Workplace benefits such as health insurance and life insurance can add tremendously to an employee’s bottom line. Yet Generation Y employees – those born in 1980 and after – are less likely than other age groups to take advantage of them, a study by insurance and benefits provider Colonial Life shows.
Benefits make up about 30 percent of total employee compensation, according to the U.S. Department of Labor. Yet Generation Y employees aren't as apt as workers in other age groups to reap benefits such as health, life, disability, accident and long-term care insurance, says Stephen Bygott, director of marketing programs and research at Colonial Life.
One reason for the disparity: Members of Generation Y, also known as Millennials, have the least understanding of how their benefits work of any age group, the report says. Not only that, but employees in that age category are more likely than other generations to obtain information about their benefits from family and friends rather than from their workplaces, the study says.
Talking about benefits with family and friends rather than human resources experts leaves Millennials open to misinformation, says Angie Kirk, an independent human resources consultant in Baltimore. “You’re not getting all of the information; you’re only getting the best of what they know,” Kirk says.
Here are five tips for making sure members of Generation Y aren't leaving any workplace benefits on the table.
1. Take care of the basics.
Health insurance is the first thing you want to make sure you have, says Scott Cramer, president of Cramer & Rauchegger, a retirement and estate planning firm in Maitland, Fla. “If you get run over by a car or you get a catastrophic illness, you’re going to go broke and you’re not going to get the quality of care you need without insurance,” Cramer says.
A company-sponsored life insurance policy is another thing most employees should take advantage of, since it will replace some of your income in case of death. Among Millennials, that's especially important for workers with spouses and children. If a company offers a discounted rate on disability insurance, that’s another benefit to consider strongly, since it would kick in if you become ill or suffer an accident and are unable to work.
Another benefit you should not overlook: a 401k or other type of retirement plan. If a company offers to match your savings, even better. Failing to take advantage of a company match is the equivalent of giving away money, Cramer says.
2. Rely on several sources of information.
Generation Y employees are more comfortable with technology and tend to be more tapped into social media than their older peers, Bygott says. Use those skills to explore benefits information on the company intranet, but also take advantage of face-to-face meetings, benefits fairs and brown bag lunches hosted by your employer's human resources department, Kirk says.
By using several venues to get information, Generation Y employees are less likely to miss out on lesser-known benefits and are able to get answers to any nagging questions.
3. Find out your total compensation.
Many companies prepare a total compensation statement, which lets employees know how much their salary and benefits are worth as a bundle.
“A lot of times people say they make $50,000, but when you include their benefits, their company is really paying closer to $70,000 for their services,” Kirk says.
If your company doesn’t provide such information automatically, ask a benefits representative whether he or she can give it to you. Not only will that number tell you what you’re losing if you don’t take advantage of your benefits, but it provides a better bargaining tool if you're searching for a new job. “I know someone who took that total compensation number when she was looking for a new job and said, ‘You guys have to beat this.’” Kirk says.
4. Expect and look for changes.
Even if you learned your company’s benefits plan inside and out when you started your job doesn’t mean you know all that’s offered today. Companies add benefits all the time, Kirk says. Most companies announce changes during their annual open enrollment period and give employees a chance to alter their benefit plans.
Not only do you want to keep up with your plan’s changes, but you want to make sure your benefits representatives know about your major life changes, as they can affect your benefits. “You definitely want to talk to an HR person if you get married, have a baby or get divorced,” Kirk says.
You're given a certain window of time for adding dependents to your health insurance plan.
5. Remember that little things add up.
While it’s important to take advantage of insurance and retirement offerings, don’t overlook benefits such as flexible spending accounts, which let you use pre-tax dollars for expenses such as health care items and child care services.
Many employers also have agreements with local retailers where employees can get discounted products or services, such as gym memberships or clothing. While it’s easy to think $10 saved on services isn’t a big deal, “you do it 100 times and it makes a huge difference,” Cramer says.
Taking advantage of corporate benefits at an early age bulks up your wealth over time, Cramer says. “Over 20, 30 or 40 years, it will make a huge difference," he says.