I asked 20somethingfinance readers to vote on what employer sponsored benefit was their favorite. Out of 238 votes, the first place benefit was rather clear: medical, dental, and vision insurance. Here are the poll results:
As you can see by the bold lettering, I personally voted for 401K match. I’ll highlight why in a little bit.
I was honestly a little surprised that health insurances were voted to the #1 spot by almost double the second choice (401K).
How to Put a Value on the Employee Benefits that you Receive
I see two different ways to valuate how much any job’s employee benefits are worth:
- Monetary (quantitative) value
- Qualitative value
Monetary value is pretty simple. Every one of these benefits, with the exception of ‘the people you work with’ can be assigned a monetary value.
Qualitative value is a much harder to measure metric. For instance, it’s hard to argue that stock options have much more than a monetary value. Vacation days, on the other hand, do have a monetary value (per day you receive off), but are almost always highly regarded for their qualitative value.
Monetary (Quantitative) Values of Employee Benefits
- Health Insurance: what your employer pays for your health insurance premiums each month.
- 401K: The dollar amount that your employer matches per year.
- Vacation: The number of vacation days multiplied by your daily wages.
- Bonuses and Stock Units/Options: These are much harder to put a monetary value on because they are often not guaranteed. The only thing you have to go on is the past, which doesn’t always foreshadow the future.
Qualitative Value of Employee Benefits
Qualitative benefit valuations are not the easiest to measure. They can vary per person. For instance, health insurance coverage may be much more heavily weighted by an employee with many pre-existing conditions. I am not at all surprised that medical benefits came in first, because they cover the most primitive human need: our health. There is a lot of security in that. The third place finisher, vacation time, provides a ton of value in the ‘quality of life’ area. Makes sense, right?
Why I Chose 401K
My employer gave a 50% 401K match on up to the maximum allowed 401K contribution. That equates to $11,500 in 2024. Additionally, it also provides a ton of future qualitative value in the hopes that it will lead to an early and/or higher income retirement. Stock options came in dead last for me, and very few of you picked them as your top choice, because they offer little guaranteed monetary value, and just about zero qualitative value.
What does this Mean for you?
My recommendation here is that when you evaluate your current job, negotiate for raises/benefit changes, or are accepting a new job, try to place monetary and qualitative values on all of the benefits. For example, for a healthy twenty-something, it may not make much sense to accept a job with health insurance (because it offers health insurance) over a job that doesn’t offer health insurance but does offer a salary that is $3,000 higher.
Employee Benefit Discussion:
- What kind of monetary value do you place on your benefits?
- What kind of qualitative value?
- Do these valuations change your ranking of these benefits?
- What are your top 5 benefits after applying values to them?
“Health Insurance: I was quickly able to find a number of good PPO plans with low deductibles and small co-pays for $100 and less per month. Plans range from around $60 to $150 for twenty-somethings. Taking an average of $100 per month, we can calculate the annual worth of a medical plan of $1,200.”
Really? Where did you find these plans, because whenever I’ve shopped for medical insurance for someone trying to go it on their own, I only find crap coverage (basically, the “we will save your life if you get hit by a car” coverage) at like $90/month. I would love to know where I can find better plans for cheaper to recommend to people!
I really like the end of your article. I like the way that you tie in negotiating not just the salary offered by job opportunities. I think it is hugely imporantant to weigh-in benefits as well.
However, I do have to say that it doesn’t surpise me that health insurance is #1. I have to agree with Stephanie above and say good health insurance is hard to find and definitely expensive. The best place to find it is your employer.
Also I’ve never heard of a company 401k match as good as your company offers. I’d love to know who you work for. Most companies cap the match on the first 5 or 6% contributions. So I can see the value in that for you.
I feel the same way about my 401k. My company will currently match 125% up to the first 10% of your income. . . So, when you contribute 10% they match at 12.5%.
This is the single biggest benefit for me at this time in my life (age 28).
@ Stephanie – The site that I looked at was ehealthinsurance.com. I remember Aetna looking like a particularly strong value. If you’ve done extensive research into this, I’d love to have you do a guest post or comment and share what you’ve learned with everyone else.
@ DarkGarage – wow, and I thought 50% was good!
This is the exact approach I took when I took my new job (which I start next week). The benefits are great, but what I liked even more was the 403b (a 401k equivalent) option, which matched my 6% salary input with 6.5%. I especially liked that it would only take 90 days to become “vested” meaning that if I stayed in this position for 90 days, the amount of money that the company matched would become mine indefinitely. Very cool!
Health Insurance would be #1 for me too. I have a family and it is almost $1000 per month for a decent HMO plan. My current employer pays ALL of that! What a huge plus. I took this job at the same pay, I work about 30 hours per week less, I pay about $500 less per month for my medical premiums. Oh and profit sharing contributions to my 401k went from 2% to 10%, but still that is $5000 vs. $12,000 for just medical insurance for my family. Benefits are soo important to consider and become even more important when you have a family. But I guess if I was single, no child, I’d go with the 401(k).