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What is a benefit package?
A benefit package covers the full scope of services, pay, insurance, vacation time and other perks available to an employee from his employer. The benefit package is seen as an incentive to attract and retain employees that meet an employer’s goals and reflect the company’s ability to pay for an extensive package of perks.
Benefit packages may offer such things as a car allowance, cellphone, gym membership or travel reimbursements to lure top talent from around the world, but they usually start with health insurance for employees, and if possible, for their families.
Sometimes, a health care flexible spending account is included. An FSA is an account that employees can contribute to tax free to pay for health care costs. In 2017, it is limited to $2,600 in contributions.
In addition, long-term and short-term disability insurance as well as 401(k)s and other retirement plans are often part of a package of benefits.
This may seem like a given, but paid time off is included in the vast majority of employee benefit packages. That includes vacation, paid holidays and paid sick days. Some employers may also offer paid personal days and bereavement and funeral leave.
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To be sure, dental and vision plans are provided by many employers, but not as often as health plans. Other perks that aren’t provided as often are life insurance, tuition reimbursement, stock options (if the employee works for a public company) and yearly bonuses.
Over time, an employee’s benefit package may change to reflect the person’s standing in the company or a revised employee contract.
If and when employment with a company ends, many of the employee benefits will end and will be passed to the employee to fund. This is at the company’s discretion and may be negotiated before leaving the job. In the case of a company closing or ending its operation, all employees could be left without a benefit package.
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Benefit package example
Before Doug accepts a job offer with SmartTech Engineering, he asks for a rundown of company benefits for him and his family. The company offers health insurance, flexible spending accounts, a 401(k), paid vacation, personal time off, a dental plan and employee life insurance.
The health policy and dental plan carry deductibles, but Doug thinks they’re small enough for him to manage. Still, if Doug wants life insurance for his family, he’ll have to pay for it himself.
He asked about bonuses and was told that in past years, the company had paid them out at the end of the year. But, they vary each year, depending on how well the company did over the previous year financially.
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