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What are employee benefits?

Posted on by Cheryl Rauh

Employee Benefits are any kind of tangible or intangible compensation given to employees apart from base wages or base salaries. Two of the foundational benefits are health and wellness benefits and retirement benefits.

What are possible health and wellness benefits?

Health and wellness benefits include healthcare insurance, dental insurance, vision insurance, life insurance, disability insurance, prescription drug coverage, employee assistance programs, and wellness programs.

What definitions do you need to understand my benefits?

Premium: The monthly cost of an insurance plan is called its premium. This cost is often partially paid by the employer with the remaining cost falling on you, the employee.

Deductible: When an insurance claim/incident (typically medical) occurs, the deductible is the amount you have to pay out-of-pocket first before your insurance starts paying your claims.

Copay: A copayment is a fixed cost attached to specific services for your healthcare. When you pay a co-pay for your service, the remaining cost will either be covered by your health insurance or split between you and the healthcare based on the co-insurance amount. An example of a copay would be a $40 flat charge for every general care appointment from your Primary Care Physician.

Coinsurance: Co-Insurance is a percentage attached to medical costs that identifies how much you pay of the medical expenses after your deductible has been paid.

Example: You have a 20/80 coinsurance indicating 20% is your cost. If you have $100 in expenses and your deductible has been paid, you will owe $20 (20% of $100). It is important to note that some plans may list the same benefit as 80/20 (reversing the numbers), so it is always important to identify which portion you are responsible for.

Out-of-Pocket Maximum: Your out-of-pocket maximum on your health insurance policy is the maximum amount of money that you will have to pay in total for the year, excluding premiums and balance bill charges.

Example: Imagine you have a $1,000 deductible, 20/80 co-insurance, an out-of-pocket maximum of $10,000 and a large medical expense of $50,000. In this example you would pay $1,000 deductible first [50,000-1,000=49,000], then 20% of the remaining costs up to 10,000 maximum [49,000*.2=9,800], but because you already paid $1,000 of your $10,000 maximum you only have to pay [10,000-1,000=9,000] 9,000 of the remaining $9,800 expenses.

Network: Your healthcare network includes all the facilities, providers, and suppliers your health insurer has contracted with to provide health care. Most plan will still cover out-of-network health care, but they will cover a smaller portion, so your expenses will be much higher.

Primary Care Physician: Your primary care physician will be your go-to for general care and your source for referrals to additional medical care. When reviewing your benefits, your primary care physical will often be referred to as your PCP. 

What are possible retirement employee benefits?

There are two basic categories of retirement plans:

  1. Defined Benefit Plans: A defined benefit provides a specified retirement income based on years of service and related salary.
  2. Defined Contribution Plans: A defined contribution plan allows you, the employee, to contribute up to a maximum amount of money each month that is saved and invested to be accessible funds for you at retirement.

Various types of retirement plans exist based on the type of employer you have, but all the defined contribution plans work similarly. The defined contribution plan options will either be a 401(k), 403(b), or a 457. A pension plan is a defined benefit retirement plan.

  • 401(K) Retirement Plan: Define contribution plan used by for-profit organizations
  • 403(b) Retirement Plan: Defined contribution plan used by tax-exempt organization (e.g. public schools, churches)
  • 457 Retirement Plan: Defined contribution plan used by nonprofit and government organizations
  • Pension Retirement Plan: Defined benefit plan. Social Security is a defined as a pension plan.

What is a % contribution match on my defined contribution retirement plan?

An employer-sponsored match on your defined contribution (e.g. 401(k)) retirement plan means that your employer will equally contribute the same amount of money that you contribute, up to a certain percentage of your income, often between 3-5%.

For example, let’s say Tristan makes $40,000 a year and Tristan’s employer provides a 4% match. If Tristan chooses to save 8% of their income, [$40,000*8% = $3,200] then their employer will also contribute up to 4% to Tristan’s retirement plan. Since Tristan chose to saved 8% then the employer will contribute the full match of 4% [$40,000*4% = $1,600].

How can Powercat Financial help you with employer benefits?

