Cost of benefits to an employer

1. Cost of benefits to an employer “How you benefit as an employee”

2. What costs are added to your salary? • Social Security Tax • Medicare tax • Unemployment tax • Health Insurance • 401 K plan

3. How is your boss effected by social security? • Social security taxes are paid by both “you” and your employer • You pay 6.2% and your employer pays 6.2% • Therefore, the system eventually gets 12.4% to pay for current retiree benefits (As well as others)

4. How mathematically does this add to your pay? • Lets say you make $40,000 per year to start off • Your boss would pay an additional $2480 towards your salary ($40,000 x 6.2% = $2480) • This means your salary is actually $42,480 so far

5. How is your boss effected by Medicare? • Medicare taxes are paid by both “you” and your employer • You pay 1.45% and your employer pays 1.45% • Therefore, the system gets 2.90% to pay for Medicare benefits for those eligible

6. How Mathematically does this add to your pay? • Lets say you make $40,000 per year to start off • Your boss would pay an additional $580 towards your salary ($40,000 x 1.45% = $580 • This means, when you add social security taxes together with Medicare, you boss now pays you ($40,000 + $2480 +$580 = $43,060)

7. How is your boss effected by Unemployment insurance? • NYS average cost of unemployment in NYS is around 4.025% (All the way up to over 9% based on claims) • Your employer pays this cost to cover claims made, you don’t • Employers percentage payment varies based on the number of claims • “If” you are fired without Cause, you are eligible • “If” you are fired “WITH” cause, you are NOT eligible (Stealing, late, contract) • “If” you quit, you are not eligible

8. How mathematically does this add to your pay? • Again, So, if you make $40,000 per year, the cost of unemployment would be $40,000 x 4.025% = $1610 per year • Add in other costs ($40,000 + $2480 (Social Security) + $580 (Medicare) + $1610 (Unemployment) = $44,670 that YOU are costing your boss

9. We haven’t even started talking about employer “voluntary” benefits • Part of the decision you make to take a job is based on benefits offered • Benefits “Add” to what you are paid • Benefits include things like Health Insurance, Dental Insurance, Life Insurance, 401K, Vacations, Travel, Discount rates for services, etc…

10. Why would employers give you benefits? • When an employer buys into a benefits package, they get a “group” rate • A group rate means the cost is cheaper to them than it would be for you alone • If you buy a gym membership, you may pay $35 or more per month • If they buy into a group rate, they could get the cost under $20 a month, which means its cheaper for them to pay you in benefits, than pay

11. Why offer a health plan to employees? • First and foremost, YOU are an investment in these companies • If you succeed, THEY succeed! • They want you well and performing at your best • When you are out with sickness, it costs the company

12. How must does it cost your boss to pay you in health benefits? • On average, businesses paid around $11,119 towards a workers Health costs, where the worker only paid $4941 of the $16,050 cost themselves • This averages out to $410 per month for the employee to pay • Without the insurance coverage, this worker would pay $1340 per month themselves

13. How mathematically does this cost your boss and add to your pay? • Using your $40,000 salary, this means your boss is paying you an additional $11,119 per year as your Health benefit • Add that to your earlier cost of $44,670 (Social Security, Medicare and Unemployment) and your boss now pays you $55,789 per year • You are becoming an expensive investment!

14. What about Dental insurance? • If they are already paying you $55,789 per year and offer dental insurance, you can add another $1700 per year to the cost (On average) meaning they now are paying you $57,489 • Dental can be a part of some health plans or separate

15. What about a 401K? • Planning for your retirement is something you MUST do • Pensions are becoming less and less offered • 401K is a plan where you take money out of each check, its tax free and you invest it • If your employer matches these funds, you “Double” your investment

16. How does a 401K work? • Lets say you are a smart investor and you take the max out of your check per year (12% ) assuming you make $40,000 • That would mean each year you would take 12% ($4800) and your boss matches this amount ($4800), which means you are actually investing $9600 per year into a fund that will make about 6% or more on average in return • Do this for about 35 years and you will be sitting on somewhere between $750,000 or more if the fund continues to grow on average

17. How mathematically does this cost your boss and add to your pay? • Again, assuming you make $40,000, I mean $55789 with all the benefits already added in, your boss now must add in another $4800 to include in your 401K • You now cost them $60589 • That means your benefits cost your employer an additional 34%

18. Am I done? • NO! • If your boss thrown in other benefits like gym memberships, spa treatments, daycare, travel, dinners, vacations, company vehicle, etc.. • This number could go easily over 40-50% • Starting to get the picture???

19. Lets breakdown the total math Starting Salary: $40,000 Social Security: $2480 Medicare: $580 Unemployment: $1610 Health: $11,119 Dental: $1700 401K: $4800 Other benefits: $2150 Vacation: $2310 TOTAL COST: $66,749