survey also found that 80 percent of employees would choose extra benefits over a pay raise.
Navigating the complex world of employee benefits can often be difficult for employees. Some workers may be confused about their options or unsure of what plans to choose for themselves or their families. When comparing plans, it is important to keep several aspects in mind, such as cost, coverage options, and features. A comprehensive employee benefits package can be a win-win for both an organization and its workers. Here is an employee benefits guide to help you.
An Employee Benefits Guide For What To Look For In A Benefits Package
When a person receives a job offer, they are typically given information about the company’s benefits package. This benefits package acts as an extension to their compensation and may offer considerable value outside the person’s normal wages. Benefits packages can vary from company to company with some businesses offering more comprehensive and competitive benefits.
The evaluation of a benefits package should begin before a job offer is accepted. While it is easy to fixate on salary alone, the benefits offered by a particular company may often far outweigh wages. Some companies offer employee benefits packages that have a monetary value worth thousands of dollars that can make some job offers with lower-than-expected salaries worth accepting.
Employee benefits can take on many forms, ranging from group health insurance to paid parental leave. Here is a look at some of the most sought-after employee benefits and what to consider when choosing a plan.
Health Insurance
Approximately 56 percent of employees are covered by health plans offered by their employers, according to a KFF 2021 Employer Health Benefits Survey. While employees are not legally required to use their workplace health insurance, participating in a group health insurance plan is often more cost-effective than purchasing health insurance elsewhere. Employer-based health insurance has to be considered “affordable,” meaning it cannot cost more than 9.61 percent of the employee’s income in 2022.
Some companies only offer one type of health insurance plan, while others may allow workers to choose from several plans. In either circumstance, it is important to understand the category of the plan being offered. Employer-sponsored health insurance plans are available in two main types: defined benefit plans and defined contribution plans.
With a defined benefits plan, the employer offers a group plan and the employee makes choices based on what is offered. With a defined contribution plan, the employer provides an allowance to spend on private benefits marketplaces to buy health insurance and other products, such as life insurance.
Also, pay attention to the type of health plan and what it includes. Health maintenance organizations (HMOs) often have strict networks and require patients to get a referral to see specialists. A preferred provider organization (PPO) allows patients to bypass the referral process and go out of network but at a higher cost. Exclusive provider organizations (EPOs) also have a strict network like HMOs but do not require referrals.
Life And Disability Insurance
Both life and disability insurance are highly sought-after benefits that can protect employees and their families in times of crisis. Group life insurance provides protection for a specific period of time and pays out a benefit to a named beneficiary, which could be a relative, friend, acquaintance, trust or charity. Life insurance can provide employees with peace of mind that if anything should ever happen to them, their families would receive monetary assistance.
When life insurance is provided through an employer as part of a group plan, employees can enjoy low group rates. Employees also have the option to name and change the beneficiaries on the policy at any time. Most life insurance plans offered through a company are guaranteed, meaning that even people with serious medical conditions can qualify.
Group disability insurance is typically divided into two main types: short-term disability and long-term disability. Short-term disability insurance pays out a percentage of the employee’s salary if he or she should become temporarily disabled. Most short-term disability insurance policies pay out between 40 and 65 percent of the worker’s pre-disability base salary. Long-term disability typically picks up where short-term disability insurance leaves off and pays an average percentage of 50 to 60 percent of the salary.
401(k) Plans
A 401(k) plan is a type of retirement savings plan that many businesses offer to help employees save for their future. An employee that enrolls in a 401(k) agrees to have a portion of their paycheck paid directly into their retirement account. Many employers will choose to match employee contributions up to a specified limit. Employees then get to choose among a variety of investment options, such as mutual funds.
There are two main types of 401(k) plans. Traditional 401(k)s involve the deduction of employee contributions from gross income. This means that contributions are taken from the employee’s pay before income taxes are deducted. Traditional 401(k)s allows employees to reduce their taxable income and claim an annual tax deduction. Taxes are not due on this money until the employee withdraws the money, usually at retirement.
A Roth 401(k) has contributions that are deducted from the employee’s after-tax income. This means that all contributions come from the worker’s pay after income taxes have been deducted. With a Roth 401(k), there is no tax deduction and no additional taxes are due when the money is withdrawn at retirement or at age 59-1/2 if you have had the account for at least five years.
Dental Insurance
Dental insurance provides employees with coverage to help pay for dental services. A dental insurance plan will usually cover all or part of dental exams, cleanings, and other services ranging from routine appointments to more complicated procedures. For example, most dental policies will cover a portion of the cost of crowns, fillings, root canals and oral surgery. Some policies may even cover orthodontics and periodontics, such as bridges and dentures. Dental insurance is similar to health insurance but the premiums are usually much lower.
When an employee selects a plan that uses in-network dentists, the dental plan will usually pay 100 percent of all preventive care, such as exams, cleanings, and X-rays. Basic procedures, such as extractions, fillings, and root canals, are usually covered at 80 percent. More major procedures, such as bridges, crowns, and implants, may only be covered at 50 percent.
Vision Insurance
Choosing a vision plan depends on the employee’s unique needs and budget. Ideally, a person should choose a plan that covers annual vision exams, frames, and contact lenses. More advanced plans may offer costly services like laser vision correction with low out-of-pocket costs. Pay attention to what is included in the plan, including coverage that may be needed in the future, such as bifocals, blue light lenses, or cataract surgery.
Vision care needs can dramatically change over a person’s lifetime. While a person may not need vision correction at a young age, it is still important to undergo regular eye care visits to ensure the health of the eyes. Older employees will likely require more extensive vision plans that cover yearly visits, eyeglasses, and other essential services.
The Bottom Line For Your Employee Benefits Guide
It is common to be confused about employee benefits options and what plan is best for a particular employee and his or her family. Benefit plans can be altered during enrollment periods, which are typically held once a year. However, an employee can make changes anytime if the change qualifies as a life event. Examples of qualifying life events include loss of health coverage, changes in household (e.g., having a baby), changes in residence, and similar changes.
If offered employee benefits when starting a new job, it is wise to accept these benefits. Younger employees can get a good head start on building a retirement nest egg and maintaining proper health insurance and other policies for themselves and their families.
How A Benefits Consultant Can Ensure Your Business Is Covered
Working with an experienced benefits consultant can help ensure that companies choose benefits that will attract and retain employees while giving them a competitive edge. Benefits consultants assist businesses with planning and education to ensure that business leaders are aware of all their options.
After the planning process, a benefits consultant can help assess the benefits’ performance and compare the company’s offerings to other businesses and market trends. Benefits consultants can help organizations develop a customized plan that fits the business’s unique needs and budget. They can also help companies in communicating benefits options to employees.
Speak With an Employee Benefits Advisor for More Information
Employee benefits represent an important component of compensation packages. Helping with an employee benefits guide to choose the right benefits for employees can increase workplace performance, enhance worker morale, and reduce absences due to preventable illnesses.
Working with a reputable employee benefits advisor is a great way to create and maintain an attractive and competitive employee benefits package. For more information on employee benefits guide and about choosing employee benefits plans or to inquire about comprehensive employee benefits consulting services, contact the knowledgeable team at New City Insurance.