Full-time jobs are supposed to come with benefits like health insurance and vacation time, but that's not always the case. Employee benefits like paid sick leave and health insurance are only offered to about three-fourths of full-time employees in the private sector. If your first job offers no benefits, there are some steps you can take to cover your medical costs and ensure you get time off when you need it.
Weighing a No-Benefits Offer
If you've been offered your first job but haven't yet accepted, it's worth looking at what you'd be giving up. On average, combined employer-provided perks are worth about 30 percent of an employee's salary. If the job is paying 30 percent more than market averages, it might be well worth it.
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But not all first-time job seekers have the luxury of turning down job offers. You could take the new job as a resume builder, and then leverage that experience to get a better-paying job with benefits in a couple of years. But if you're looking at multiple job offers or your skills are in demand, you might be able to choose the best offer, and that 30 percent should be included when you're choosing between potential employers.
Finding Health Care Coverage
The biggest issue with a no-perks job is that you won't have health insurance coverage. One emergency room visit can result in a four-figure bill. You also won't have coverage for annual physicals, dental cleanings, eyecare visits or prescriptions.
You can find healthcare coverage on your own, but you won't have the benefit of a group insurance plan. However, there are some options for DIY healthcare.
- Parent or spouse: You can stay on your parents' healthcare plan until you're 26. If you get married, your spouse's insurance plan will likely cover you as one of the dependents.
- Healthcare.gov: The Affordable Care Act offers a portal where you can price insurance premiums and coverage on a variety of plans.
- Membership organizations: Look into health insurance plans offered through industry membership organizations like the Association for Computing Machinery and the Writers Guild of America.
Pensions and Retirement Funding
It's not unusual for private-sector employers to skip pensions as a benefit. In fact, only 67 percent of private-sector employees had employer-provided pensions in 2020. But many employers do offer access to a 401(k) plan, through which you can have money withheld, tax-free, from your paycheck each week. Some even provide an employer match.
The good news is, you don't need an employer's help to set up retirement savings. You can create a retirement plan of your own by opening a retirement account through a brokerage or by using a robo-advisor. With a Traditional IRA, the funds will come out pre-tax, saving you a little on your tax bill each year.
If your first job offers no benefits, there are some steps you can take to cover your medical costs and ensure you get time off when you need it.
Vacations and Sick Leave
Paid time off is one of the most important items in any benefits package. But those who are part-time or working for smaller employers might not have PTO. That means if you're sick, you'll have to go unpaid, which can only compound any healthcare costs you incur.
The best thing you can do to account for future vacation days or sick days is to put some money aside in a bank account. You'll need to save not just for the vacation costs but for the loss of income you'll suffer. This short-term savings should be in addition to your long-term personal finance strategies.
Even if your first position doesn't include job benefits, you'll be gaining experience you can use to negotiate better terms in the future. You'll also get practice in lining up your own insurance and time off pay, which will make you more informed on costs when you're offered those benefits going forward.
- Bureau of Labor Statistics: Employee Benefits in the United States – March 2021
- Bureau of Labor Statistics: Employer Costs for Employee Compensation - March 2022
- U.S. Department of Health & Human Services: Young Adult Coverage
- Association for Computing Machinery: Insurance Programs
- Writers Guild of America West: Benefits
- Bureau of Labor Statistics: 67 Percent of Private Industry Workers Had Access to Retirement Plans in 2020
- IRS: Traditional IRAs