Top Nine Things You Need to Know About Your Employee Benefits

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Employee Benefits I sometimes have people tell me they started their new job and then found out there was no health insurance. They express shock -- but they have to give me insurance, don't they?

No, they don't. There is no law requiring any employer to provide any particular benefits to employees. There are some tax incentives for employers to provide benefits like health insurance and 401(k) plans, which is why so many do (that, and the executives want them). Also, some large businesses have to pay an assessment if they don't provide health insurance for employees.

You should always ask about benefits before you accept a new job. The time to negotiate is before you accept, not after you start.

Even though employers don't have to provide benefits, once they do, the benefits are regulated by law. Here are some things you need to know about benefits you might get in your new job, what happens to your benefits when you leave, and the federal laws that govern benefits.


1. ERISA

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry (not government entities or churches). ERISA requires your employer to provide you with plan information, theoretically in plain English (ha!), that explains your benefits. It also requires your employer to set up a grievance and appeals process if your benefits are denied. Don't lose it or toss those boring Summary Plan Descriptions and other documents that your employer or the plan administrator sends you when you start. You'll need them if you have any questions, and the employer has to follow them to the letter.


2. Health insurance

Read up on your new coverage to make sure you get enrolled as soon as you qualify so that you don't get stuck with high COBRA premiums any longer than you have to. The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives your family and you the right to choose to continue your health insurance if you lose it due to job loss, reduced hours, death, divorce, or other life events. COBRA applies to employers with 20 or more employees, and some states have statutes covering smaller employers. The employer has 30 days after you're terminated or another qualifying event to notify the plan administrator. (If the "qualifying event" is a divorce or separation, you have to notify the administrator within 60 days.) The administrator has to send all plan participants and beneficiaries an election notice within 14 days after they get notice of a qualifying event. You'll have 60 days to make your election to continue your coverage, and 45 days after you elect coverage to pay your first premium. It's wildly expensive. Still, nothing will bankrupt you faster than unexpected hospital bills, so elect it if you can.


3. 401(k)

If your new employer has a 401(k) plan, you'll get to roll any vested benefits over from your old plan. To the extent your former employer provided matching funds, you need to look at your vesting schedule. If your matching funds weren't vested, you may have lost them when you left. You'll want to get the paperwork for your rollover as soon as you're eligible to participate in the new 401(k).


4. Life and disability insurance

If your former employer provided life or disability insurance, you probably lost this when you left. Some insurance companies will allow you to purchase continuation coverage, but they don't have to. It's important to find out if and when you'll qualify to enroll in your new insurance plans. There may be a limited time to enroll.


5. Pension

Few employers provide true pension plans anymore. If you do have a pension plan, ERISA covers it. You'll need to look at your Summary Plan Description (remember how I told you not to lose it?) to understand when you can elect your pension, what circumstances cause you to forfeit your pension, and the benefits you'll get at each age you may elect. It's important to understand your pension benefits when you start, and when you are getting ready to leave.


6. Vacation

Employers don't have to offer paid vacation. However, if they do, then they have to let you use it if you take Family and Medical Leave. If you quit or are fired, you may, under some circumstances, be entitled to have your accrued vacation paid out. If the employer has a "use it or use it" policy, you won't get your vacation paid out. Most employers only allow you to roll over some vacation from the prior year, or require you to use it by the end of the year or lose it. Vacation is sometimes considered an "Employee Welfare Benefit Plan" under ERISA, and then it will need to be paid out when you leave. The vacation policy should be in your new handbook. Read it and understand it.


7. Severance

No law requires severance to be paid. However, if an employer has a published severance policy, it is probably an "Employee Welfare Benefit Plan" under ERISA and it needs to be followed. Employment contracts may also provide the right to severance. Look in your handbook when you get it to see what your rights are if you're terminated.


8. Contract

If you have an employment agreement, make sure your benefits are set out in the agreement, including what happens to them when you leave.


9. Handbook

Read your handbook. Know your benefits and your rights under all benefits plans. Take it and keep it at home, or at least make a copy if you can. If you are terminated, it's an important document to have, and it's handy if you have a medical emergency that keeps you out of the office.


Watch: How to Maximize Your Employee Benefits

How to Maximize Your Employee Benefits

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