Powercat Financial is a free, confidential peer financial counseling service for K-State students. At Powercat Financial, we work together with students to explore and discuss topics like credit, student loan repayment, budgeting, and job offerings. Employee benefits are a major factor to any job offer as well as your financial well-being and as such it is important to understand what you’re being offered and how to benefit from these employer-sponsored benefits. I’d encourage K-State students looking to review a job offer and benefit package to schedule a free appointment to have one of our counselors guide you through your employee benefits!

Chet Redstone
Peer Counselor I
Powercat Financial
www.k-state.edu/powercatfinancial

When Is The Best Time To Negotiate Your Salary?

Posted on by christyne

An employer ask you to take a seat and you start talking about the job as he looks over your resume. You are thinking really hard about all your qualifications that will get you this job. The employer then ask what sort of salary are you looking for. Is this the right time to tell him what you want to be paid? The answer is no, not just yet.

First, think of when you go to the store and you are looking at clothing.  Think about when you first see something you want! You are very interested and you have to buy it. What stops you? For most people, it is the price tag.  What happens when the retailer asks you to try it on before you see the price? Most people that see the merchandise on them before they see the price tag are more than likely to buy it. This is the same thing with employers: you want them to commit to liking you before you talk about how much you are worth. Don’t let them screen you out because you are over their budget.

The employer asked early on in the conversation how much you are wanting to get paid, so what do you say?  To postpone the salary talk until you have been offered the job reply, “I’m sure we can come to a good salary agreement if I am the right person for the job, so let’s first agree on whether I am.” Or: “Salary? Well, so far the job seems to have the right amount of responsibility for me, and I am sure you pay a fair salary, don’t you?” (What can they say here?) “So let’s hold off on the salary talk until you know you want me. What other areas should we discuss now?”

You may think this seems bad that you are trying to avoid the employer’s question, but think of it from the glass half full side instead of half empty. The employer may be impressed that you’re wanting to make sure you are a good fit before you talk about how much you want to be paid. The more qualifications the employer knows you have, the more he is willing to pay you. So by postponing the salary talk until you have been told you are the right person, you will not get screened out and their salary offer may go up.

Resource:  Negotiating Your Salary: How to Make $1000 a Minute

Tyler Larson
Peer Counselor II
Powercat Financial Counseling
www.k-state.edu/pfc

Impact of the Affordable Care Act (Obamacare) on College Students

Posted on by kdarnell

In addition to figuring out how to pay for tuition, books, and housing, college students need to be aware of the impact of the Affordable Care Act (ACA), otherwise known as Obamacare, on their finances.

You’ve probably heard lots about this program, but there is still quite a bit of confusion and misunderstanding out there. The best way to approach this issue is to become informed about it. One reality is that the program will have a definite impact on health care insurance for students. One of the impacts is you will have more options to compare and contrast. You’ll need to figure out which option makes the most sense for you. One thing to know is that effective January 1, 2014 most people will need to have health insurance coverage that meets the requirement of the ACA, or pay a tax penalty.

If you are under 26 and your parents have health insurance that covers family members, the law allows you to stay on their plan in most cases. This is one very positive aspect of the ACA for young adults. We recommend that you check with your parents to see if this provision applies to you. If it does, staying on your parents’ plan might be the lowest cost option available to you. This coverage is available even if you are considered financially independent, and is available regardless if you are single or married. Costs for this coverage might go up, however, because many plans charge higher premiums when you add additional family members.

Check the provisions of your parents’ plan carefully if you are considering being covered by their plan. Some plans limit the physicians and other health care providers to those in their network. This is particularly true in the case of Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). If you attend school outside the community where your parents live, you might have to go to an out of network provider. This can result in less coverage or more expenses.

