What Are Your Benefits Really Worth?
Benefits make up more than 30% of typical job compensation, according to the US Bureau of Labor Statistics. But understand what your advantages worth is not always easy.
You may need to do some research to find out how much your employer contributes to health insurance, retirement packages and other benefits. Some benefits also have non-monetary value, and people can value the same benefits in different ways.
For example, people with medical conditions are likely to appreciate guaranteed access to disability or life insurance that might otherwise be difficult to obtain or prohibitively expensive. Someone who has student loans may value a student debt relief program much more than someone who does not have student debt.
Now that open enrollment season is back, it’s a great time to review your current employer offers. Understanding what your benefits are worth could renew your commitment to your current job or make you realize it’s time to look for a better deal. If you’re considering becoming self-employed, you can better understand how much extra you’ll need to earn to replace your current benefits.
Here are some of the most common benefits, along with typical employer contribution amounts, according to Mercer, a benefits consultant.
Health insurance: $5,000 to $20,000
Employer-provided health insurance plans range from the simplest to the most extravagant. On average, however, employers paid 83% of the premium of $7,739 last year for individual coverage and 73% of the premium of $22,221 for family coverage, according to KFF, an employment research organization. ‘Health Insurance.
You can find what you and your employer paid for health insurance last year on your 2021 W-2, says Paul Fronstin, director of health benefits research at the Benefits Research Institute, or EBRI. The annual figure is often reported using a ‘DD’ code.
Your employer can also itemize their contribution on your pay stub. A pay stub is a document that provides details of your gross and after-tax pay as well as various deductions. You can often access your pay stub through your company’s online payroll system. check with your human resources department.
Of course, premiums are only one factor in evaluating your healthcare coverage. Deductibles, copayments and provider networks also matter. Having access to different types of plans can make open enrollment more confusing, but it can also help you tailor your coverage to your situation.
Retirement savings plan: 3% to 10% of salary
EBRI surveys have consistently found that the benefit employees value most after health insurance is access to a pension plan, with all other benefits falling “a distant third,” Fronstin says.
According to AARP, people who have workplace retirement plans such as 401(k)s are much more likely to save for retirement than those who don’t. These plans offer automatic payroll deductions, and many people also enroll automatically.
Most 401(k)s also come with company matches, which is free money that can help employees build wealth faster. Some of the more common matches include 50% of the first 6% of salary the worker contributes, or a dollar-for-dollar match of 3% to 6% of salary.
Employers can contribute an even higher percentage of salary to traditional pension plans, which promise a specified monthly benefit amount upon retirement. This contrasts with 401(k) and other defined contribution plans, where the amounts you receive in retirement depend on the amount of contributions and the performance of your investments.
Pensions are still common among government agencies, colleges and nonprofit health care organizations, though only about 15% of private sector workers have access to such plans, according to the Bureau of Labor Statistics.
Everything else: from zero to thousands
Employers who offer dental insurance typically pay $500 to $2,500 a year for coverage, according to Sandra Sweeney, director of professional practice at Mercer. Life insurance costs on average between $100 and $300 per employee, while disability insurance generally costs between $250 and $1,500.
Employers may offer access to other coverage, such as supplemental life insurance, long-term care insurance, or pet insurance. Workers generally pay the full cost, but may qualify for group rates for policies, Fronstin says.
Tuition assistance is also increasingly popular. About half of employers offer tuition assistance, according to the Society for Human Resource Management. And of the companies surveyed by EBRI last year, 17% offered some sort of student debt relief, while 31% planned to do so.
Workers can also exclude up to $5,250 in tuition assistance from their income on their tax returns, according to the IRS. And through 2025, the limit also includes student loan repayment assistance.
Remember that your employer offers benefits to attract, retain and reward workers. If you’re not sure about all of your benefits or their value, your human resources department should be happy to inquire, Fronstin says.
“Ask your employer,” says Fronstin. “It’s not a secret.”
By Liz Weston of NerdWallet
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