Are your employee benefits good? The Definitive Guide & Calculator

Understanding what constitutes good benefits is crucial for job satisfaction and well-being. In this guide, we’ll cut to the chase, helping you assess your current benefits package or those provided in a job offer. We cover the why, the what, and the how—from vital health insurance details to work-life perks—equipping you with the knowledge to evaluate or negotiate your benefits effectively. Before you take a new job, understand how your benefits compare.

Key Takeaways

Employee benefits are essential for job satisfaction, loyalty, and retention, and can affect overall well-being, making it important to evaluate the comprehensive benefits along with salary.

A complete benefits package typically includes five things:

• Health insurance
• Ancillary benefits like dental, vision, life, and disability
• Retirement savings plans
• Leave or paid time off (PTO)
• Other perks that support work-life balance

The average employee benefits package is worth $15K if you are single, and $25K if you are covering a family. It represents a large percentage of your compensation and ranges greatly by employer.

To properly value your current benefits package or for a new job, compare it with industry standards, calculate its monetary value, and assess how well it meets your personal needs. Mployer provides online, easy-to-use tools for employees and employers to do just that as well as information to help you better understand how it all works together.

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Why having great benefits is important

Employee benefits are more than just perks; they’re a critical part of the employment relationship, ensuring job satisfaction and fostering loyalty and retention. Benefits account for over 20% of an employee’s total compensation. That’s a significant chunk! So, when weighing a job offer or thinking about your current job, it’s crucial to consider not just the paycheck but also the following benefits and perks that come with it.

Considering these factors will give you a more comprehensive understanding of your total compensation package.

The Five Key Components of a Good Benefits Package

Before we delve into the evaluation, let’s first understand the key components of a great benefits package. These components include:

• Health insurance
• Ancillary benefits
• Paid time off (leave benefits)
• Retirement benefits
• Work-life balance perks

But remember, the value of these benefits is dependent on your personal life and career stage, making a big difference in how you perceive them and the pay you receive.

1. Health Insurance

The average dollar value health insurance paid by an employer for an individual is $9,000 if you are single, $15,000 for a family. See below to understand how to value your employer's offering.

There are three main components to evaluate when you are looking at the medical insurance an employer offers:

1. Employer's percent contribution towards health insurance - The percent varies widely, depending on factors such as company policy, budget constraints, and competitive practices.
   • For individual coverage, the contribution percentage typically ranges from 70% on the lower end to as high as 90% in more comprehensive benefit packages.
   • However, for family coverage, the contribution percentage tends to be lower, ranging from 55% to 85%. This discrepancy often arises from the primary focus on covering the employee rather than their dependents.
   • Large employers tend to provide a high coverage percentage of medical compared to smaller employers.
2. Plan design - This covers items like your deductible, maximum out of pocket, copays and coinsurance. Generally, it is the lower the better for these items. Your employer decides what type of plan design to provide here.
3. Tax strategy and options - Depending on your life cycle phase, a high deductible health plan with a savings option may be best for you, which include a health savings account (HSA) or a health reimbursement account (HRA). These plans are a smart way to reduce an employee's monthly premium and give a vehicle to give an employee money towards their healthcare in a tax advantaged account.

2. Ancillary benefits like dental & vision

The average value for an individual of ancillary benefits is $1,500 but can vary significantly. See below to understand how to value your employer's offering.

Ancillary benefits do not cost an employer a lot of money but they can add up, especially to the specific employee and depending on the job role. Do you wear contacts or glasses? Then you, along with almost 75% of Americans, get it. Are you in commercial construction? Short-term disability and life insurance are two items that your company should provide given the nature of the work.