Another option to consider is the student health plan offered for students at KSU. In the past these plans had limits on their coverage. Limits on coverage is something that the ACA is addressing. According to Professor Roberta Riportella, Professor of Community Health at KSU, the KSU Student Health plan meets the requirement for coverage under the ACA. This could be a lower cost option for students that qualify for coverage. Check out the following website for info on this plan: https://www.uhcsr.com/SelfServiceSupport/Students/CollegeHome.aspx

A new feature of the ACA just now being rolled out is the online health insurance exchange. In this exchange you’ll be able to see the health insurance companies providing policies in your state. You’ll also be able to choose benefit packages ranging from basic coverage in the bronze plan to higher-level coverage in silver, gold, and platinum plans. You’ll pay more in premiums for the higher levels of coverage. You can access the health insurance exchange at the following link: https://www.healthcare.gov/

Professor Riportella has been very active in posting information to a blog that clears up a lot of the misinformation regarding the ACA. Her blog can be accessed here: https://blogs.ksre.ksu.edu/issuesinhealthreform/

Finally, Professor Riportella discusses the ACA and its impact on college students in the following archived recording from a session presented to students on November 5, 2013. If you missed her workshop you can check it out online. It would be worth your time to watch this informative session. The video at the beginning of her presentation covers a lot of the important info you need to know. Here is the link: http://www.k-state.edu/grad/students/workshops/aca.html

Rob Jones, M.A.Ed.
Peer Financial Counselor II
Powercat Financial Counseling
www.k-state.edu/pfc

Top 5 Hidden Costs of Your First Job

Posted on by roxanne

1. Clothing

Your favorite jeans and college t-shirt work great when you’re heading to class, but once you enter the workforce you may have to beef up your wardrobe. Depending on the industry you go into you may be required to wear business professional or business casual attire every day. Purchasing these types of clothing doesn’t always come cheap.  About.com estimates that men will spend $125 a month on their professional work wardrobe. That totals up to $1500 annually.

2. Transportation

Depending on what city you work and reside in, other costs of your commute may arise. After you graduate you may need to upgrade your vehicle which will increase costs of auto insurance, loan payments, etc. Transportation costs may also include stress and time away from family or other activities depending on the distance or traffic of your daily commute.

3. Eating out

Even though you may plan on bringing lunch to work most days, you may be obligated to go out to lunch. Many employees treat lunch as a time to network with clients or discuss business. Spending a minimum of $20 a week on business lunches or dinners can end up costing you $1,040 a year. This being a low estimate increasing lunch outings can really add up over time and end up decreasing the amount of money you have to spend on other discretionary items.

4. Travel

With some jobs you may be required to travel. Whether this means traveling locally to meet clients, or traveling across the country, these costs can reduce your discretionary income.  Many firms will reimburse you for travel expenses, but you may have to pay the upfront cost. There are also expenses associated with traveling that your firm may not compensate you for such as time away from your family, meals, and traveling essentials.

5. Taxes

Most people don’t consider taxes when they enter their first job but it is something to be aware of. When you earn more money you may be pushed into a higher tax bracket. This is especially true for students entering their first job who have formerly filed as dependents of their parents. In 2012 those filing as Single on their tax return earning $8,700 to $35,350 were taxed at a rate of 15%. If you earned $30,000 last year you would have been taxed roughly $4,500. As your income increases your tax bracket increases, which means you may end up forking a good chunk of your income over to Uncle Sam.

 

Although that new job offer may sound great, it is always good to look into the hidden costs. Comparing these costs and your compensation is a great way to find out if you need to further negotiate your salary. When looking at an offered salary it is important to analyze the extra costs that take away from your discretionary income in order to accurately evaluate the offer. Budgeting for these extra expenses can help you in not being caught off guard when they arise.

 

Sydney A. Henderson
Peer Counselor I
Powercat Financial Counseling
www.k-state.edu/pfc

Evaluating Employee Benefits and Perks

Posted on by roxanne

When considering a job offer, many people think the most important factor is the salary. Actually, it is just as critical to analyze the ‘secret’ money – benefits and perks that are offered by an employer. Some benefits to consider include a comfortable and casual work environment, flexible work schedules, an option to telecommute, gym memberships, tuition reimbursement, and a casual dress code.

Typical Employee Benefit Packages

According to the Bureau of Labor Statistics, the average number of annual paid holidays is 10.  Paid leave time also can include sick and maternity leave. Almost half of medium and large employers offered either a defined benefit or a defined contribution pension plan. But they may have some requirements. For example, you can join the plan after working a required number of years for the company. Or you must work for the company a certain number of years before you become “vested” and own the company contribution portion of your plan.

