Types of Employee Benefits - Mr. Blankenship



Types of Employee Benefits

Benefits are any perks offered to employees in addition to salary. The most common benefits are medical, disability, and life insurance; retirement benefits; paid time off; and fringe benefits.

Since benefits can be quite valuable — medical insurance can cost several hundred dollars a month — it's important to consider them as part of your total compensation. Make sure you are clear on the benefits

Medical insurance

What's covered? Medical insurance covers the costs of physician and surgeon fees, hospital rooms, and prescription drugs. Dental and optical care might be offered as part of an overall benefits package, sometimes offered as separate pieces, and sometimes not covered at all. Coverage can sometimes include the employee's family (dependents).

Who pays? Employers usually pay all or part of the premium for employee medical insurance. Often employees pay a percentage of the monthly premium. Even if the employer does not pay the entire monthly premium, the cost is often lower than available to an individual.What's covered? Medical insurance covers the costs of physician and surgeon fees, hospital rooms, and prescription drugs. Dental and optical care might be offered as part of an overall benefits package, sometimes offered as separate pieces, and sometimes not covered at all. Coverage can sometimes include the employee's family (dependents).Who pays? Employers usually pay all or part of the premium for employee medical insurance. Often employees pay a percentage of the monthly premium. Even if the employer does not pay the entire monthly premium, the cost is often lower than available to an individual.Minnesota facts:

Fifty-three percent of firms offer medical insurance to full-time employees, while only 12 percent offer it to part-time employees. Dental insurance is less common, especially for part-time workers.

By industry, manufacturing, financial, and education and health services are the most likely to offer benefits. The leisure and hospitality sector is the least likely to offer benefits.

Larger firms are more likely to offer benefits than small firms.

Disability insurance

Disability insurance replaces all or part of the income that is lost when a worker is unable to perform their job because of illness or injury. This benefit is not commonly offered.Disability insurance replaces all or part of the income that is lost when a worker is unable to perform their job because of illness or injury. This benefit is not commonly offered. There are two main types of disability insurance:

Short-term disability insurance begins right away or within a few weeks of an accident, illness or some other disability. For example, someone hurt in a car accident would be offered a few paid weeks to recover.

Long-term disability insurance provides benefits to an employee when a long-term or permanent illness, injury, or disability renders the individual unable to perform her/his job duties. For example, an employee with spinal injuries could be entitled to long-term disability benefits until retirement age.

Minnesota facts:

Only 19.2 percent of firms offer short-term disability insurance, and only 18.1 percent offer long-term disability insurance to full-time workers.

Life insurance

You can get life insurance through an employer if they sponsor a group plan. Company-sponsored life insurance plans are standard for almost all full-time workers in medium and large firms across the country. You can also buy it privately in the marketplace, but this is usually more expensive.Life insurance protects your family in case you die. Insurance benefits are paid all at once to the designated beneficiaries of the policy — usually a spouse or children.You can get life insurance through an employer if they sponsor a group plan. Company-sponsored life insurance plans are standard for almost all full-time workers in medium and large firms across the country. You can also buy it privately in the marketplace, but this is usually more expensive.

Minnesota facts:

The number of people employed usually determines whether a company will offer life insurance or not.

Only 15.5 percent of firms with fewer than 10 employees offer this benefit, while firms with more than 250 employees offer it almost universally.

Retirement benefits

Retirement benefits are funds set aside to provide people with an income or pension when they end their careers.

Retirement plans fit into two general categories:

In defined benefit plans, sometimes called pension plans, the benefit amount is pre-determined on the basis of salary and years of service. In these plans the employer bears the risk of the investment.

In defined contribution plans (for instance a 401k plan), employer or employee contributions are specified. But the benefit amount is usually tied to investment returns, which are not guaranteed.

Retirement benefits are funds set aside to provide people with an income or pension when they end their careers.

Retirement plans fit into two general categories:

In defined benefit plans, sometimes called pension plans, the benefit amount is pre-determined on the basis of salary and years of service. In these plans the employer bears the risk of the investment.

In defined contribution plans (for instance a 401k plan), employer or employee contributions are specified. But the benefit amount is usually tied to investment returns, which are not guaranteed.

Minnesota facts:

The vast majority of full-time workers in Minnesota are offered access to retirement benefits: 64.4 percent are offered access to a defined contribution and 15.6 percent are offered a defined benefit program.

Defined benefit plans are offered most frequently in those sectors with the highest levels of unionization: public administration, construction, manufacturing, and trade, transportation and utilities.

Domestic partner benefits

Some employers offer benefits to unmarried domestic partners, while others do not. Requirements to qualify vary from simply signing a form to showing proof of domestic partnership or financial interdependence. A common domestic-partner benefit is access to family health insurance, but that benefit is considered taxable income by the federal government.Some employers offer benefits to unmarried domestic partners, while others do not.

Requirements to qualify vary from simply signing a form to showing proof of domestic partnership or financial interdependence.

A common domestic-partner benefit is access to family health insurance, but that benefit is considered taxable income by the federal government.

Minnesota facts:

Check this list of Minnesota employers offering domestic partner benefits.

Paid time off

Paid Time Off (also referred to as PTO) is earned by employees while they work. The three common types of paid time off are holidays, sick leave, and vacation leave.

In the majority of workplaces, employees earn vacation, sick leave, and paid holidays as separate benefits. About ten percent of Minnesota employers offer Consolidated PTO, which combines sick leave and vacation into one account for the employee to use as needed.

Paid Time Off (also referred to as PTO) is earned by employees while they work. The three common types of paid time off are holidays, sick leave, and vacation leave.

In the majority of workplaces, employees earn vacation, sick leave, and paid holidays as separate benefits. About ten percent of Minnesota employers offer Consolidated PTO, which combines sick leave and vacation into one account for the employee to use as needed.

Minnesota facts:

The most popular benefit with employees is paid vacation. Sixty-two percent of firms offer this benefit to full-time workers. Paid holidays are also very common.

Thirty-three percent of firms have paid sick leave for full-time employees.

Fringe benefits

A variety of non-cash payments are increasingly being used to attract and retain talented employees. These are referred to as "fringe benefits" and can include tuition assistance, flexible medical or child-care spending accounts (pre-tax accounts to pay qualified expenses), other child-care benefits, and non-production bonuses (bonuses not tied to performance).

Tuition reimbursement can be an especially important benefit if you plan to take classes in your personal time. They can be a great opportunity to advance in your career. Most firms offering tuition assistance, however, require that courses relate to job duties.

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