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Salary Isn t Everything Evaluating the Benefits in your Compensation Package
May 12,2008 00:00
by
saroja
Student loans, rent, gas, groceries…okay, yes, salary is important, but when it comes to deciding on a job, it is also important to evaluate your entire compensation package, including medical, retirement and other benefits. Sometimes, the benefits from one company are what set them apart from another company as your new employer. So, do your homework, and make sure you know what types of benefits you want before you start negotiating with a prospective employer. Keep in mind, however, that you should never ask questions regarding salary or compensation packages during an interview. The information provided here should guide you through negotiation only AFTER you have received an offer from a potential employer. Insurance Coverage Most employers will offer some type of health insurance to full-time employees. If your compensation does not include health insurance, make sure that your salary is high enough to cover the expense of buying yourself health insurance. You can call any health insurance company to get a quote for what it would cost per month to insure yourself. If your employer does offer health insurance, you want to make sure that it will meet your needs, and, if applicable, the needs of your family. For example, if you’re not married and want to cover your partner, will your health insurance plan insure him or her? Find out how much insurance coverage is offered, and whether the premium is deducted from your paycheck. If it is, how much is the deductible? Are there health insurance options that you can review? What restrictions or limitations are there with each option? If you or a family-member has a pre-existing condition, make sure that the condition will be covered by the insurer. Also find out when your coverage will begin. Depending on your resignation date, your work start date and the start date of the coverage, you might have to get coverage through COBRA from your former health insurance provider. Additionally, find out if the employer will cover vision, dental and prescription expenses, and if so, what the limits are. Many employers also provide life insurance, and some even require that you get it. They may also offer short- or long-term disability insurance. If they do, make sure that you get all of the details of both types of insurance, how they will cover you and/or your family, and how much they will cost you per month before you make a decision about whether to accept the job. Retirement Plans Defined-benefit pensions – traditional pensions to which your employer makes all contributions, and decides how to invest the money. The contributions will increase as you get closer to retirement age. At retirement, you’ll receive a promised payout based on your age, salary and number of years of service to that company. The longer you stay with one company, the larger the sum of money you’ll receive when you retire. If you only plan on staying with the company for two or three years, this pension is probably not the best retirement plan for you. Cash-balance plans – also assures a specific payout at retirement. Your employer will contribute a set amount for all employees, but that amount does not depend upon your age or the number of years on the job. If you are planning on leaving the company after only a few years, your cash-balance plan would have more money than a defined-benefit pension would. It is also easy to roll over that lump sum into another retirement account. Defined-contribution plans – the most popular version of this plan is the 401(k). With this type of plan, you choose how the money is invested. You will contribute to the account, and usually your employer will too, but sometimes only after a pre-determined period of service. The employer may match your contribution or may have a pre-set amount that they contribute, and that is something you should investigate before accepting an offer. When it comes time for payout, either due to retirement or the transition to a new employer, you may either get a lump sum based on how much the account is worth after investment gains and losses, or you may leave it in the 401(k) plan or roll it over to another retirement account. Vacation, Sick Time & Holidays If you’re a full-time employee, you should have vacation and sick-time allowances, and most employers allow several holidays for all employees each year. Find out when you begin to accrue vacation and sick time, and at what rate it accrues. Also, does the employer require a specific amount of service time before you can take a vacation or sick day? If you have children or care for elderly parents, you should also find out about the company’s family leave policy. Some companies offer paid time-off for certain family situations, so find out what your employer offers for your family. Perks To stay competitive, many employers also offer some additional perks to their employees. These can include tuition reimbursement or assistance, flex-time, gym memberships, casual dress codes, flexible spending accounts and more. Find out what perks are offered, and how they might save you money if you choose to accept an offer with that employer. If the employer does offer tuition reimbursement, find out how long you must be employed, and what the requirements for use are before you accept the job. If you have questions about how to decide between multiple employment offers or questions about benefits, arrange an appointment with your CMC Advisor. Call 312-567-6800 to schedule your appointment today. http://technews.iit.edu/index.php?id=1077 |