What Is That Benefit Package Really Worth?

You've been there before: talking with a prospective employer, interview all but finished. Now it's time for what you've been waiting for: What are they going to pay you? Before you can grasp what's happened, a salary figure flies by -- and it sounds awfully low. Then, as if to compensate, the boss starts talking about all the wonderful benefits you will get for signing on with the company.

Contrary to what some might have you believe, not all benefits packages are the same. Some can save you a bundle, while others are a pure waste of time.

Evaluate the Benefits

So how do you decide what's good for you? Here are three questions to ask yourself when evaluating them:

  • Think of a benefits package as its own little piece of your salary -- in the form of services instead of cash.
  • Figure out the approximate cash value of those benefits, and decide whether you think you could get those services at a better price.
  • Decide whether you want the services in the first place -- because if you don't, why accept them in lieu of salary?

    Let's start with the first consideration. A typical benefits package adds about 25 percent to your salary. That is a good rule of thumb to help you compare competing job offers with different base salaries, keeping in mind that some benefits packages are very stingy and others are more generous. The best type of benefits package is what's called a ''cafeteria plan'' or ''flexible benefits plan.'' This means your employer will give you the chance to choose from among a variety of benefits.

Here's how it works: You get a specific number of credits to use on your benefits. You then look at a list of benefits choices (see a list at the end of this article for some of the options you might be offered), and if you decide to forgo life insurance, for example, you may be entitled to extra vacation days. The point is that it's flexible and can be tailored to your needs.

Whether you work at a company with a cafeteria plan or at one where benefits are set as a standard package, you still need to know what they're worth.

Look at the individual components of the package. Are you being offered health coverage through an HMO or through a carrier that offers a full plan? Call up some health care providers such as Blue Cross and Kaiser Permanente to figure out how much you'd have to pay for an individual policy that is comparable to the one your prospective employer is offering.

Finally, think about what you're being offered and decide whether you really need those benefits. If your employer offers a free membership to the gym next door but you already belong to a great kickboxing studio, that's not a great benefit for your situation.

Your Benefits Checklist
Benefits can save you money and provide services necessary to your life. Instead of running around collecting health insurance, retirement accounts and child care expenses, you're covered. But before you sign on, remember to think about what your needs really are and think about ''the big picture'': the whole benefits package. Above all, be sure your employer is offering you a benefits package that has real benefit for you. Use our checklist to decide for yourself:

Are you benefiting?

  • Health insurance -- for you and a spouse
  • Disability insurance
  • Dental care
  • Eye care, including glasses and annual eye exams
  • Life insurance
  • Pet insurance
  • Education expenses
  • Gym membership or a stipend to cover workout costs
  • Company car
  • Profit-sharing
  • 401(k) or pension plan
  • Stock options
  • Personal days
  • Vacation days
  • Child care
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