When you’re negotiating the terms of a new job, the first thing you’ll likely look at is the annual salary. Nevertheless, it’s important to understand that employee benefits are equally important, as they can impact both your finances and your overall wellness. However, if this is your first job, then you might not be familiar with the phrases used to describe employee benefits. The following glossary can help:

• Healthcare benefits: Most employers offer healthcare plans that not only cover employees but also their spouses and dependents. Healthcare benefits cover medical expenses for services provided by healthcare providers or in hospitals. Depending on the employer, they may also include dental, vision and/or prescription drug coverage.
• Health savings accounts: Also known as HSAs, health savings accounts are often offered to employees by companies whose healthcare insurance plans have high deductibles. HSAs are portable and tax exempt, and employees can roll over any unused contributions from one year to the next.
• Wellness programs: A wellness program offers benefits such as weight-control classes, smoking-cessation assistance, exercise programs and stress-management support. It functions independently from any healthcare benefits.
• Retirement plans: Retirement plans are also known as 401(k) plans. At their most basic, they involve the employer paying a portion of a retirement plan while the employee finances the rest. The employee’s portion is generally deducted from his or her salary and paid immediately into the plan. There are several different types of retirement benefit formulas, including dollar amount, career earnings, terminal earnings and percentage of contribution formulas.
• Paid time off (PTO): Paid time off is also referred to as PTO or paid leave. It generally includes paid holidays such as Thanksgiving, Christmas, New Year’s Day, Labor Day, Independence Day and Memorial Day, as well as a number of paid vacation days. It can also include paid sick leave, paid personal leave, paid jury duty leave, paid military leave, paid family leave and paid funeral leave.
• Disability insurance: In the event an employee can’t work due to a non-occupational injury or illness, disability insurance provides protection against any loss of income. Disability insurance generally pays a percentage of the employee’s salary on a monthly basis. There are both short- and long-term disability plans.
• Life insurance plans: Employer-provided life insurance plans provide a lump-sum payment to an employee’s beneficiaries in the event of that employee’s death. Many companies that offer life insurance plans provide a basic amount of coverage and allow employees to purchase additional coverage. There are several types of employer-provided life insurance plans such as flat-dollar-amount plans, fixed multiple of earnings benefits plans and variable-dollar-amount benefit plans.
• Flexible benefit plans: Also referred to as cafeteria plans, flexible benefit plans allow employees to choose from multiple employer-provided benefits. These benefits are paid for on a pre-tax basis and any contributions are deducted from the employees’ salaries. Employees may also choose to take a cash option instead of the benefits. Common benefits included in cafeteria plans are health insurance, life insurance, HSAs, retirement plans and vacation days.
• Stock option plans: Some for-profit private companies allow their employees to purchase stock options in the company at a fixed price. In many cases, stock options are offered as a signing or performance bonus.

Now that you know the meaning of these phrases, you’ll be in a better position to fully understand and, if necessary, negotiate your remuneration and benefits package. Finally, remember that, if you have questions pertaining to the wording of your employee benefits, it’s always smart to get answers from an HR representative before signing any contract.

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