Overview of Employee Benefits

Many jobs not only pay directly for the work that you do, but also provide other cash and non-cash benefits.  Review the following list of mandated and optional employee benefits.  Check with your human resources department to make sure that you are taking advantage of all the benefits that you qualify for!

Mandated Employee Benefits

17. Social Security: This pays into a fund to provide retirees a monthly payment proportional to the time they spent in the formal job market.   Employees owe 12.4% of their taxable income for Social Security.  The employer pays half of this—a benefit of employment.  If you are an independent contractor or the on-demand workforce, you must often pay both the employer and the employee share. The more you pay into the system, the greater the amount you receive at retirement. The maximum monthly Social Security benefit payment for a person retiring in 2016 at full retirement age is $2,639 per month. Full retirement age is 66 for people born before 1960.  It will rise to 67 for people born in 1960 or later. If you wait until age 70 to retire, the maximum benefit is $3,576 per month in 2016.The maximum allowable benefit amount is only payable to those who had the maximum taxable earnings for at least 35 working years. In 2016, the maximum taxable income for Social Security is $118.500 per year. 
17. FICA (Medicare): This pays into a fund to provide retirees with medical insurance. Employees owe 2.9% of their taxable income for Social Security.  The employer pays half of this—a benefit of employment. If you are an independent contractor or the on-demand workforce, you must often pay both the employer and the employee share.
17. Unemployment Insurance: This pays into a fund to pay employees who lose their job through no fault of their own and meet other eligibility requirements of state law. In all except three states (AK, NJ, and PA), the employer pays for this benefit.  There is no employee share. The amount you get if you do become unemployed depends on the laws of the state you live in.
17. Workers Compensation: This pays into a fund to pay employees who are injured or become ill as a result of their job.  The employer pays this entirely.  You will not have any deductions in your paycheck for this benefit.

Optional Employee Benefits

17. Paid Time Off: Paid time off may include holidays, sick days, personal days, and vacation days.  Employers may continue to pay employees their wages even though they are not working.  While most unused paid time off stays with the employer when an employee leaves a job, sometimes employees are able to “cash out” unused vacation time and convert it to pay.  Likewise, the employee forfeits most paid time off if he or she decides not to use it, with the exception of vacation time. Sometimes vacation time up to a limit of hours may be “rolled over” to the next calendar year.
17. Vacation and Holiday Time: Employees might qualify for paid vacation days or paid holidays depending on their length of employment and other employer policies
17. Sick and Personal Time: Many full-time jobs and some part-time jobs offer paid sick time to their employees. Some jobs even offer paid personal time off to take care of appointments that occur during regular business hours.  The Family and Medical Leave Act allows certain workers up to 13 weeks of unpaid leave to care for a family member
17. Insurance: Employers may offer health, life, and/or disability insurance to their workers.  These insurances are generally less expensive for the worker than having to buy them in the open marketplace. Employers are able to negotiate “group plans” on behalf of their workers.  Furthermore, employers may choose to pay for some or all of their employees’ insurance premiums, leading to a great cost savings to workers.
17. Health Insurance: Employees who have the option to participate in their employer's group insurance plan sometimes find it more affordable than purchasing it through a state exchange. Review your employer's health insurance plan and compare it to your spouse's.  You may find that one is less expensive than the other. Flexible Spending Account (FSA) is a pre-tax savings account that employees can set up and designate a regular contribution of their paychecks to.  Funds from this account can then be used for certain medical or childcare expenses tax-free.  It is important to remember that FSAs run on the calendar. If you don't use the funds in an FSA, you may lose them! Once an employee separates from an employer, he or she is able to continue with the group health plan for a certain number of months through COBRA
17. Life and Disability Insurance: Review if you employer offers this.  Group plans for life or disability are frequently very inexpensive to have and may be very beneficial depending on your life circumstances.
17. Retirement: Employers may provide defined benefit plans (pensions) or defined contribution plans to their workers. Most employers offer defined contribution plans including 401(k) or 403(b) plans.  If you work for the government, you be able to save in a 457 plan or the Thrift Savings Plan.

If your employer offers a retirement savings plan, enroll in it.  The earlier you start saving for retirement, the better off you will be. Many employers offer to match the amount employees put into retirement savings.  Find out if your employer offers a match.  Then you will need to know how much to contribute in order to qualify for it.   If you do not take advantage of an employer match, you are leaving money “on-the-table” that could help provide you with basic necessities in old age.  Finally, in most cases, the money you put into a qualified retirement tax is not taxed.  This is often called “pre-tax dollars” or “pre-tax money.” This is another advantage of saving for retirement through a qualified plan.