You’re excited about the benefits package your employer has to offer, and you’re thankful your overall compensation package includes health insurance, a 401(k) plan, and other perks. With the rising cost of health care and the retirement savings crisis, it’s more important than ever to find an employer that provides these types of benefits. Just be sure you fully understand what the package offers: does the 401(k) have the characteristics of a top plan? Does the health care plan provide coverage that will reduce your out-of-pocket costs?
Before you sign up, you need to have the answers to these and other important questions. Start by asking the following six questions to ensure that you have a solid grasp of how your employer’s benefits package does—or doesn’t—meet your needs:
What are the costs, and who covers them?
Most employers are not going to cover all the expenses of a benefits package. Before you sign up or make a new election for yourself and your family, find out what premiums or costs are involved and what your responsibility is for covering those costs.For a 401(k):
- Does your employer provide a company match for your contribution? How much of a match?
- What types of funds are available in the company 401(k) plan? What are their fees?
- Is there a vesting period?
- Is the 401(k) provider acting in my best interests? In other words, are they a fiduciary?
- Are you a non-US citizen? Read up on how a 401(k) works for permanent residents or visa holders.
- For health insurance, confirm the monthly premium costs you’ll pay based on the level of coverage and type of plan you choose.
- Does the plan cover my family members? Any restrictions?
- What are the co-pay costs (out-of-pocket costs for office visits, prescriptions, etc.)? What is the deductible (maximum out-of-pocket amount I’ll have to pay)?
- Can I opt out of this plan? Would I receive any credits (cash) in lieu of the coverage?
Based on the answers to these questions, you can make more well-informed decisions. Here are some example scenarios:
- 401(k): If there’s a company match, make sure to contribute up to the minimum required to claim the match (ex: 3%). This is free money!
- 401(k): If the fund selection is poor (high expense ratios AKA fees), you may want to save your money in an IRA or other retirement account instead. Need help evaluating your fund choices and, if they’re good, picking the right ones? This is a great beginner’s guide.
- Health insurance: If the overall costs and offerings of this plan are less than ideal, it may be worth it to opt out of this plan and choose to be covered under your spouse’s plan, if that’s an option. It’s also possible that you could receive the company cost of this benefit in the form of cash compensation if you opt out, depending on the structure of their health insurance offering. It may be tempting to ask for this and forego coverage altogether, but remember that health insurance is a vital safety net so don’t do this unless you’re sure you have alternative coverage!
Are there any enrollment restrictions?
As you consider what features you want to use in a benefits package, be sure you know about any stipulations. Some packages may be available only after you’ve been an employee for a specific amount of time, or only for employees at a particular level. If you’re an hourly employee, confirm if there are any conditions about the number of hours you must work to maintain your benefits-eligible status. When you’re looking at the 401(k), find out if the company plan and vesting are immediate, or based on tenure with the organization.
What timelines should you keep in mind?
Many health care plans have a specific enrollment schedule or timeframe during which changes are allowed. If you don’t make changes by the deadline, you may have to wait for six months to a year to enroll or update your account. Ask for a list of critical benefits dates, make note of them on your calendar, and set up reminders to prepare any necessary paperwork. You only have to miss a benefits-related deadline once to understand the importance of keeping track of key dates.
How do you access your benefits accounts?
To monitor and maximize your benefits it’s crucial that they’re easy to access. Find out if you’ll have if you’ll be able to login via a central, online dashboard, or if you’ll need to login to individual provider websites. When you get the link(s), store it somewhere that makes it easy for you to update and monitor your benefits accounts (e.g., investment performance or health care co-pays and deductibles).
Who do you contact for more information?
At some point, you’ll have more questions about your benefits, due to changes in the package or changes in your life circumstances. Find out now who you should contact when questions come up. Is there a benefits resource person in the human resources department, or will you contact an outside provider for assistance? It’s important to know your resources before you need them—you don’t want to be figuring out who to contact about your 401(k) options on the day enrollments are due or scrambling last minute about an urgent health coverage question.
What happens when you leave your company?
Chances are you won’t be with this employer forever. From the beginning, you need to understand if there’s anything to consider when your employment ends. For example, you might be required to make decisions about what you want to do with your 401(k) investments within a specific timeframe. Likewise, you’ll have a date by which you must elect to maintain coverage under COBRA (Consolidated Omnibus Budget Reconciliation Act) if you wish to do so. Don’t be surprised! It’s better to find out in advance how terminating employment impacts your benefits so you can prepare and make the best decisions before you leave.
Once you’ve asked these questions and made your benefits elections, protect your investments by taking the time to review your accounts to confirm that everything is correct. We’re all human, and there’s a chance that someone somewhere made an error (incorrectly entered birthdate, incorrect salary amount, etc.).
Most importantly, don’t stop asking questions, especially when benefits are being adjusted or updated. Continue to educate yourself and stay informed to ensure that you’re making the most of your company’s benefits package.
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