Helpful Information
















Benefits offered by most companies include paid vacation, holidays, sick days, health insurance, dental, long term disability, and a 401k plan. Some companies add life insurance, short term disability, a pension plan, flexible spending, or health savings accounts. Most companies require employee participation in paying premiums but allow employees to use pre tax dollars by establishing a Section 125 plan.

Health Insurance: The biggest driver in benefit cost increases today is health care. Companies are struggling to keep up with annual double digit cost increases. More and more companies are stepping down the level of benefit (lower cost plans) and asking employees to contribute a higher percentage of premiums. Alternative high deductible plans once considered too drastic a change from popular HMO plans are catching on. These plans can be combined with a health savings account (HSA), where employees save pretax dollars and retain what is not used. Management of these accounts is left to the employees and ads to its attractiveness. HSA accounts can also be used as flexible spending accounts saving employees additional taxes.

Dental Insurance: Dental insurance plans are typically high priced relative to benefits paid and may not be worth the cost. With a maximum benefit amount paid each year – typically around $1,000 per individual, there is not much "insurance" offered. An individual plan can cost $600 or more for a maximum of $1,000 in benefits. The real benefit is achieved only by the larger families with $1,000 in coverage for each dependent. Many companies are self insuring these plans as they have limited risk with the $1,000 maximum.

Life Insurance: Group life plans can be more expensive than individual life coverage. Companies may offer basic plans to help those who may have trouble obtaining individual policies at reasonable rates. However, most individuals should be able to obtain cheaper term life coverage on their own.

Long Term Disability: Many individuals are concerned with life insurance, but the reality is that there is a greater chance of becoming disabled. The potential loss of income coupled with the health costs associated with the disability is not being covered by many individuals. There are many more employees without adequate disability insurance than life insurance. LTD plans typically kick in after 90 days when sick, vacation and short term coverage ends.

Short Term Disability: Short term disability plans typically cover up to 90 days and are much more expensive than long term plans due to the fact that they are used much more often. Often included in this coverage is maternity leave.

401(k) Plans: The most popular retirement plan today is the 401(k) plan that allows employees to save "pre-tax" dollars that theoretically earn a return on not only the "after tax" money but also the portion that would have been paid out in taxes. Of course, recently, many employees have not been thrilled with the returns or more appropriate, the losses on their investment. However, most people agree that a long term retirement saving account is not only wise but necessary as long term returns historically have been more than adequate. Also, many companies match employee contributions because this is considered the "right" thing to do and because it allows highly compensated employees and owners to contribute more of their earnings pre-tax.