Every employer wants an awesome team. But to want is not enough, and to gather one is not enough either. Employers should know how to make their workforce stick around. Any secret recipe? Yes – employee benefits. Did you know that 75% of employees said they’re more likely to stay with their employer because of their benefits program?
But do employees understand how to make most of their employee benefits? Not always. Some just take them for granted while others underestimate them. And that can get employees and their families in trouble in times of need. Below are five crucial employee benefits and a guide of how to make most of them.
It’s the king of all benefits. See for yourself – 40% of workers would take a pay cut for a better health insurance. Many employees report that choosing a health insurance plan is a process they wish they never went through. It’s stressful and confusing. So why not consider the help your employer can offer in that regard? Your coverage should be comprehensive and cost-effective. So let’s make sure you know how to tell whether it is.
Review your coverage in case of major life changes such as marriage, having children, health problems, and upcoming retirement.
Compare HMO/PPO plans. You may be able to choose between the two. PPO is usually more flexible, while HMO is more beneficial when it comes to price.
Know what exactly the insurance covers. Options like preventive care, physical therapy, prescription drugs might be included or not.
Calculate the price rationally. The premium isn’t all there is to it. Low-cost plans are appealing at first. But remember to compare annual deductibles, meaning the sum you pay before your insurance starts. Or the co-payments – the fixed sum you pay for a service. As well as pocket maximums, which are the most you will have to pay before the insurance pays 100%. In the end, a lower premium might mean higher pocket expenses.
And as a final thought, see if dental and vision coverages are available. Those are good for the most part. Also, be aware that if you work for a small company, your employee benefits can be much more under the Affordable Care Act.
If you think that having a disability insurance is a waste of time, here is something to change your mind. Over 1 in 4 of Americans become disabled before retirement. It does not mean that you will be one of them, but there are no guarantees in life. So take your disability insurance seriously.
Find out what kind of insurance your employer provides. It could be short-term (up to two years) as well as long-term. Long-term coverages can be more expensive but will make you feel safer.
Understand the difference between workers’ compensation and disability insurance. Workers’ compensation will only cover the injuries you received on the job. While the disability insurance will provide you with income during the period when you are unable to work. Disability insurance is one of those employee benefits that is necessary but is more costly and difficult to buy on your own.
Do not forget to consider this potential drawback. Most disability insurances are short-term, which doesn’t make sense if you have a lifetime disability. Moreover, if your employer pays the premium, you will have to pay the taxes. You can have a supplement individual policy with tax-free benefits if your employer coverage is not enough.
Those who have just embarked on their career path will deem this unnecessary. But it is never early planning for years ahead. Your future self will thank you for securing it an awesome retirement.
Do not miss the opportunities. Understand how your employer’s matching contributions work and then make the most of them. Next, as your salary increases and you are getting closer to retirement think of boosting your contributions. That way, your annual taxable income will lower and your money will be able to grow tax-deferred.
Rebalance. Is your investment allocation still appropriate for your needs and risk tolerance? Some plans help employees to rebalance their plan to make sure their allocations and goals are on the same page.
You should have filed a beneficiary form for your retirement plan already. You listed people who will inherit your account without it going through probate. Which is perfect, as it will save your time and money.
But be careful with everything you put on that form. Because it will have more weight than your will and trust. If an ex-spouse is mentioned on the account, no matter how ironic but they will get your account after you pass away. Had a new child, which has no trace in your beneficiary documents? What you did then is you carelessly cut them out of your estate.
Obtain a spousal consent. If you are married and plan on mentioning someone other on your beneficiary you will need to obtain a spousal consent. If you do not, your spouse will have the right to your retirement account even if you named someone else.
Modify your designations with major life changes. Marriage, divorce, the birth of a child, death of a spouse, etc. To make sure all beneficiaries are named correctly.
Employee benefits might be the reason employees are willing to stay at their jobs. But to feel secure just because you have them is not enough – you must know how to make most of them. That way you will be able to build a financial plan for a secure future.