A company’s success depends on having dedicated and satisfied employees. While everyone loves a pay increase, many employers offer valuable benefits to reward workers and improve their financial lives.
When you’re on the hunt for a new job, don’t forget to survey a company’s benefits when deciding which offer to accept. Here are six life-changing benefits and tools that can set a workplace apart from its competition.
- Health insurance
Everyone needs health insurance, even if you’re young and healthy. Without it, a trip to the emergency room for an illness or a broken bone could leave you with a substantial medical bill. Being uninsured and having a serious health condition could be financially devastating.
If you have the option to enroll in a health plan at work, participate as soon as you’re eligible. Getting a group policy through an employer is usually less expensive than buying an individual plan. Your employer may also pay a portion of the premium on your behalf.
Health plans vary by employer. Make sure to check the plan details before choosing to enroll, so you understand the covered services and out-of-pocket costs.
If you can’t get affordable coverage at work — or if you’re self-employed or unemployed — you can shop the health insurance marketplace at healthcare.gov or through a qualified insurance broker. Depending on your income and family size, you may be eligible for government assistance to reduce the cost of a qualified health plan.
- Medical savings accounts
Many employers offer medical savings accounts that allow you to pay for qualified health care expenses on a tax-free basis. The most popular types are a health savings account and a flexible savings account.
A health savings account allows you or your employer to make pretax contributions up to an annual limit — but you must be enrolled in a high-deductible health plan to qualify. An HDHP requires a higher-than-normal deductible, but typically has lower monthly premiums.
You can spend HSA funds on medical expenses not covered by your health plan, such as the deductible and co-payments. There are no spending deadlines, and you own an HSA no matter if you leave your employer, change insurance, or become unemployed.
A flexible spending account also allows you or your employer to make pretax contributions up to an annual limit — and you don’t have to be in a high-deductible health plan to use one. Another difference between FSAs and HSAs is you typically must empty your FSA every year, while funds in an HSA can roll over from year to year and accumulate indefinitely.
- Disability insurance
Health insurance is critical, but it only pays a portion of your medical bills — not your living expenses. Consider how you’d pay everyday bills if you couldn’t earn an income for an extended period.
Disability insurance solves this problem by providing a percentage of your income (such as 60%) if you’re unable to work due to a covered injury, illness or accident. Receiving a portion of your salary could be the difference between surviving financially or drowning under a mountain of bills and expenses while you recover.
- Life insurance
Life insurance is essential when your death would create a financial hardship for those you leave behind, such as a spouse, partner, or children. There are two basic kinds of life insurance: term and permanent.
With term life, your beneficiaries receive a benefit if you die within a set period, such as 10 or 20 years. Permanent life covers you for your entire life and may build cash value over time you can use during your life. Term life premiums are usually lower than permanent life.
- Employee assistance program
EAPs can help employees with issues that may affect their home life, emotional well-being or work performance. It may also be available for an employee’s spouse, partner or dependents. You can get confidential advice and counseling in a variety of ways, such as by phone, video, email, or in person. Some services, such as a set number of sessions with a counselor, are free.
“An EAP may help with a broad range of issues, such as addiction, stress, grief, legal questions, family relationships and parenting, child care or elder care, and workplace performance issues,” says Laurie Mitchell, assistant vice president of global well-being & health management at Unum. “It’s a private and convenient way for employees to get the support and resources they need to be more successful.”
- Retirement account
Many employers offer traditional and Roth retirement accounts, such as a 401(k), a 403(b), or a 457 plan. These plans allow you to contribute a portion of your paycheck to investments. For 2019, you can contribute up to $19,000, or up to $25,000 if you’re over age 50.
A traditional plan allows you to make pretax contributions that grow tax-deferred until you take withdrawals in retirement. Bear in mind if you withdraw money before age 59½ you’ll likely pay income tax, plus an additional 10% early withdrawal penalty.
A Roth plan requires you to pay tax upfront on contributions but has a valuable advantage in the future: tax-free withdrawals. Choosing a Roth can make sense if you believe your future tax rate will be higher than it is now.
Many companies match a percentage of your contributions — that’s free money on the table. Be sure you’re contributing enough to max out a free company match to avoid missing a significant employee benefit.