How to Evaluate Benefit Packages

You are in your last few months of clinical internship and the end is clearly in sight! There were times when you had your doubts, but soon you will be able to reap your just rewards — your first job at your new professional pay scale. With the current shortage of clinical laboratory science professionals, you will most likely have your pick of several jobs. Many factors will go into your job selection, including location, organizational culture, job responsibilities, potential for future advancement, and the financial offer.

Salary is only part of the financial picture. The total compensation package that comes with a job offer is a combination of salary and benefits. How are you going to evaluate the benefit packages that come along with the salary offers? Typical benefit packages include medical coverage, pharmacy, dental, vision, life insurance, long-term disability insurance, and some type of paid time off plan. You need to break down the cost of each of the components, both the cost to you and the cost to the employer, to get a picture of the total value. By setting up a spreadsheet that includes the salary and all of the benefits that you plan to use for each job offer you receive, you can calculate the annual value in both income and cost savings to you for each job offer you are considering. In this way, you can assess which offer is the best for you financially.

For example:

¹PDV — Pharmacy,Dental & Vision
²AD&D — Accidental Death & Dismemberment
³LTD — Long Term Disability
⁴Benefits Allowance -

Health Care Insurance is a benefit that everyone will need, but the type of plan that best meets your needs will vary depending on your family situation. Most employers do not pay for 100% of medical coverage. Employees are required to pay a percent of the premiums — typically 20-25%. Any of you who have purchased an individual medical insurance plan will know that the rates are significantly lower through a large employer plan. Many employers offer a choice between two or three health insurance plans. Some will have a lower deductible ($250-$500) that you will have to pay before you start receiving benefits. These usually have the highest monthly premiums. Other plans will have a very high deductible ($1000-$2000), but have much lower monthly premiums. Young 20-something singles often have fewer needs for healthcare services, so can benefit from plans with a higher deductible on physician services. Usually the premiums are significantly lower, but hospitalization costs are still well covered. The out-of-pocket costs for one or two doctor visits per year will still be much less than the higher monthly premium costs. Families will normally utilize many physician visits a year, so the higher premium for the plan with the lowest deductible on physician services will often save you money. Pharmacy, dental, or vision coverage plans are a plus that can save you out-of-pocket expenses. Again, you should evaluate how much you (or parents or spouse) spent over the past year in deciding if the premiums you will pay will save you money by the end of the year. Some employers offer their employees an allowance for benefits that is additional earnings given to employees each pay period. If you purchase any of the insurance options, the additional earnings will help offset the cost of the insurance. If you do not purchase insurance and provide proof of other coverage (such as your spouse's plan) you will usually still receive the additional earnings. Some employers may also allow utilization of part of your paid-time-off hours to be applied toward the cost of your insurance plans.

If you do not have health insurance coverage now, and have not had coverage within the past 60 days, any pre-existing medical conditions you have at the time you join a new health insurance plan may not be covered for an initial waiting period, usually 9-12 months. Health insurance plans are prohibited by COBRA regulations from excluding coverage on your pre-existing health conditions, if you have maintained continuous health insurance coverage with no gaps in coverage of 60 days or more. When you change jobs, COBRA regulations require that your employer notify you that you can choose to maintain your coverage by paying the premiums yourself for up to 18 months. The premiums will be significantly higher than what you paid as an employee. But if you have a medical condition that generates significant healthcare costs, it could be well worth the extra cost to maintain your insurance coverage while you are between jobs.

Does your potential employer offer a Flexible Spending Account? This is another way to extend you net income. A Flexible Spending Account (FSA) is a pre-tax benefit offered by employers to help offset the costs of health care and dependent care for you and your family through savings on taxes. Two types of accounts are available. A Health Care Reimbursement Account allows you to pay for eligible health care expenses not reimbursed by medical, dental, or vision insurance plans using pre-tax dollars— Unreimbursed costs are your out-of-pocket expenses that insurance will not cover. Your savings depends on your tax bracket but are likely to amount to %15 or more of your unreimbursed medical costs. A Dependent Care Reimbursement account covers eligible dependent/child care expenses in much the same way. You select how much money you want to put into one or both accounts. The amount is deducted from your paycheck before taxes are withheld. Then when you have expenses for the items or services that are eligible, you are reimbursed from the account with your tax-free money. This benefit takes some planning to set up, but will increase your net income at no additional cost to you. Here is an example of how it can work:

Retirement may be the last thing on your mind when starting a new career path, but it should be a factor in selecting an employer. The benefits of compound interest pay huge dividends if you start saving for retirement early in your career. To reach a nest egg of $275,000 at age 65, a 20-year-old would only have to contribute $1000 a year (or about $38.50 per pay period) for 5 years at 10% interest, a total investment of $5,000. A 31-year-old would have to contribute the same amount each pay period for 35 years, a total investment of $35,000 to accumulate the same amount of money.