Every company has different requirements when they offer health insurance.  Some may require an initial premium payment  after which, the policy itself will cover you and your family.  Be sure when making insurance selections that you know whether or not the plan will include dental, vision or disability coverage and whether or not there will be any out-of-pocket expenses. Life insurance is also a common benefit associated with most insurance solutions. Employers usually provide an amount equal to a percentage of your annual salary for insurance needs with an additional option to purchase life insurance when necessary.

How to Evaluate Perks

Employers believe that an advantageous way to attract top employee talent is offering perks and benefits outside of the initial base salary. However, not all benefits are necessarily the best fit for you. The true value of perks being offered from the employer should be determined not by the overall quantity or dollar value, but by the benefits that make a true impact on the lifestyle you live. As an example, if living an active healthy lifestyle is important for you as an employee, it may be valuable to look for companies that offer gym memberships to employees. An extreme example of this would be looking for companies that have a gym inside of the office as this perk is becoming more and more popular in the modern day workplace.  Another example of perks would be companies that offer a flexible work schedule. If you are not a morning person, being able to come in later and be more productive creates a win-win situation for both parties! Just remember, when a company is a better fit for you, you are also a better fit for them.

 

Angela Li
Peer Counselor I
Powercat Financial Counseling
www.k-skate.edu/pfc

It’s almost time to graduate! Money tips for college graduates:

Posted on by roxanne

If this is your last semester at Kansas State University then there is no doubt that you are busier than ever.  You are sending out résumés, preparing for interviews, applying for graduation, and finally purchasing your cap and gown!  Everything you are doing now is exciting and your life is about to change dramatically as you transition from being a student to being a full-time employee.  As you’re building your career and life outside of college there will be many financial decisions that you will need to make.  Here is a list of a few things to consider as you prepare for graduation and beyond.

How are you going to manage your debt?

Many students will graduate with student loans that need to be paid off.   The first step you will want to take as you get close to graduating is to find out who your loan servicers are and set up accounts with them.  Your loan servicer is the company that hosts your loan and who you will be making payments to.  After you have set up an account you will want to decide what kinds of payments you will want to make, such as standard or graduated.  Powercat Financial Counseling has brought SALTmoney.org to Kansas State University students and alumni and this is a great interactive website to use to understand what your loan payments will be.

Do you know your credit score?

Your credit score is a number representing your creditworthiness based on past and current credit files.  The range of credit scores is from 300 to 850 and new graduates need to be aware of the dangers of a poor credit score.  Bad credit will make it hard to get an apartment, car loan and even a job.  There are many ways to build your credit score, but one simple way is to make all payments on time and never miss a single payment.  You can view your (unofficial) score for free anytime at www.creditkarma.com.

Do you have a budget?

Upon graduating college and obtaining a job you will start to have a lot more income, but also more expenses.  It may be hard to begin managing your money and new expenses so it is a good idea to start sticking to a budget.  A budget is not meant to have a negative connotation; it is simply a way to control your money instead of letting your money control you.  If you would like to start forming a budget Powercat Financial Counseling has spending plan worksheets available online at www.k-state.edu/pfc/budgeting.

Will you start saving?

Hopefully when you graduate you will begin to have money available for savings, and your employer is likely to offer retirement plans such as 401(k)’s.  If your company will offer to match your contributions to your 401(k) then you should take this opportunity, it’s basically free money!  Another reason to think about saving as soon as you graduate is that interest on your savings grows exponentially so the sooner you start saving, the more you will have when it comes time to retire!

Are you insured?

Students used to be removed from their parent’s health care insurance immediately after graduation; however under the Affordable Care Act of 2010, parents may now keep their children on their insurance until age 26.  This may be a relief to a few of you because it gives you a little more time to build up income before you must pay for your own insurance.  As you graduate and accept a full time job you will want to assess your company’s health care plan and talk with your parents about whether or not you will stay under their plan for a little longer.

 

There are many other decisions that will need to be made around graduation time and countless other questions that you may have, but hopefully this list will help you get started thinking about your financial future! For further questions, please request an appointment at www.k-state.edu/pfc!

 

Wende Witthuhn
Peer Counselor I
Powercat Financial Counseling
www.k-state.edu/pfc