So You've Got Benefits, Now What?

Does your new job comes with benefits, but you can't decide how to take advantage of them? 

Here are some tips to help you make the most of your employee benefits. 

1. How do you pick the right health insurance plan at the right price?

If your employer offers different kinds of plans, make sure you understand the pros and cons of each type.

• An HMO (or health maintenance organization) is a type of health plan that’s relatively inexpensive, but fairly restrictive. 
• A PPO (or preferred provider organization) give you more flexibility — in terms of which doctors you can see — but you may also have higher out-of-pocket costs.

Pay attention – for instance — to what is, and isn’t covered, such as mental health services or prescription drugs. When comparing plans, look for a summary of benefits and coverage. 

2. Participate in your employer-sponsored retirement plan as soon as possible.

When you are busy climbing the corporate ladder, retirement may seem like a long way off. But it’s important to start participating in your employer-sponsored retirement plan as soon as you can. When you make pre-tax contributions to the plan directly from each paycheck, that money gets invested in mutual funds that own stocks or bonds. You get to decide how your money is invested by choosing from a menu of funds. Some employers will even match your contributions and who doesn’t like free money?

If you start saving early (ideally in your twenties), time is on your side. So, when retirement rolls around, chances are you’ll be better off than someone who started saving in their thirties or forties. Not only will you have more time to save, but your nest egg will have more time to reap the advantages of a wealth-building phenomenon known as compounding. Compounding has been called “the snowball effect” that happens when your earnings generate even more earnings over time. 

Before diving in — though — it’s important to understand your investment options and to pay attention to the fees charged by funds in your plan, which can eat into your returns. You can get answers to many of your questions by calling the investment company that manages your plan or visiting its website. Better yet, if your plan manager offers an onsite workshop for employees, be sure to sign up. 

3. Should you get life or disability insurance?

Many companies provide what’s called group term life insurance at little or no cost to their employees. And, in most cases, you don’t have to get a physical exam to qualify. But make sure you know how much coverage you’re getting. If you have a partner or children who depend on you for financial support, you may want to consider buying a supplemental group policy through your employer, or even private insurance. 

And don’t overlook disability insurance, which will help you pay your bills if you can’t work. Find out if your company offers this kind of insurance and get familiar with the plan benefits. Short-term policies provide coverage for — well — a short time; so consider buying a private disability policy if you want more of a safety net.

4. Many businesses also offer a variety of other benefits.

Check to see if your company also offers:

• Paid holidays and vacation 
• A dependent-care or health-care flexible spending account
• Partner benefits
• Long-term care insurance
• Group legal services 
• Discounts or free public transit benefits