Employer benefits that actually aren't that beneficial | How to take back some of your power
Today we're going to talk about two typical employee benefits people receive while working a 9-5 or 8 hour job in the United States, and two ways you can "hack" the benefits to actually and sincerely benefit you for the long term. We're going to discuss the obvious one first, then the one not many working class people are aware of. I'll also share my personal cost breakdown at the end.
Let's start with Health Insurance.
We all need health insurance for yearly wellness check ups, pregnancy, the accidental broken bone, and for our children. Most companies provide health care plans for their full time workers. Some make you wait 90 days while others make it available once you go through orientation. This is the biggest "perk" of full time employment in the United States because our healthcare is so expensive and the employer pays a portion of the plan. Did you know we have one of the most costly healthcare systems across the globe? Countries like Japan and Switzerland provide free, Universal, healthcare, yet over here it costs $13-22k just to have a baby without insurance in a hospital. An ambulance ride will cost you $1,000.
The downside of employer provided healthcare is that once you retire, quit or get fired from a job your healthcare benefits disappear. It's like, if you're no longer employed, then your your life no longer matters. Sounds like capitalism in a nutshell!
According to the Population Reference Bureau, approximately 75% of Americans work a typical 9-5 or 8 hour work day. The Bureau of Labor Statistics says about 77% of these employees have access to medical care plans and about 61% of them actually take advantage of the benefit. What do you think the other 39% are doing? Well I know many of them are opting out of the employer provided health plans and purchasing directly from the government, aka healthcare.gov aka Obamacare.
The two primary reasons I see this as the best way to move forward is because if you're in between jobs, you will never have an involuntary lapse of coverage, you have more healthcare provider options and it really isn't that much more expensive than the employer provided health plans. If done at the right time it's very possible to receive a tax credit that can significantly reduce your monthly payments. This is especially the way to go for freelancers, business owners and 1099 employees. Depending on your employer for such an important aspect of ones quality of life just doesn't make sense to me. If you agree start googling and see if this option is right for you.
Next is life insurance
insurance in general can really feel like a scam, doesn't it? I felt the same way until someone crashed into my car WHILE IT WAS PARKED. An angel from the sidewalk video recorded the guys license plate and put a note on my car with their phone number so they could send it to me. Without insurance I would have been SOL and left with a broken bumper and white scuff marks on a car I had literally purchased only months before.
The benefit of life insurance is the fact that it allows the family you leave behind with money to cover funeral costs and a little in their pocket. My first go round with life insurance when my dad passed is a pretty horrific story. I'll save it for another video.
There are 2 different types of life insurance: term and whole.
Employers typically offer term life insurance. It's typically for $100k post death, lasts for 10-20 years and you pay anywhere from $5 to $50 a month. Pretty reasonable right? Well, the whole 10-20 year term part is what makes this practically a waste of money, and again you lose this if you leave the job for any reason. We all know we can be unalive at any moment, but when you're 25 years old...it doesn't make the most sense to buy a 10 year term life plan.
Let's look at the other option: whole life.
Many people tend to pass by this option entirely because of the prices. You're usually going to pay over $100 for a good plan and many people just don't want to pay that much for something that isn't being "used", but guess what? That's what people don't know. Whole life insurance is one of the best, no strings attached deals out there. For starters, it lives up to its name. Whatever money you put into the account, you can use during your WHOLE LIFE. Say you put in $200 a month for a whole year with a death benefit of $225,000. That next year you want to buy a car or a new piece of furniture. Well, you've saved up $2,400 in cash value in your whole life plan. Grab $1,000 out (aka borrow against) and go wild. The thing to remember, though is if you don't ever put the money back, it will be deducted from your death benefit, meaning your family will receive $224,000 instead. Not a bad deal IMO.
My own personal cost breakdown as an individual not including children (sorry!):
I currently pay $203 for a silver medical plan (dental, vision included) with a provider I had with a previous employer. It was important to me to keep all of my doctors and preferred hospital/clinic. I honestly could've picked a plan for $100 less if I was okay with switching providers. I also currently pay $175 for a $200,000 whole life insurance plan.
That's $4,800 a year for both whole life and health insurance, but $2,100 of that money I can borrow back at any time. The other $2,700 is guaranteeing me the consistency and familiarity a person needs when dealing with their health and allowing me to work for myself without worrying about an unexpected hospital visit.
Now all the employer is needed for is the moola! That is a great segue to proper salary negotiation, but that is another day, another blog post.
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Thanks for reading!