To unpack the ancillary benefits, there are several core ones to evaluate -

1. Dental - 90% of employers offer dental insurance. Dental benefits are almost like commodities these days, the plans don't vary too much. Ask your employer what percent they contribute or the dollar amount monthly to get an idea. If you have children and it's braces time, ask that question. That is a meaningful amount.
2. Vision - Similar to dental, 80% of employers offer a vision plan and the designs are almost a commodity. Again, ask your employer what percent they contribute or the dollar amount monthly to get an idea. It is not a lot each month, but it adds up.
3. Disability - Coming in two forms, both short-term, offered by about 40% of employers, and long-term, offered by about 35%. Most large companies offer some form, smaller companies it depends. Short-term disability is the primary insurance type used for birth giving parents. If your employer industry or job function has a high percent of females in child-bearing years, short-term disability is important.
4. Life - About 60% of employers offer life insurance. It is nice to have for piece of mind and security for your family. Life insurance is something most people need to maintain individually. It is priced based on the individual at the time. People in the workforce now will likely work with five to six companies over their life cycle and the amount, cost, and employer contribution will change drastically by employer. In short, do not depend on employer-sponsored life insurance to meet your family's needs. Ask if it is offered, and the employer's contributions.

3. Leave & Paid Time Off  (Leave Benefits)(PTO)

The average value for an individual of ancillary benefits is $5,000 as an example but can vary significantly based on your income. See below to understand how to value your employer's offering.

We all need a break from work, right? That’s where paid time off (PTO) policies and paid holidays come in. Generous PTO policies contribute significantly to the mental health of employees, but it also has a hard dollar value. It’s not just about taking a vacation; it’s about achieving a healthy work-life balance, which is a critical aspect of overall job satisfaction.

1. Type of PTO - Do you have a "consolidated" leave package, non-consolidated or do you have unlimited PTO? Consolidated leave means that the employer combines your sick leave and PTO into one group of days, unlimited means you have no set cap (or carryover) on your benefits.  into two separate buckets of days
   • Positives - you get more days, it incentivizes you to stay healthy and it is easier to administer
   • Negatives - if you get sick a lot, this could hamper your total PTO days
   • The average number of days offered for one year of service for those on Consolidated Leave is 14 days, 18 days after five years. For non-consolidated, it is 9 days of PTO after one year and 13 days after five years. About 55% of employers nationally provide consolidated leave benefits.
2. Paid holidays - The number of paid holidays can vary greatly from one company to the next

4. Retirement Savings Plans

The average value for retirement benefits are $3,200 as an example but can vary significantly. See below to understand how to value your employer's offering.

Planning for your future is a long-term endeavor, and employer-sponsored retirement plans are a key part of that journey. These can come in different forms. Most employers today offer a defined contribution plan, such as 401(k)s, but pensions still exist, especially with governmental entities. In each of these retirement plans, they involve regular contributions from both employers and employees.

But buyer beware, even if two employers offer a 401(k), the plans can be very different and have a significant impact on your retirement and savings. There are two main components to consider -

1. Match rate -  How much your employer contributes to your 401K can range from 0% to 8%+ and have a large impact on your overall financial health and future well-being.
2. Plan features - Does your plan have an auto-enrollment feature for new hires? Is there an auto-escalation feature to encourage savings? Can you take a loan against your 401K with a low interest rate if you need. When does your employer match vest - is it monthly, quarterly or annually?

Over a five year period, for an $80K salary, the difference between a 1% match and a 6% match is the difference between an employer contribution of $4,500 for 1% and $27,000 for 6%, assuming modest investment returns. The difference is $20K+ for an $80K year employee. That is just five years, imagine if that were compounded over 20-30 years. Plan features can then escalate that even higher and or lower. The higher match, the more money it costs your employer.

5. Work-Life Balance Perks

Work-life balance and other benefits perks are one of the most important factors to make the full plan work together. They are the interior features of a car and the paint color and while not expensive to an employer (for the most part), they can bring it all together. Some of these perks include:

• Flexible schedules, allowing employees to adapt their work hours to better fit personal responsibilities and preferences
• Employee assistance programs, providing support for employees’ personal needs
• Childcare assistance, helping employees manage their work and family responsibilities

These perks play a crucial role in supporting employees’ needs and promoting a healthy work-life balance. Similar to the above benefits though, each of these also costs money for your company to cover these benefits.

Evaluating Your Benefits Package

Now that we’ve identified the key components of a strong benefits package, let’s dive into how to evaluate your current benefits or those being offered for a new job. An effective evaluation involves assessing the entire spectrum of benefits offered, including both employee-paid and employer-paid options.

