How can I make up for a poor benefits package?

May 12, 2005 5:51 AM

I am strongly considering taking a new job, but the benefits package is, frankly, horrible compared to the one I have with my current job. However, the new job promises to be much more fulfilling than the current one. How can I make up for the lack of good benefits?

First, I freely admit to not having done enough research on my own here, but this is a relatively complex issue and I'm hoping I can learn from others who've experienced the same thing.

I will start with a run-down of my current package. I am with a large international software and consulting company. I have full medical, dental, and vision for myself, my spouse, and my child. I carry a half million in life and a quarter million in AD&D. I have the highest level of dependent life. As an example of the greatness of my medical plan, I recently broke a leg that required surgery and extensive physical therapy. The total of the medical bills, including PT, approached $50,000. My total out-of-pocket cost: under $200. My copays are $5 and my prescriptions are $3. Chiropractic is also covered. I currently only pay $176.87 (most of it pre-tax) per paycheck, or $4200/year, for all of the above benefits. My company pays the other $517.36 per paycheck (or almost $12,500/year).

I also have financial benefits like an employee stock purchase plan and 401k with employer matching.

The new job is with a small business expanding into my area. We have struck up a mutual love affair and they are giving me and a colleague free reign to build our own team for a big contract in the area. I have briefly touched on the disparity in benefits with them and they have given me the impression that they will supply extra cash to at least match my current total compensation. I won't get into their package, other than to say that it doesn't even come close. My out-of-pocket costs for my broken leg would have been in the $5000 range. They only offer $10K in life. Et cetera.

They are giving me the option of incorporating and coming under them as a subcontractor. In that case, I would receive more cash but no benefits.

There is no question that I want to take this job. It is the opportunity I've been waiting for and I intend to jump on it. But, after my broken leg, I have become very aware how important good insurance coverage is and I do not want to sacrifice anything there. What are my options? Supplemental insurance like Aflac? Can I just tell Aetna (my current provider) that I want to continue my current coverage even though I will not be an employee of the old company? If that's even possible, would it be exorbitantly expensive (higher than the price they give my company)? Should I incorporate and handle my own benefits? I have only worked for large companies in my career so I have always been blessed with good benefits and this is very new territory for me. Thanks!

posted by mike9322 to Work & Money (5 answers total)

Get yourself to a CPA who specializes in small business. He or she can tell you what benefits you can recreate if you incorporate and which you can't, and he'll likely be able to refer you to someone who can tell you about medical coverage, etc. If you get advice here, it might not be all that good, or at least not comprehensive. This is a huge decision for you, and doing the wrong thing at any of several steps will be very costly, so it's worth dropping some cash to get the best advice. Your state's CPA association should have a web site that can give you some names.
posted by anapestic at 6:23 AM on May 12, 2005

anapestic is right; you need real numbers to compare your options, and a CPA is probably where you can get them. After you have a basis for comparison, you can negotiate with the prospective employer. The CPA can also tell you whether it's really worth your while to incorporate. It may not be.


Generally, you will pay Aetna lots more than your current employer does, to get the same coverage.
posted by Kirth Gerson at 8:34 AM on May 12, 2005

Wow, I don't think any smaller company will be able to come even close to what you get in the way of benefits. The question is whether they can offer you something that is acceptable. As long as they are not completely unreasonable, I'd go with their plan and get some supplemental insurance.

(As everyone else said, your CPA can advise you on incorporation. However, your options for insurance as a independant contractor may very well not be worth the hassle.)

Having not worked for any large multinational companies -- is the coverage you have typical or exceptionally generous even at your level?
posted by desuetude at 11:18 AM on May 12, 2005

You have the option of continuing your existing medical coverage through COBRA for up to three years after leaving your current company. If I were you I'd ask the new company if they'll pay for that (it will be as expensive for them as for your old company).
posted by cali at 11:21 AM on May 12, 2005

Having not worked for any large multinational companies -- is the coverage you have typical or exceptionally generous even at your level?

I think it's common. That's about what I have, too. My copays are higher, but I pay a lot less per paycheck (like, $100 a month).

Personally, I agree about seeing an accountant. Figure out what all of your benefits would cost, out of pocket without employer help, and don't accept less than your current salary plus that amount from this company.
In general a company will pay less for someone's insurance than they would for themselves, it's a bulk discount or something.
FYI, you can deduct the entire cost of insurance on your schedule C if you go with this.
posted by Kellydamnit at 1:48 PM on May 12, 2005