b udgeting for c ollege : e mployee c ompensation and b enefits andrea morgan, gary moore, and...
Post on 28-Mar-2015
216 Views
Preview:
TRANSCRIPT
BUDGETING FOR COLLEGE:EMPLOYEE COMPENSATION AND BENEFITS
Andrea Morgan, Gary Moore, and Melissa GreensladeProgram CoordinatorsOffice of Financial AidUniversity of Arkansas
CONSIDERATIONS FOR YOUR FIRST JOB
Compensation Pay Overtime Taxes Cost of Living
Benefits Insurance Retirement Leave Time Other Benefits
EMPLOYEE COMPENSATION Salary
Annual rate of pay Set amount of pay per paycheck Work until the job is done; no overtime pay Often referred to as exempt employees
Wage Hourly rate of pay Minimum wage is currently $7.25/hour Paid based on the number of hours actually
worked Paid overtime if over 40 hours worked per week
Overtime = 1.5x wage Often referred to as non-exempt employees
COMPENSATION TERMS Gross Pay – total amount of your pay before any
deductions
Take-Home (Net) Pay – pay actually received by an employee after deductions, including taxes, health insurance premiums, retirement contributions, etc.
Commission – payment based on employee meeting certain sales goals; usually a percentage of those sales
Bonus – money given to an employee in addition to the employee’s usual compensation
At-Will Employee – Most employees are “at will” meaning that your employment can be terminated at any time for any lawful reason
EMPLOYMENT FORMS/TAXES Form I-9
Employment Eligibility Verification From Verifies your eligibility to work in the U.S.
Must provide documentation to prove eligibility: driver’s license, passport, social security card, birth certificate, or other documentation
W-4 Form Tells the employer how much money to withhold from
your pay for federal taxes (exemptions) The fewer exemptions you claim, the more that will be
withheld from your paycheck If you withhold too much then you will get a refund when
you file taxes, but are not paid that money during the year
If you withhold too little, then you could end up having to pay taxes at the end of the tax year
EMPLOYMENT TAXES Federal income taxes Social Security and
Medicare Withholdings Also called FICA taxes Approximately 7.65% of
your pay State and Local Income
Taxes Vary by location States can have no
income tax, flat tax, or progressive tax
OTHER PAY CONSIDERATIONS Pay Periods
How often are you paid? Monthly (12 pay periods/year) Bi-weekly (26 pay periods/year) Other
Cost of Living How much it costs to meet your basic needs
where you live
COST OF LIVING EXAMPLE Fayetteville, AR vs. San Diego, CA
If you make $30,000 in Fayetteville, to have the same standard of living in San Diego, you would need to make $43,032
Groceries will cost 17% more in San Diego Housing will cost 148% more Utilities will cost 20% more Transportation will cost 26% more Healthcare will cost 22% more
Cost of Living (Comparison) Calculators
Data from CNN Money: www.cgi.money.cnn.com/tools/costofliving/costofliving.html
EMPLOYEE BENEFITS
Non-wage compensation offered to employees Health Insurance Other Insurance Flexible Spending Accounts Retirement Leave Time Other Benefits
On average employee benefits provide a 31% boost to employee compensation
HEALTH INSURANCE Enrollment is often allowed only within 30 days of hire, during
open enrollment periods, or if there is a qualified change in family status Qualified change = change in marital status, change in number of
family members (birth, adoption, child reaches age 26, etc), change in coverage to spouse or dependent
Types of Health Insurance Plans HMO (Health Maintenance Organization) – coverage is limited to
doctors who contract with the HMO, a primary care physician (PCP) oversees your care and refers you to specialists as needed
PPO (Preferred Provider Networks) – allows subscribers to use doctors, hospitals, and providers outside of network for a fee, no PCP required
High Deductible Health Care Plan – high deductible plan with low monthly premiums designed to offer minimal day-to-day coverage but protect you in the event of a catastrophe
Point of Service Plans – combines aspects of HMOs and PPOs; generally requires a PCP to make referrals to other doctors within the network
HEALTH INSURANCE TERMS Health Insurance Premium – the employee’s cost
of the insurance, often withheld from each paycheck
Co-Pay/Co-Insurance – your share of the healthcare cost
Deductible – the amount you have to pay out of pocket before the insurer covers costs
See Sample Health Insurance Chart handout
OTHER INSURANCE Employers may offer other forms of
insuranceVisionDentalDisability – pays a portion of your salary if
you become disabled or unable to work due to injury or illness
Life – Pays an amount to your beneficiary if you die You must choose (and update) your beneficiary
or beneficiaries
CAFETERIA PLAN A Cafeteria Plan is a plan that offers flexible
benefits using pre-tax income Employees choose their benefits from a selection
offered by the employer. The selections can include medical, accident, disability,
vision, dental, group term life insurance, and reimbursement for child care or medical expenses
Once you opt in to a Cafeteria Plan, you may not change until the end of the plan year unless you have certain special circumstances
FLEXIBLE SPENDING ACCOUNTS (FSA)
Designated, pre-tax amount of your gross income is deposited into an account to pay for eligible costs Reduces taxable gross income Subject to maximums set by the IRS You are reimbursed from the account for eligible costs You lose unused amounts in the account at the end of the year
Healthcare FSA Eligible expenses: deductibles, co-pays, over-the-counter
medicines (requires prescription), physical therapy, contacts, braces, etc.
