Don’t Miss Out on Free Money
As the economy continues to rebound from the pandemic, employers are beginning to fill vacant positions again. Business conditions are still very fragile, and traditional compensation is at best stagnant or possibly even less compared to pre-pandemic conditions. As employees return to work looking to make up for lost wages or replenish savings, how can they get back on track?
Start by looking beyond the traditional salary and bonus plans. Many employers offer other benefits that equate to additional real money in employees’ pockets.
Employer matching contributions to retirement plans
Many workplace retirement plans have an employer matching component. It can be structured in several ways, but the essence is an employer will contribute to an employee’s retirement savings plan account up to a certain amount if the employee contributes a certain amount of their own money. This is essentially free compensation. The money can’t be used immediately because it is earmarked for retirement, but it is a great way to build bigger balances for later in life.
Keep in mind that most plans have a length of service, or “vesting” requirement, on any funds contributed by the employer. If an employee were to leave the company before becoming fully vested, they may forfeit a portion of the employer contributed funds. At minimum, aim to contribute an amount that maximizes any employer contributions.
Employer contributions to health savings plans
Beyond traditional retirement plans, many companies that offer health insurance benefits may also contribute to a health savings plan for employees. Health Savings Plans (HSAs) are available to anyone participating in a high deductible health insurance plan. Employees can fund the HSA up to certain limits each year by deferring directly from their income. Employers may also contribute to the HSA on the employees’ behalf.
If used for qualified health expenses, funds can be withdrawn from the HSA tax-free. Participating in an HSA offers employees a tax advantaged way to pay for everyday medical expenses.
Reduced health insurance premiums for employees
Some employers will offer reduced health insurance premiums to employees who demonstrate healthy lifestyles. Having a documented annual physical and routine blood work could entitle the employee to reduced costs. The company wants to incentivize their workforce to be health conscious in hopes it will reduce the overall costs to administer the health plan. In addition to routine medical care, some larger employers negotiate reduced membership fees to health clubs.
While these benefits aren’t direct increases to an employee’s salary, they do represent meaningful increases to their financial well-being. In today’s challenging work environment, employees can’t afford to overlook these valuable benefits that equate to free money from employers.