Understanding Job Benefits

There’s more to compensation than just getting paid.

The main benefit of a job is your salary. Your salary pays for food, rent, heat, and other necessities. But many jobs offer other benefits that are just as important.

Health insurance is by far the most common job benefit—and the most popular. Healthcare is expensive and employer-provided health insurance makes paying for it much easier. Health insurance works by requiring a monthly premium, which is what you pay to the insurance company regardless of if you use insurance that month or not. With employer-provided health insurance, your job will generally pay around 70-80% of the premium, meaning you only have to make up the rest.

In addition to basic health coverage, many employers offer disability insurance. With this, you wouldn’t be left without income if something were to happen that prevented you from working for a significant amount of time, such as an injury. Another potential benefit is life insurance, which pays a beneficiary (a person you choose) if you die. While that may not seem as important now, it will be vital if you have a family to provide for.

Retirement may seem like a long way off, but starting early can make all the difference when it comes to saving enough. The most common plan offered by employers is a 401(k). This retirement plan takes a percentage of your gross income and invests it toward your retirement. Some employers will even match the amount of money that you contribute up to a certain percentage. That means that if you contribute 3% of your income every month, let’s say $2,000, your employer will also invest that much into your 401(k).

Be aware that a 401(k) is not a savings account, it's an investment. That means that rates of return and earnings can fluctuate. You may make money sometimes and you may lose it others. Overall, though, a 401(k) is generally low-risk and can make up any losses by the time you retire.

Some employers offer stock options. Basically, these are agreements that give you the right to buy a set amount of company stock at a set price. If you buy that stock and the value rises, you’ll be able to sell them to make money. But if you buy the stock and the value goes down, you’ve lost money. Many companies require you to work for the company for a set period of time before you can buy them.

Some companies offer perks that can improve your lifestyle. These benefits generally fall into two categories.

The first category focuses on big benefits for specific situations. For example, some companies offer paid leave if a child or parent is sick or tuition assistance. While you may not use them every day, they can be a big plus if you use them eventually.

The second category focuses on improving your day-to-day life. This can mean anything from a kitchen stocked with free snacks to free daycare services. Another option is Flexible Spending Plans that let you set aside pre-tax income for certain things like uninsured medical expenses or childcare. The catch is that you usually have to spend the full amount you set aside on eligible expenses before the end of the year. If you don’t spend it, you lose it.

Overall, good job benefits can take a decent salary and turn it into a stellar compensation package.