Which Employee Benefits Should You Choose?
Working has its benefits. Literally. Most employers offer a range of employee benefits that can help you make the most of your salary, compensation, and the time that you put in on the job.
Here are some of the most common employee benefits that you should consider taking advantage of if your employer offers them.
401(k) Plans And Saving For Retirement
A 401(k) plan provides a tax-advantaged way for you to save for retirement. The IRS sets a maximum amount that can be contributed to a 401(k) annually; the amount can change from year to year.
Mutual funds, the most common investment choice in a 401(k), allow you to decide how you would like your contributions invested. If you change your mind down the road, you’ll be able to decide on a different strategy that you feel best suits your financial needs at that time.
In addition to money market fund investing, you’ll have the option to choose from stock and bond mutual funds. Keep in mind that a stock-based fund is riskier than a money market or bond mutual fund, both of which could be good choices for employees nearing retirement.
Withholding Taxes From Your Earnings
Although not necessarily considered a benefit, many companies withhold taxes for you, making your IRS financial decisions a bit easier. To have taxes withheld from your earnings, you’ll need to complete an IRS W-4 Form, which enables the employer to determine your level of taxation. You’ll need to provide your Social Security number, your name and address, and the number of allowances you wish to claim. You can count yourself as one allowance; if you’re married, you can add another allowance, and if you have children you can list each of them as an allowance. The more allowances listed on your W-4 form, the less amount of money will be deducted from your check.
As an employee, you may be offered medical and health insurance, and also have the option of choosing between a Preferred Provider Option (PPO) or a Health Maintenance Organization (HMO).
Doctors who are part of a PPO have relationships with specific insurance companies, but you can opt to see a doctor that’s not on the PPO list and still receive partial payment for the services you receive. With a PPO, you might find yourself paying more out-of-pocket expenses, but you’ll most likely encounter fewer restrictions when it comes to selecting a physician.
With an HMO, you’ll be able to visit doctors who contract with a specific insurance company. If you have a doctor that you prefer to use, check to see if that physician is a member of the HMO. While HMOs can cost less, you may need to be flexible when it comes to choosing a doctor and a hospital.
Dental And Vision Plans
If you’re thinking about an employer-offered dental plan, consider your past dental history. Rarely have dental issues? You may find it’s more expensive to pay for dental insurance than paying for dental work out of pocket.
The same thinking applies to a vision plan: Review the covered services and estimate how often you think you might need them. Some services might be offered through a Multiple Employer Welfare Arrangement (MEWA), in which a small business joins with other small businesses to provide benefits to their employees at reduced costs.
Disability And Life Insurance
With disability insurance, you would receive compensation instead of income in the event that you’re unable to work because of illness, injury, or a disability. Oftentimes, disability insurance provides a bridge that can help support you–and your family–until you’re able to resume work.
Employer-provided life insurance is designed to compensate your survivors for your lost wages and income should you die while employed. If you’re single and not responsible for supporting anyone else financially, you might feel that life insurance isn’t necessary. But if you have a family that depends on you for monetary support, you may want to give some thought to how much money they would need in the event of your death.