Job Benefits 101: What to Look for When You Start With a New Employer

If you’re like most people, you probably only think of compensation as the paycheck that hits your bank account every two weeks. Surprise: Your salary typically comprises only about 70 percent of your compensation, according to the Bureau of Labor Statistics.

The other 30 percent? That would be the job benefits your company provides for you. So it’s worth knowing how to make the most of what you’re being offered. A recent study found that more than half of employees say they want to better understand their benefits so you should take the time to make sure you’re not missing out on the options available to you.

After all, not claiming these perks is like leaving money on the table. Here are eight common benefits worth looking into at your company.

1. Retirement plans

As pensions have become as obsolete as paper event tickets, consumers increasingly are expected to bankroll their own retirement, often through 401(k) plans or similar retirement savings options. But in 2023, even though 73 percent of workers had access to retirement benefits, only 56 percent participated, according to the U.S. Bureau of Labor Statistics.

If you haven’t started investing in your 401(k) plan, contact your HR department ASAP to find out how to enroll. The reason is simple: Your 401(k) contributions come straight out of your paycheck, which makes it easy to start building your nest egg without having to consciously decide to save each month.

A 401(k) also has tax advantages: The contributions and earnings you make to a traditional 401(k) are tax-deferred, meaning you won’t have to pay taxes on that money until you make withdrawals in retirement—plus, anything you contribute now helps to lower your taxable income. Roth 401(k)s are funded with post-tax dollars, but you won’t have to pay taxes on your earnings when you withdraw later in retirement. (Traditional 401(k)s are more common, but some companies do offer a Roth option.)

What makes 401(k)s even sweeter is that your company might offer an employer match. That means they’ll contribute some money into your retirement account on your behalf. An example of a typical match is 50 percent up to 6 percent of your salary. So if you make $100,000 and contribute $6,000 a year to your 401(k), your company would throw in another $3,000 for you. That’s free money for retirement!

2. Health insurance

If you work for a large or midsized company, chances are it offers health insurance coverage. Some companies subsidize the total cost of your health insurance premium, but most likely you’ll have to cover some of it yourself. Still, that’s preferable to paying full price: Mercer’s Health and Benefit Strategies for 2024 Survey Report finds that HR professionals expect an increase of 5.4 percent in health care benefits.

If your company offers different levels of coverage, choosing the right plan for your situation will depend on a number of factors, including your ongoing need for health care visits and prescriptions; the number of family members you have to cover; whether your preferred providers are in your health network; and how much your out-of-pocket costs could be. It’s important to make your choice thoughtfully during open enrollment, because you won’t be able to change your selection until the next enrollment period, unless you have a major life change, such as getting married or welcoming a new baby.

3. Disability insurance

Another health-related insurance benefit worth looking into: disability insurance, also called disability income insurance. If you were to get injured in an accident or come down with a serious illness, this type of insurance can help replace a portion of your income if you’re unable to work for an extended period of time. Some companies may offer both long-term and short-term disability insurance. In some cases, employers might offer short-term disability as a way to help cover a portion of income during maternity leave.

4. Paid time off (PTO)

We’re guessing this is your favorite job benefit of all (after your salary, of course). Generally speaking, PTO is the amount of time for which your company will pay you even if you’re not working. Your company might separate PTO out by vacation, personal and sick days. Or they might have bundled PTO, which means there’s just one bank of paid leave they offer you, and you can use it for whatever reason you want.

Make sure you know if your company’s PTO policy is “use it or lose it” each year—in which case, use it—or if you can roll over a certain number of days into the following year (so you have more time for that extended European backpacking adventure you’ve been planning).

Those not as common, many companies offer “unlimited PTO,”—Mercer’s Health and Benefit survey found that more than one-quarter of respondents offered it. While this may sound amazing, make sure you talk to your HR department so you can understand exactly how this benefit works to allow you to take the time you need.

5. Life insurance

Your employer may offer a baseline amount of life insurance coverage at little or no cost to you, with the option to get additional coverage at a discount under the company’s group plan. Your company is the policy owner, however, so keep in mind if you leave your job, you’ll likely lose that coverage.

You also may want to talk to a financial advisor about whether you should supplement their coverage with an additional policy to ensure your family is taken care of in the event of a tragedy. They can help you sort through alternatives—such as term and permanent policies—and guide you to the optimal amount for peace of mind.

6. Wellness benefits

A survey from the Integrated Benefits Institute found that 51 percent of employers are prioritizing employee satisfaction through enhanced benefits that include offerings for physical, mental and financial well-being. With this focus on holistic benefits, it’s worth checking to see which wellness programs your employer offers that go beyond, say, the company gym.

Examples of wellness perks include:

• free onsite flu shots
• biometric screenings
• discounts on gym memberships
• health coaching
• onsite fitness classes

Some companies may even offer financial wellness programs, in which your company offers resources to help with money goals like budgeting or saving for retirement.

7. Commuter benefits

When we became accustomed to working from home, many of us saved a bundle in the process, by forgoing transit fees, gas, tolls and/or parking. Now that most companies are requesting one or more days in the office, it can be discouraging to see those savings evaporate. Yet while you may not always have a choice for when or how you get to the office, your employer might help you offset some of the cost.

Some companies will reimburse their workers for the price of public transportation or parking, or at least let you pay for those costs with pre-tax dollars. Others might even offer ride-sharing or shuttle services in your neighborhood to the corporate campus helping you avoid traffic snarls. If what your company offers can help you save on gas or subway fare and keep your sanity intact, why not take advantage?

8. Tuition and student loan assistance

You always meant to finish that degree or get an extra certificate, didn’t you? Well, thanks to corporate tuition benefits, you just may be able to. Some companies have partnerships with career services that make courses available to their employees while others may pay a set amount toward continuing or higher education or cover a percentage of your tuition. With some programs, you may be required to stay with your firm for a certain period of time after you finish your degree. Be sure to read the fine print carefully because if you don’t meet your employer’s requirements, you might have to pay back the tuition reimbursement.

If you already have your degree—and a mound of debt to go with it—your employer may have the have the option to make the same matching contributions as they do for 401(k) plan enrollees, thanks to a provision in the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act, which was passed in December 2022.

It’s worth taking a deep dive into your HR packet to understand everything that’s being offered to you—beyond the free snacks or office foosball table. And if any of them can help you save or get you closer to your financial goals, all the better.