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Employee benefits: a simple guide for new grads and hires

By Randall Kelso

After completing his final season of college baseball and graduating from St. Lawrence, Brent Gray was thrilled to land a finance job with a comprehensive benefits package. As a student-athlete, Gray spent most of his offseasons competing in summer leagues rather than pursuing internships or working a job. So while the acceptance of his first job brought excitement, it also sparked plenty of questions. Like most new grads, Gray had no prior experience with employee benefits. The choices he faced on everything from insurance to retirement plans were enough to be head-spinning.

This overwhelming feeling for first-time employees is common. Decisions you make before day one of your job can have a major influence on your income later. That’s why After the Game turned to Gray, now a family wealth advisor with Morgan Stanley, to offer a few tips for navigating new benefits.

Employee benefits are the total compensation package for your job including salary. Depending on where you work, your employer may offer a wide variety of options and combinations. “The benefits package should factor into why or if you decided to take a job in the first place,” Gray says.


Insurance is one of the most important choices recent grads will make after accepting a new position. The most common types of insurance plans are medical/health, vision, dental, life and disability.

Most companies offer one of three major options for managed-care or medical/health insurance: a health maintenance organization plan, a high-deductible health plan and/or a preferred provider organization plan.

HMOs allow you to pay a fixed cost per year for comprehensive health care coverage but have restrictions on which physicians and specialists you’re able to see. Under this type of plan, all health care needs are handled through a primary care physician. PPOs don’t offer a fixed cost per year but are less restrictive than HMOs. They allow for more flexibility in the choice of physicians and specialists.

With a high-deductible health plan, the monthly premium is usually lower, but you have a higher deductible — at least $1,350 for an individual or $2,700 for a family. An HDHP can be combined with a health savings account, which lets you make tax-free contributions that can be used for medical expenses.

After medical/health insurance, there are dental, vision, life and disability plans. As most recent grads are in their early to mid-20s, they may not opt to take life and/or disability insurance. While no one is required to sign up for any insurance plan, you never know when you’ll need to make an unexpected trip to the emergency room.

“Enroll for benefits as soon as possible,” Gray says. “When we are young, we feel invincible. Having money set aside for health insurance seems pointless; however, the cost of not transferring that risk to an insurance company could be greater than you think. Treating an unexpected illness or accident or covering a trip to the ER could cost an employee way more than any monthly deductible.”

Retirement Plans

To help you save for retirement, most privately owned companies will offer a 401(k), while most nonprofit and public organizations will offer a 403(b).

Both plans help you save for retirement by setting aside a percentage of your paycheck before taxes and investing that money on your behalf. Many organizations have limits on the rate of how much or how little you can contribute each check. Understand those limits and invest as much and as early as possible.

“Participate in the retirement plan as soon as you are eligible,” Gray says. “Retirement plans allow employees to do the one thing we should all do: pay ourselves first! While the amount you contribute may seem small at first, the power of compounding interest over time will make a major difference over your career.”

If applicable, know the company match, so you don’t leave money on the table. Depending on the match, maxing out your contribution might offer the biggest bang for your buck, Gray says. “Ask the retirement plan administrator or a trusted advisor to get this benefit set up as soon as possible.”

Other benefits

After the major items of insurance and retirement come other add-ons your organization may offer in a benefits package. This includes paid vacation or personal days and other perks outside of your salary. Options such as flexible work schedules, tuition reimbursement, professional development and health and wellness benefits may all be a part of a complete package.

Research your company before, during and after the job search. Understand the basics of benefits offered to others in your field and look out for new options that may become available later.

Most importantly, ask questions. You don’t have to — and shouldn’t — navigate this all on your own. Seek the assistance of the human resources department or a trusted outside adviser.

“Many first-time employees don’t fully understand their benefits package simply because they don’t ask,” Gray says. “Questions like ‘When am I eligible for health benefits? When can I enroll in the company 401(k) plan?’ and ‘Is there a match to the 401(k)?’ are often overlooked.”

Brent Gray

About the expert

Brent Gray is a financial advisor for Morgan Stanley. He is a former four-year baseball player at St. Lawrence, where he earned a bachelor’s degree in sociology. He also holds an MBA from the Thunderbird School of Global Management at Arizona State and a financial planning certificate. The views expressed in the story do not necessarily reflect the views of Morgan Stanley Wealth Management or its affiliates.