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Employee Benefits 101 For Recent Grads

What recent graduates and new full-time employees need to know about their benefits packages

Lindsay Astle, a benefits manager for G&A Partners, recently shared her tips for helping recent graduates get the most of their benefits options in an article for BenefitsPRO.

Another summer has come and gone, ushering in the latest entrants into the full-time workforce. This latest class of workers – many of whom still haven’t framed their diplomas – is entering the labor pool at one of the best times in recent years: with unemployment rates at a historic low and many industries facing both a worker shortage and an impending exodus of experienced workers fast approaching retirement, many employers are more willing than ever to hire those with limited or no experience.

While this latest crop of new workers might have an easier time than others getting their first full-time jobs, understanding and evaluating the benefits packages that accompany those job offers still remains a challenge for many young workers.  A 2015 poll sponsored by Collective Health found that nearly 75 percent of Millennials (defined here as those between the ages of 18 and 34) are “often confused about all the benefit options available to them,” compared to 60 percent of all those surveyed.

Instead, Millennials tend to be more singularly focused on their take-home pay than their total compensation (the value of their benefits package plus their salary).  This misunderstanding of benefits packages can be particularly frustrating for employers that offer richer benefits packages, as the value of these benefits may be overlooked in comparison to traditional compensation.  While younger workers’ confusion about benefits might be frustrating for their employers, it’s nothing compared to the potential missed opportunity they may have by overlooking the benefits packages available to them.

So why are Millennials so confused about benefits?

While every worker is different, there are a few likely culprits behind younger workers’ confusion about benefits: First and foremost, many younger people are choosing to take advantage of the Obama-era rule allowing children to remain covered by their parents’ insurance until age 26, resulting in a more-or-less automatic dismissal of their own employer’s benefits packages.  Other reasons include simply suffering from the information overload associated with being a new hire and not knowing who to ask for help.

Employee Benefits 101 for Recent Grads

 

5 tips for recent graduates/young workers for making the most of their benefits options

To help set the newest (and often the youngest) members of the full-time workforce up for success in their new roles, we’ve compiled a list of 5 tips to help them become – if not benefits experts – at least more knowledgeable about their benefits options:

1.     Don’t just assume staying on your parents’ plan is your best option

While being able to remain covered under your parents’ plan is something many workers find helpful – especially for those facing high student loan debt – automatically assuming your parents’ plan offers the most value can be a costly mistake.

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Recent grads should carefully compare the plans their new employer is offering with the current coverage through their parents.   Their employer might offer richer benefits with better plan options, provider networks or prescription coverage, or have lower premium costs.  Moreover, it may actually end up being cheaper for the entire family for recent grads to enroll in their employer’s plan than to stay on their parents’ plans.

2.     Figure out what your health care needs are

How often do you typically go to the doctor?  Do you suffer from a chronic condition?  What prescriptions are you taking?  Do you want to have more flexibility when choosing your doctors?  Is your lifestyle conducive to health risks?

These are all questions recent grads should be asking themselves when it comes to determining their health care needs and deciding what kind of coverage they might want.  A helpful tip is to approach understanding one’s health care needs with the same mentality used when making a budget: Start by reviewing any recurring medical expenses (making sure to include the cost of prescriptions), then try to figure out how much might be needed to cover the expenses that are likely to be incurred throughout the year (contacts/glasses, expected dental work, doctors’ visits), and finish by adding in some extra money to cover any incidentals that might crop up through the year.

Taking the time to go through this simple exercise will go a long way to making you feel more confident when it comes to selecting a plan, and help you avoid both overpaying for coverage you don’t need or paying the price later on for not getting enough coverage.

3.     Educate yourself as much as you can

Not all benefits plans are created equal, and young workers shouldn’t let their confusion or a fear of appearing uninformed prevent them from getting the information they need.  You’re the one who will be paying for them and using them, so take the time to understand what your benefit options are as soon as you can – even before your first day if your prospective employer will provide the information along with your offer letter.  (Having this information up front can also help you evaluate the total compensation value of different potential opportunities if you happen to have multiple job offers.)

Additionally, don’t be afraid to continue asking questions after you’ve enrolled in coverage.  Make sure to check your paystubs to ensure your benefits deductions are correct and speak up if you think there’s been a mistake.  If your employer utilizes a third-party administrative provider to manage its human resources and/or benefits functions – like a professional employer organization (PEO) – make sure to take advantage of any resources the provider offers, such as dedicated benefits experts who can answer your questions.  If not, figure out who within the company (such as an HR manager) can help answer your questions.

4.     Don’t wait until the last minute to enroll

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When it comes to benefits, knowing your dates and deadlines is key.  There is often a limited window (called the “enrollment period”) for employees to make decisions about their benefit elections, after which you will be unable to make any changes until the next enrollment period unless you experience a mid-year qualifying event.   This means that waiting until the night before your enrollment period ends to even open your benefits packet is probably a bad idea.

5.     Take advantage of ancillary benefits

When it comes to benefits, most employees tend to focus on health insurance (medical, dental and vision coverage) since these are often the most expensive and most used benefits.  But most employers also offer a number of ancillary benefits and perks that can help enhance the value of your benefits package – sometimes at no additional cost.  Moreover, employees often don’t have to enroll in the medical plan to take advantage of these products and plans, which means younger workers still covered by their parents’ plans can still take advantage of them.

Below are some important ancillary benefits, perks and other considerations to keep in mind:

  • Retirement plans: Most people know that the earlier they can start saving for retirement, the better off they’ll be. If your employer offers any kind of employer match, make sure to participate as much as you can.
  • Life insurance: Most young people probably don’t rate life insurance high on their priority list, but it can be an incredibly valuable benefit – especially if your employer offers guarantee-issue life insurance.
  • Telemedicine: More and more employers (and carriers) are recognizing the value telemedicine services offer. In addition to saving you the hassle of scheduling an appointment and physically going to your provider’s office, telemedicine services that don’t charge for each virtual visit can also help you save money.
  • Wellness programs: Participating in your company’s employee wellness programs is a great way to learn more about your personal health and how to adopt healthier habits. Many employers also link their contributions to health insurance premiums to participation in the wellness program, giving you another reason to take advantage of this benefit.
  • Flexible work arrangements: The ability to work from home occasionally or being able to set your own schedule is a highly sought-after benefit, but not all employers offer it. If this something that’s important to you, don’t forget to ask about it up front.
  • Vacation/paid time off: Paid time off policies can vary significantly from employer to employer, so make sure you understand exactly how much time you get and when you can use it before you schedule that vacation you’ve been dying to take.

Ultimately, the type and quality of benefits an employer offers can tell you a lot about a company and should be something workers pay just as much attention to as their base salary  when evaluating job offers.

 

 

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