Grading Your Benefits

Use online tools to grade and evaluate your benefits package. Mployer offers a useful calculator that helps you assess your benefits across various categories. If you want to calculate it yourself, below is a high-level example of just a few of the simple (and complex) elements to evaluate:

1. Provide us with your plan documents. We will run them through our plan grader and in 24 hours send you back a full plan evaluation. The medical component is free, we charge $39 for the full plan. A part of our mission is greater transparency into employee benefits for employees so we give away most of it for free.
2. Calculate it yourself using the guide below.

If you want to calculate it yourself, below is a high-level example of just a few of the simple (and complex) elements Mployer evaluates -

1. Medical benefits - Look at how much of the premium your employer covers each month, the total premium cost, and the specifics of your plan like deductibles, maximum out-of-pocket expenses, and copays. Is there a tax strategy like a health savings account and contribution? If so great, that plays a huge impact.
2. Ancillary benefits like dental, vision, life and disability - Ask if they are offered and what the employer contributes.
3. Retirement benefits - Consider what percentage of your savings is matched and or contributed by an employer each year.
4. Leave benefits - The type and amount of leave provided (including vacation and sick days), total days and holidays.

Furthermore, to put your benefits into perspective, Mployer enables you to download an industry-specific cohort report. This report compares your benefits with those offered by other companies in your industry, helping you understand where your package stands relative to your peers. By considering these comprehensive factors, you can make more informed decisions about your employment offers and negotiations.

Tips for Negotiating Better Benefits

Were you paying less out of pocket monthly with your last job compared to this job offer? Did you have access to things like dental, vision and a 401k but don't with this offer?

The good news and the bad - an employer is not going to change their benefit plans just for you. Benefit costs are significant for an employer and large percent of your overall pay. But, what they can do is adjust your salary up (or down?) to make it comparable. Armed with all this knowledge, you’re now ready to negotiate better benefits. But where do you start? Let’s explore some tips to help you navigate this often daunting process.

Large employers typically provide a richer package than smaller employers. This is due to two main items -

1. Legislation - Large employers over 50 people or 100 people depending on the state, are required to make certain benefits available.
2. Budget - Large employers often have a higher budget and ability to pay for richer benefits for their employees.

Summary

Employee benefits can range in value from a few thousand dollars to $20,000+ plus depending on the employer based on our peer reviewed studies - that is material. Remember to ask for the employee benefit plan details before accepting a position to get a clear understanding of the benefits offered. Review detailed benefit sheets and seek clarification on any unclear points before engaging in salary and benefit negotiations.

By confirming benefit options prior to accepting a job offer, you’ll ensure that they meet your needs and provide an opportunity to request negotiations.

Understanding, evaluating, and negotiating your employee benefits package is a crucial aspect of your employment journey. From health insurance and retirement plans and other benefits perks, each component of your benefits package plays a vital role in your overall job satisfaction and well-being. Remember to consider industry standards, calculate the monetary value, and assess your personal needs when evaluating your benefits. By utilizing online tools and prioritizing your needs, you can effectively negotiate a benefits package that aligns with your personal and professional goals.

Frequently Asked Questions

What are the key components of a good benefits package?

An example of a good benefits package should include health insurance, ancillary benefits, retirement plans, paid time off, and other perks like flexible schedules and childcare assistance. These components can help employees feel supported and valued in the workplace.

How do I evaluate the quality of health insurance?

To evaluate the quality of health insurance, consider example factors such as premiums, deductibles, copays, coinsurance, network coverage, tax strategy approach and the employer's contribution. These factors play a key role in determining the overall quality of the insurance plan.

How can I calculate the monetary value of my benefits package?

The easy way is to use Mployer's free calculator. The complicated way to calculate the monetary value of your benefits package is to sum the annual employer costs for each benefit. You can also divide that total value by your annual salary to express benefits as a percentage of your salary. This will give you a clear understanding of the value of your benefits package.

How can I negotiate better benefits?

To negotiate better benefits, it starts in your job offer. you should research, prepare, prioritize your needs, and effectively communicate your value to the employer. Approach the negotiations with confidence and respect for a successful outcome.

What online tools can I use to evaluate benefits?

Mployer provides a simple calculator to grade and value your benefits. Other sites provide summary information if you want to do research like Glassdoor, PayScale, or Indeed. Mployer is the only platform available to compare benefits packages, which include calculators and rating systems to make an informed decision.

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