6 Terms to Help You Decode Your Employee Benefits

Starting a new job is full of learning, and the work itself is just one part of it. You’re navigating new waters in terms of coworkers, relationships, company culture, and the social sphere. And, on top of all of that, there’s always an introductory tete-a-tete with HR to fill out forms, copy documents, and do your best to make sense of it all.

It’s important to understand your employee benefit package for obvious reasons, but being able to work through they affect you might be a little harder to discern. With some help from LearnVest, here are the terms you need to know:

1.    401(k)
This is a retirement savings plan, and the most common one offered by employers. Contributions are usually deducted right from your paycheck, so in a way, it’s like money you never knew you had. Many of employers will offer some sort of matching, meaning that they will add a percentage of what you contribute to your 401(k). It’s essentially free money for your retirement. So take the time to review what a company offers, and if it’s matched. Even if it seems arbitrary, like 25% versus 35%, that 10% difference can make a huge difference over a few years.

2.    Paid Time Off, or PTO
PTO includes vacation, floating holidays, personal days, sick days, holidays, any day that you get paid without working. You might have negotiated this prior to hiring, or it might be something which you don’t have a lot of say. Some organizations might give 10 days of vacation, a few days of sick time, and certain holidays off, all within a year’s timeframe. In other places, you might have to accrue the time. Knowing what to expect in case the unexpected happens makes understanding PTO necessary.

3.    Commuter Benefits
These are more common in urban areas, where parking, traffic, and commuting in general can contribute to low morale. Companies typically offer commuter benefits in the form of reduced or reimbursed mass transit fare, or some kind of tax-exempt fund for parking. They might even offer incentives for biking or walking to work, although that’s typically more common in the next type of benefits: Wellness.

4.    Wellness Programs
A healthy employee is a happy employee, and more and more companies are coming around to this idea. Ask your HR department what they offer; it might include a reduced-price or free gym membership, onsite yoga, a FitBit-type step program, or financial planning for a wider interpretation of wellness.

5.    Stock Options and Vesting
If your company allows employee stock options (ESOs), that means you can buy into your company stock under certain conditions. It’s an incentive for employees because it empowers them to work harder for the success as well as gives them the opportunity to sell. These options are subject to vesting, though. Vesting is when you are given access to benefits over a period of time, and it isn’t limited to stock options. It can relate to profit sharing, retirement plans, etc. The main idea is that they influence employees to stay put longer.

6.    Health Benefits
This is the first thing that usually comes up when employee benefits are mentioned (well, health or retirement). Getting through health benefits paperwork is an article all unto itself, particularly as the USA moves forward with health care reform. Stay tuned for that in the future.

Employee benefits can make or break a job offer, since a higher salary on the surface might not pan out if you have to pay more for health benefits, transportation, or other things. It pays (literally!) to become comfortable exploring your benefits package and make the most of your options!