Benefits Overview
What are benefits?
Anything other than salary/wages that a company offers its employees to incentivize them
Will employer-provided health insurance typically be cheaper or more expensive than if you bought insurance on your own?
Cheaper- the company gets a bulk rate and can pass on the savings to you.
Why is investing so important for most people's retirement?
For many people, it is the only way they can make enough money to live the lifestyle they want to live in retirement.
What is employer matching?
This means that when you put money into your employee retirement account, your company will also put money in.
Why do employers offer benefits other than pay?
To find good employees and keep them around.
What is a premium?
The monthly fee that a person pays to get health insurance.
True or False: Health care is the most important benefit for a lot of people.
True- company-provided health insurance can save people a lot of money, especially if they are older and/or less healthy and need more medical care.
True or False: If you are retired, it means you cannot go back to work.
False- many people who are retired find that they can't afford to live without going back to work. Others keep working after retirement by finding different jobs while still receiving retirement benefits.
What is one of the advantages of employee retirement plans that we discussed?
Tax benefits, intentionality, convenience, employer matching (AKA free money)
What are the three benefits that Mr. Brown indicated are probably the three most important for a lot of people?
Health insurance, paid time off, and retirement plans
What is a deductible?
A deductible is the amount of money that you have to pay before insurance will start covering certain medical costs. Some medical costs will be covered before you meet your deductible, and others won't be covered even after you have met your deductible.
Who is more likely to receive health insurance from their employer, a full-time employee or a part-time employee?
A full-time employee- companies are typically required to provide insurance to full-time employees if they have a certain number of employees, while part-time employees usually don't receive insurance.
What are the two big challenges that many people face in retirement that were discussed in the PowerPoint?
Having less or no income and potentially living a very long time in retirement without that income
Of a 401(k) and a pension plan, which one will likely give you more control over your investments?
401(k)- it will typically provide you with choices for your investments, while a company pension plan usually does not.
What are some specific ways that high employee turnover could hurt a company?
There are a lot of potential answers to this, but some would be: make it harder to find new employees, make it harder to get loans/investments, cost the company time and money to replace the employees, losing talented workers, losing knowledge and experience that may not be replaceable, etc.
Will a higher premium typically mean a higher or lower deductible?
A higher premium typically means a lower deductible- you are paying more, so you get better coverage.
Why is employer-provided health insurance typically more convenient than buying health insurance on your own?
It can come straight out of your paycheck and your company picks where you get the insurance, instead of you having to shop on your own and remember to pay the bills.
Who can typically afford more risk in their investments, a younger person who is just entering the workforce or an older person who is going to retire soon?
A younger person- they have more time to build their wealth back up if anything happens to their investments.
Of a 401(k) and a pension plan, which one is more likely to come with guaranteed income?
Pensions are more likely to come with guaranteed income- not all pension plans have guaranteed income, but some do. 401(k) plans pretty much never come with guaranteed income.
What is employee turnover and how do benefits help keep it lower?
Employee turnover is the number of employees that leave a workplace over a period of time. Good benefits help to keep turnover lower because they make people want to stay at their job.
How do insurance companies make money?
They make money if they make more in premiums from customers than they pay in medical bills. This only happens if there are enough healthy people that don't meet their deductible to cover the expenses of the ones who do meet their deductible.
How does an HR person at your company help simplify the health insurance process?
They can help you fill out the forms and answer any questions you have- this is very helpful because health insurance can be a little confusing.
Why should a young person entering the workforce not be confident that they will be able to receive social security when they retire?
The amount of people needing social security is going up while the amount of money available in the program is going down- if we don't make changes, eventually there will not be any money left to pay social security.
What is the main benefit of individual retirement accounts that are not provided by a company (IRA and Roth IRA)?
They provide tax benefits, but are not as convenient as employer retirement plans and do not come with employer matching.