Understanding Your Employee Benefits

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Employee benefits are an added type of compensation offered to employees by employers. Some of the most common employee benefits include health insurance, paid time off, sick leave, and life insurance. If a company offers a 401(k), the employer match can be a great benefit since it's free money because employers contribute a percentage of an employee's wages to your retirement account.

When considering a job, it's important to consider each company's benefits. Read on to learn the most common employee benefits.

Key Takeaways

  • Companies offer a variety of employee benefits that could make a lower-paying job with good benefits more enticing than a higher-paying job with no benefits.
  • Some of the most common employee benefits include health insurance, disability, 401(k) match, paid time off, sick leave, and life insurance.
  • Your benefits can often be reviewed each year during an open enrollment period or at the start of a new financial year.

Health Insurance

The most common employee benefit is health insurance, which helps to cover your medical expenses. Many companies have different policies about when you qualify for health insurance. Generally, if you are working full-time, you qualify for this benefit.

Some companies will completely cover you and allow you to purchase insurance for your family. Other companies will have you pay a premium for yourself and your family. Some companies also allow you to cover your significant other or partner.

You should consider the out-of-pocket costs as well as the premium costs when comparing health insurance benefits. Companies are required to offer health insurance plans that meet the Affordable Care Act guidelines in many cases.

401(k) Employer Match

Employer match is another great employee benefit. Many employers will match your 401(k) contributions up to a certain percentage of your salary.


The employer matching contribution to your 401(k) can help you build your retirement savings much faster than if you saved for retirement on your own.

Be sure at least to contribute enough money to your 401(k) to qualify for the employer match because it's free money. In other words, a 401(k) plan might require you to contribute a minimum of 3% of your salary to receive the full matching of 3% from your employer, for a total of 6%. If you don't contribute or participate in your 401(k), you don't receive the employer match.

If you leave the company before you are vested in the 401(k) program, you will lose the amount your employer has added. Typically, it takes five years to become vested, meaning the employer-matched contributions become yours to keep. As a result of being vested, you can transfer those funds to another 401(k) or individual retirement account (IRA) when you leave the company. Your human resources representative can tell you how long you need to work in order to become vested.

Paid Vacation and Sick Time

Paid vacation and sick days are also great employee benefits. Generally, you earn a set number for each month you work. These days will accrue as you work.

Many employers also give additional days once you reach the five- or 10-year mark. When changing jobs, you may want to consider the benefits that you will give up due to seniority.

Also, when you leave, your company may pay you for the sick days and vacation days that you have accrued but not used. However, it varies by state on whether that is enforceable by law.

Life Insurance

Typically, your employer will pay for the amount of one year's salary while giving you the option to purchase additional coverage. A life insurance benefit can help pay your bills, debts, and burial expenses in the event of your death.

You should be prepared to name a beneficiary when you fill out your initial paperwork, which requires the social security number of your beneficiary. You can also change the beneficiary by contacting your human resources department.


Your primary life insurance coverage should not be through your work because you will lose coverage if you lose your job. Look for a term life insurance policy that you can buy separately for your primary insurance coverage, particularly if you have a spouse or family.

If you have a condition that will stop you from qualifying for life insurance, you may want to maximize the amount you have through your job.

Stock Options

Stock options allow you to purchase stock at a set price. However, there is usually a waiting period set by the company before you can sell the stock.

You receive the stock options at a specific stock price and you might be able to sell them when the stock price is higher. Using your stock options is a great way to increase your savings and a great benefit offered by many start-up companies. 

Flexible Spending Accounts

Another common benefit is a flexible spending account (FSA). These are regulated by the government, and so the rules are pretty much the same across the board.

An FSA will allow you to set aside pre-tax dollars from your paycheck and direct them to an account for medical expenses. FSAs can cover out-of-pocket copayments and deductibles required by your insurance plan, some prescriptions, and other health care costs.


When you use an FSA, you also reduce your taxable income, meaning it can make your taxes lower in some cases.

Other Insurance Options

Your company may offer many other insurance options, including dental, vision, and disability insurance. You should determine whether or not you need all of these additional insurance benefits. Disability insurance is a great benefit since it will protect you if you were suddenly injured. If you are considering dental and vision insurance, you should carefully look at your insurance plans before you make a decision.

Frequently Asked Questions (FAQs)

What are the major employee benefits?

The most common employee benefits include health insurance, disability, paid time off, sick leave, and life insurance.

What are considered good retirement employee benefits?

A 401(k) with an employer matching program is a great way for employees to save for retirement. Some employers match your retirement contributions up to a specific percentage. For example, an employer might contribute 3% of your salary to your 401(k) as long as you also contribute 3%. Also, your contributions to your 401(k) can have tax benefits, depending on the type of retirement account.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Register. "Shared Responsibility for Employers Regarding Health Coverage."

  2. Internal Revenue Service. "401(k) Plan Overview."

  3. Internal Revenue Service. "Retirement Topics - Vesting."

  4. Thomson Reuters. “Vacation Pay State Laws Chart: Overview.”

  5. HealthCare.Gov. "Using a Flexible Spending Account (FSA)."

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