Entire designated annual amount is available January 1 or after the first contribution is made
Dependent Care FSA Reimbursement for daycare or other dependent care expenses
that allow you to go to work Qualified dependents: children under 13, dependents of any age that are
physically or mentally incapable of caring for themselves
RETIREMENT BENEFITS
Defined Benefit Plan – pays an amount based on a pre-determined formula; often called a pension
Defined Contribution Plan – retirement amounts are based on the contributions of employee and employer, and any investment earnings on the account 401(k) – offered by public or private for-profit companies 403(b) – offered by tax-exempt or non-profit organizations
Employer Match – many employers match a portion of the contributions employees make to their accounts
Vesting – your right to the money in your account You are always 100% invested in the money you contribute Employers may have a vesting schedule that outlines how
much of their contributions you own
LEAVE TIME The amount of time off you may take from your job Vacation, Personal, and/or Sick Leave
Some employers divide your time off into these categories Paid Time Off (PTO)
Bank of leave time not allotted to any specific category Unpaid Leave of Absence
Time off that is not paid; employer’s discretion whether allowed, unless it is FMLA
Family Medical Leave (FMLA) Mandates unpaid, job-protected leave for up to 12 weeks a
year to care for a sick or injured family member (spouse, child, or parent) or recover from your own illness or injury
Does not apply to small businesses (less than 50 employees); part-time workers, or for short-term illnesses
OTHER BENEFITS Employers may also offer a variety of other
benefits: Tuition Reimbursement Fitness Center Access Parking Fees Childcare Mileage/Gas Reimbursement Etc.
GETTING PAID Employers use different methods of
paying their employees:Paycheck with a paycheck stub
a physical check with attached information to show deductions; the employee is responsible for handling the check
Direct Deposit Pay is directly deposited into your bank account
Payroll Card A prepaid card that has money electronically loaded
on it, used similar to a debit card There may be fees associated with using a payroll
card
UNDERSTANDING YOUR PAYCHECKIncluded on every paycheck stub:
Pay Period – time period covered by the check (weekly, bi-weekly, twice a month, monthly)
Gross Pay – total amount earned before deductions
Net Pay – amount the employee “takes home” after deductions
Federal Withholding Tax (FT or FWT) – amount withheld to pay federal taxes Based on information provided on the W4
State Withholding Tax (ST or SWT) – amount withheld to pay state taxes
Social Security (SS, SSWT or OASDI) and Medicare (MWT or Med) or FICA Taxes May be combined or listed separately on your pay stub
Year-to-date (YTD) – totals of pay and/or deductions made for the year up to the pay period on the paycheck
UNDERSTANDING YOUR PAYCHECK, CONT’D.Items that may also appear on your check stub:
Local Tax – may apply to employees of certain cities, counties or school districts
Insurance Deductions– amount withheld for medical benefit premiums
Retirement – amount you contribute to your retirement plan
Childcare Assistance/Dependent Care Deduction
Leave Time – vacation hours or sick hours used to date and remaining
Other Voluntary Deductions from your paycheck (parking, donations, gym membership)
Important Notices – a portion of the paycheck may be designated to communicate important information like wage increases or tax information
UNEMPLOYMENT BENEFITS Payment from the government to unemployed people
The amounts of previous earnings and time worked (base period) are used to determine the benefit amount
The average weekly benefit is 36% of your previous weekly wage
Must register and document seeking work
Previously part-time, temporary, and self-employed workers do not qualify
Generally, the worker must be unemployed through no fault of his/her own
Register with the state unemployment agency, ex: Arkansas Department of Workforce Service
COBRA HEALTH INSURANCE Provides certain (former) employees and dependents
the right to temporary continuation of health insurance coverage at group rates. Must have been covered under the group health
plan of an employer with 20 or more employees the day before the qualifying event
The qualifying event determines who the qualified beneficiaries are
More expensive than the insurance for active employees since the employer will not be paying part of the premium.
You, spouse, and dependent children can receive COBRA benefits for 18 months if employment is terminated
SELF-EMPLOYMENT
Speak to an attorney and an accountant regarding the many ways you might structure your business and the many legal and financial considerations to take into account.
Remember that as a self-employed person, you will need to pay employment taxes to the IRS at tax time.
You will also want to consider health insurance coverage and retirement plans.
NEGOTIATING SALARY AND BENEFITS FOR YOUR FIRST JOB
Do not immediately accept: ask for time to consider the offer
Consider the entire job package – not just the wages/salary Think about responsibilities, benefits, perks, hours, work
environment, flexibility, and other preferences you may have
Research the typical pay for similar jobs (remember cost of living adjustments) and your level of education and experience
Try not to discuss salary until you have an offer; if pressed, say you are flexible or provide a range, not a specific amount
Even if you are not able to get the salary you wanted, you can negotiate some benefits, such as signing bonus, education, vacation time, flexibility, etc.
Keep your goals reasonable: Remember a new graduate will not have the same negotiating power as someone who has been working in the field for many years
BACKGROUND CHECKS References & Credentials Check
Education, Employment, Licenses, Military Service Record, Workers Compensation Claims
Criminal Records Check County, State, and Federal Criminal Record Searches,
Civil Record Search, Sex Offender Registry, Fingerprinting
Identity and Credit Check Confirm identity and right to work in this country Provide insight into personal responsibility & reliability Can check up to 10 years into your past
Driving Records Check If required to operate a vehicle for business purposes Can check the past 3-7 years
Physical/Substance Abuse Tests
Questions??
BEFORE YOU GO…
Please complete and submit the evaluation form
PowerPoint presentation and handouts will be posted on our website with all other Budgeting For College Seminars
THANK YOU! Contact Information:
Office of Financial Aid; Andrea, Gary, and Melissa Campus location: 114 Silas Hunt Hall Phone: 479-575-3806 Fax: 479-575-7790 Website: http://finaid.uark.edu/ And find us on Facebook at University of
Arkansas Financial Aid!
top related