One of the most confusing issues surrounding starting a new job is the benefits package. Some employers offer so many different perks that it may be difficult to decipher which programs you want to use and which to disregard. Understanding the basics of benefits will help you decide what is best for yourself and your family.
Purchasing health insurance provides financial protection in case you get injured or fall ill. However, most employers offer more than one plan, which can be confusing. You will want to understand the deductibles, the limits of each plan, and what is covered. For example, some health plans cover mental health, chiropractic treatments, and fertility treatments. Other plans do not. Make sure you understand what is excluded from coverage before you make a decision. If the health insurance plans cover prescription medications, read through the fine print to see if the monthly amount is capped or if certain classes of drugs are excluded from coverage.
Dental and Optical Insurances
These are usually offered separately, as some people feel they have no need of these insurances. However, if you have teeth or eyesight that are less than perfect, these products may offer a great deal of savings. In the plan description, you should be able to read about any limitations of the plan. For example some less-expensive dental plans do not cover root canals or crowns, but will cover the cost to have the tooth extracted. Optical plans usually only cover a portion of the cost of new glasses, especially features like transition lenses than darken in sunlight or scratch-resistant coatings.
Retirement Plans with Employer Matching
The vast majority of employers offer a 401(k) plan where you can sock away a portion of each paycheck for retirement. The funds are then kept in a variety of stock or bonds, to grow until you need them. As an added perk, some companies will match what you put into your 401(k), up to a certain amount. For example, an employer may agree to match your savings up to two percent. This means that if you participate in the plan and put two percent of each paycheck aside for retirement, your employer will add an equal amount to your 401(k). Some companies will require you to work for them for a set period of time before the match is yours to keep, usually several years. Once you have met that stipulated amount of time, you are considered ‘vested’ and the entire match is yours to keep.
Flexible Spending Accounts
Some workplaces will offer you the chance to put money aside for specific spending types, such as medical spending not covered by insurance. You can then use the funds for procedures or items your insurance will not cover, like cosmetic surgery or fertility treatments. Some of these flexible spending accounts are tax free. Read the fine print to understand all of the limitations and requirements before you sing up.
Choosing your benefits from an employer’s offerings can be confusing. By taking the time to understand the basics of these types of plans, you can make the best choice for you and your loved ones.