| So you have benefits. But what does that really | | | | full advantage of pre-tax dollars, contributing to a Roth |
| mean? | | | | IRA, if you are eligible, before making such contributions |
| For people living in Texas, and especially in cities like | | | | to a retirement plan. |
| Dallas, Houston and Austin, the question deserves | | | | Those who have a pension plan in addition to a 401(k) |
| some attention. It's especially the case when | | | | or other retirement-savings plan should take the time |
| considering that a good number of people may not | | | | to learn exactly how the employer calculates |
| fully understand what either their employer is delivering | | | | employee benefits. In many cases, that calculation will |
| as part of a comprehensive benefits package, or, in | | | | be based on years of service and average pay when |
| the case of someone who is paying at least a portion | | | | an employee retires. |
| of their own benefits coverage, what they are getting | | | | What happens if you become unable to work |
| for their hard-earned dollars. | | | | because of disability? Think the odds are in your |
| Benefits aren't cheap. According to the Bureau of | | | | favor? Perhaps, but the odds are you're more likely to |
| Labor Statistics, it costs an employer roughly 30% of | | | | become disabled than you are to die while working. |
| full-time payroll to cover benefits and that's a | | | | For that reason, having disability insurance as part of a |
| percentage that continues to rise with healthcare | | | | benefits plan is a good thing. |
| costs, which most people think about first when | | | | Think about it: how long could you be out of work |
| considering benefits. | | | | without having an impact on you or your family? |
| Employees who have benefits - - including health | | | | Would you be able to pay for rent or a mortgage? |
| insurance -- should be aware of what they have, | | | | Other bills? |
| whether they're paying for it or not. One key point is to | | | | Many employers offer disability insurance as part of a |
| not assume you have coverage. Even if the insurance | | | | benefits package. If someone makes the choice to |
| plan is going to pay for a medical bill, the amount of | | | | buy it, they'll likely pay less than if you purchased it on |
| coverage over an employee's lifetime might be | | | | your own. |
| affected. Understanding the limits of coverage including | | | | Still, only 28% of employees sign up for long-term |
| the maximum coverage is important information to | | | | disability coverage. For those who work in an office, |
| know. | | | | the percentage is higher -- up to 40%. Some may think |
| It's also important to know and understand what | | | | nothing will ever happen to them, but it might be |
| choices might be available to you as an employee. In | | | | surprising to know how often people need to take |
| some cases, a person may be able to choose their | | | | advantage of this benefit. |
| own doctor -- with a certain amount of the costs paid | | | | Short-term disability often covers benefits for one |
| for by the health insurance plan. In other cases, a plan | | | | year or less and sometimes an employer will |
| might pay the majority of costs, even preventive costs | | | | automatically cover any short-term disability, with |
| which some plans would not cover, but there is a list of | | | | long-term coverage typically replacing 50% to 70% of |
| "approved" doctors from which to choose. | | | | a salary. That coverage is not always automatic, |
| Benefits may also include some sort of retirement | | | | though, so employees need to make sure to sign up if |
| fund, so employees who have those available to them | | | | they want the benefit before they need it. |
| would be wise to check out exactly what's included in | | | | How an employee pays for disability insurance may |
| their benefits package and take advantage of what | | | | also make a difference should they need to collect. If |
| the employer is already willing to pay out. In some | | | | coverage is paid for with after-tax dollars, future |
| cases, the contribution of an employer will depend on | | | | benefits would be tax-free. But if premiums are paid |
| how much the employee is willing to contribute to a | | | | with money before it is taxed, the benefits will be |
| fund, but if the money is available, it would be wise to | | | | taxable. A company that pays for a disability policy |
| jump in, even if an employee has to cut back on other | | | | with pre-tax dollars might be convinced to make a |
| areas of expense in order to do so. | | | | change in their policy if they know it's a concern. |
| Even if someone can't contribute the maximum | | | | Other benefits to consider and to fully understand |
| amount that an employer would allow (and for which | | | | include life insurance, specialty health coverage such |
| they are willing to match), starting somewhere is better | | | | as that for eye, dental or hearing, and various stock |
| than no contribution at all. By starting small and | | | | options that a company might offer. |
| gradually raising the percentage of money being | | | | If an employer offers benefits to its employees, |
| contributed, progress is being made. | | | | understanding the extent (and limitation) of the various |
| Another option in some benefit plans is the ability of | | | | components of the plan is an important undertaking. |
| employees to make after-tax contributions to their | | | | But even if benefits aren't available, there are options |
| retirement plan. Experts say the best advice is to take | | | | to consider. |