Starting a new job can be very overwhelming. Often, new-hires go through a barrage of training, information overload and multiple booklets covering procedures, processes and application. Somewhere in that mix is the benefit package. Here is where the new employee can sign up for important health insurance coverage, retirement savings plans, and other benefits such as life insurance and disability. In the stress and whirlwind of the on-boarding process, sometimes benefits can get pushed to the side, and then after time, forgotten about.
Here’s a checklist of what a new employee can do to make sure they sign up for these precious benefits and some information on how to move forward.
- Select the appropriate health coverage. Some employers have one carrier that provides coverage with different options from that carrier. Options may include HMO, PPO or HSA plans. The premiums the employee pays will depend on the deductibles in the respective plans and the different benefits offered. More information can be found here.
- Sign up for group life insurance. Generally, this is going to be the cheapest life insurance the employee can get. There’s often little underwriting involved and employees can get anywhere from 1-5 times (sometimes more) of their annual salary in coverage. Some plans allow for spouse and child coverage as well. This coverage should be in addition to the personal policy. The reason being is the coverage may be forfeited if the employee loses their job or changes employers.
- Start saving into the retirement plan. Whether a 401(k), 403(b), or other plan such as a SIMPLE or 457 employees should start to defer (save) into these plans as soon as they are eligible. Some employers will match an employee’s contributions up to a certain amount. This is free money – never leave it on the table. Additionally, employees should consider saving a percent of their income versus a fixed dollar amount. As the employee receives raises, so too does their contribution increase. This isn’t the case with a fix dollar amount.
- Sign up for short and long-term disability. This covers an employee’s income (up to a certain percentage) if they become disabled and cannot work for a short or long duration. Premiums are very affordable since it is group coverage and the definition of disability is generally much more favorable than that of Social Security (any occupation).
- Consider other benefits. These other benefits could be discounts on health club memberships, flexible spending accounts, employee discounts, etc. Flexible spending accounts (FSAs) allow an employee to use pre-tax dollars to fund an account that may be used to help pay for certain expenses. More information on FSAs can be found here.
These are just a few things to consider when becoming a new employee. As always, questions can be directed to the employee’s HR department or a competent financial professional.