As graduation season comes to a close there are many young adults such as myself, getting ready to enter the work force. As a recent graduate it can be difficult to decipher the various types of benefits offered by employers and whether or not you are getting a fair offer.
The following is a list of some of the benefits traditionally offered by employers to help give you a head start on understanding your benefits package:
You may choose to contribute a portion of your income (usually pre-taxed) towards your retirement through a pension plan. The most well-known type of pension plan is a defined contribution plan, which is often in the form of a 401(k). A defined contribution plan allows you to invest a predetermined amount of your income in a mutual fund, and if you are lucky, your employer may even match your contribution.
An Individual Retirement Account (IRA) is another option if you would like to invest in your retirement. Unlike a 401(k), an IRA is set up between the account holder and a financial institution and controlled by the account holder.
Young professionals who want to further their education should inquire about whether or not their employer offers tuition reimbursement. If your employer offers tuition reimbursement, be sure to pay close attention to conditions of the reimbursement - there is often a catch. An employer may offer to cover a percentage of your tuition based on your grades or require that you remain an employee for a specified amount of time after completing your education.
Health Insurance Plans
Looking through health insurance plans can be very overwhelming. There are various types of health insurance options such as: Health Maintenance Organization (HMO), Preferred Provider Organizations (PPO) and Exclusive Provider Organization (EPO)
The type of health insurance plan you choose should reflect your current lifestyle and health needs. Young professionals with low health care needs might find a health savings account (HSA) to be most beneficial. An HSA is a savings account that is not taxed and is strictly used for health care expenses. Consumers who use these accounts are usually covered under a high deductible health insurance plan.
Another option for professionals under the age of 26 is to opt out of your employer’s health insurance plan. Since the health insurance benefit offered by my employer is comparable to the health insurance plan I’m currently covered by under my parents’ plan, I have chosen to save some money and stay covered under my mother.
Some employers offer their new employees a signing bonus. This is especially beneficial for young professionals who might need the extra money to get started with furnishing a new apartment and upgrading their closet with professional attire.
It varies with employers, but employees can generally expect approximately two weeks of vacation time per year. While not common, that vacation time might roll over to the following year if not used.
Sick and Personal Time
We all have those days when we are not feeling well at all. Luckily, most employers offer paid sick time. When negotiating your employment contract or deciding between job offers, a good question to ask is whether or not your sick time rolls over from year to year. According to the Bureau of Labor Statistics, the average amount of paid sick time offered by employers in 2012 was 10 days. The number of sick days offered can differ between employers, industries and employee tenure.
In an effort to be more environmentally friendly, some employers offer compensation to employees who use public transportation to commute to work. A previous employer of mine provided $40 as compensation for our weekly metro fares.
Now that you’ve been briefed about the variety of benefit options offered by employers you should be well on your way to understanding your benefits package.
If you found this article useful, be sure to check out these related articles:
Health Savings Account: Is It Right for You?
The Bank of Mom and Dad: When to Shut It Down
What You Need to Know before Buying Your First Car