Getting Real about Your First Job With Benefits

BFine.org Admin

You’ve put in the time and effort to land your first full-time job with benefits. You have arrived in the adult world. You will have health insurance and a steady paycheck, but HR has more papers than you’ve ever seen. You are asked to make decisions on things you don’t know about.  Be prepared!

Paycheck

The job offer was for a great salary, but the amount falls short of your expectations when you are paid. That happens because of taxes and benefits that you pay for from your paycheck. When employers advertise benefits, they usually (but not always) come at an expense for the employee. Ask the human resources representative about the cost of benefits before accepting a new job to make sure you can meet your financial responsibilities. 

Benefit Waiting Period

Some companies will have a waiting period of 30, 60 or 90 days before a new employee qualifies to receive benefits. The Affordable Care Act (ACA) mandates that employers cannot wait more than 90 calendar days to offer health insurance coverage to eligible employees.

It’s important that you find out if there is a waiting period for your new job so that you do not have a gap in health insurance coverage. 

Insurance

Medical, Dental, and Vision insurance is a primary benefit for full-time jobs. Usually, the employee will pay a portion of the premium cost – it can be anywhere from a 50/50 split where the employee pays 50% of the premium cost and the employer pays 50% or it could be 30/70% or 20/80%.  Most companies today only pay for the employee-only portion of the premium and not for any dependents, but they can be added. 

Short-Term and Long-Term Disability Insurance provides some compensation in the event of an injury/illness or procedure where you will be out of work for a period of time.  It is typically about 50-65% of your salary and, depending on the company, they may pay for the insurance or you can purchase it.

Your employer will pay for Worker’s Compensation insurance.  This is insurance that is provided to you in the event of an accident/injury, etc. that occurs on the job. 

Many companies have contracted with insurance companies to provide additional insurance like Life Insurance that you can purchase as an employee.

401(k)

You’ve probably heard the term and now it’s time to learn about this important part of personal finance. A 401(k) plan is a retirement savings plan offered by many American employers that has tax advantages for the saver. While retirement seems like forever away, retirement is expensive and you need to start saving as soon as possible. 

Life is expensive on an entry-level salary, but you should still contribute to your retirement account every month. If your expenses increase, you can always change the amount taken out each pay period. As a bonus, some employers will match 401(k) contributions. That’s like free money, so it is important to match what your employer contributes to avoid leaving money on the table.

Some companies may offer other programs aimed at retirement or investment such as 403(b), profit sharing or employee stock ownership. You should investigate those carefully and ask plenty of questions.

Now that you know the basics, congratulations on the new job!