If your potential employer offers a retirement plan, how much will the employer contribute in addition to what you contribute to the plan? This will be money in your pocket (compounded as in the example above) at retirement. How long is the waiting period before employees are eligible to enroll in the retirement plan? Career paths today will most likely be a combination of many jobs and employers, unlike the Baby-Boomer generation who often expected to stay with the same job and employer until retirement. Look for a retirement plan that is portable, such as a 401k or 403b. With these types of plans, all of the money contributed by your employer, as well as what you contributed, and all accumulated interest can be rolled over into another plan when you change jobs. With standard pension plans, you can only withdraw the money that you contributed and some of the interest. If the employer offers a standard pension plan, how many years are required to become vested, so that you can retain what you and your employer have contributed to the plan, even if you move on to another employer? Although you cannot continue to add to the plan, you will be able to draw a pension from it when you retire.

Paid vacation time may be firmly fixed on your radar screen as you are evaluating potential employers. You probably need a vacation right now, and will definitely need one after sitting for your certification exams. How many vacation days will you accrue in a year? Will you begin accruing vacation from your first day of employment, or is there a waiting period? The best employer plans offer the employee flexibility in how they use their paid time off (PTO). These plans usually combine the number of days allotted for vacation, paid holidays, and short-term sick leave into a single PTO account. If you work a holiday, you can take the paid time off as a scheduled vacation at another time. Are employees allowed to use the hours in the PTO account to cover occasional absences to be home with a sick child? If the employer allows, a set number of hours can sometimes be cashed out once a year. Some employers also allow employees to cash in some of their PTO to apply to the employee's share of the cost of insurance premiums. If you do not use all of your PTO time for vacations, this can be a means of increasing your net income.

Health care employers often have scholarships available for students pursuing professional development in health care, especially in those professions where there is a shortage. Tuition reimbursement benefits are another way that employers support educational advancement of their employees. If you are considering an advanced degree some time in your future, this could be a very important benefit for you financially. Employees may be required to commit to a specified number of years of employment in return for the financial assistance.

Check into the employer's policy on supporting continuing professional education. Does the employer have funds available to assist employees with the cost of attending seminars? Is paid Education Time available, or are employees expected to use their paid time off/vacation to attend continuing education sessions/meetings?

Many employers provide financial incentives to employees who earn advanced professional certifications beyond those that are the basic requirement for the position, such as a Specialty Certification in Hematology or Microbiology. Employees can earn either a percent increase on their base rate of pay or a lump sum payment, often up to one or two thousand dollars each year. Employers use these programs to attract and retain highly skilled and motivated employees. Career Ladder programs are structured so that there are two or three payment levels, based on the accomplishments of the employee. Advanced certification credentials may be one of several endeavors that can earn the financial payment. Moving up the ladder, each level receives a larger financial reward for an increased number of voluntary accomplishments. These might include taking responsibility for a performance improvement project for the department, active participation in professional society activities, student preceptorship, or participation in community health screenings or public relations activities. These pay bonuses are not automatic. They require the employee to take the initiative to earn them by volunteering for roles or assignments that go beyond the basic job description. If you are motivated to be a top performer, this type of program can be very rewarding, both financially and personally, because your accomplishments are recognized and appreciated.

As the shortage of clinical laboratory science professionals becomes more severe, employers are becoming more competitive in trying to attract new graduates. You may see offers of relocation expenses, sign-on cash bonuses, or student loan repayments. Depending on your needs, health club memberships or childcare packages can save you money that you would have spent otherwise. In valuing extra incentives in a job offer, determine if they are a one-time benefit, or one that will be ongoing. Ongoing financial benefits should be added to your salary and benefits spreadsheet. Consider one-time hiring incentives separately.

Your starting salary is very important, but it is not the whole story. With so many benefits being offered, you need to calculate the value of the total compensation package to get a true picture of the financial offer.