Hannah earns $[tex]$52,000[/tex] per year, receives 10 days PTO, [tex]$6 \%[/tex] retirement matching, and receives [tex]$60 \%[/tex] employer-subsidized health insurance which totals $[tex]$10,000[/tex]. Calculate the benefit rate.
| Employee Benefits |
| :------------------ | :------- |
| Health Insurance | [tex]$60 \%[/tex] |
| FICA | [tex]$7.65 \%[/tex] |
| Paid Vacation (PTO) | 10 days |
| Retirement Matching | [tex]$6 \%[/tex] |
[?] %
Round to the nearest percentage point.
Answer (2)
Calculate the retirement matching: 0.06 × 52000 = 3120 .
Calculate the health insurance subsidy: 0.60 × 10000 = 6000 .
Calculate the PTO value: 260 52000 × 10 = 2000 .
Calculate the benefit rate: 52000 3120 + 6000 + 2000 × 100 ≈ 21 . The benefit rate is 21 % .
Explanation
Calculate Retirement Matching First, we need to calculate the value of the retirement matching. Hannah receives 6% retirement matching on her annual salary of $52,000. To find this value, we multiply her salary by 6% (or 0.06).
Retirement Matching Value 0.06 × 52000 = 3120
The value of the retirement matching is $3 , 120 .
Calculate Health Insurance Subsidy Next, we calculate the value of the health insurance subsidy. Hannah receives 60% employer-subsidized health insurance, which totals $10,000. To find the subsidy value, we multiply the total health insurance cost by 60% (or 0.60).
Health Insurance Subsidy Value 0.60 × 10000 = 6000
The value of the health insurance subsidy is $6 , 000 .
Calculate PTO Value Now, we calculate the value of the PTO (Paid Time Off). Hannah receives 10 days of PTO per year. We need to determine the daily value of her salary. Assuming there are 260 working days in a year (52 weeks * 5 days/week), we divide her annual salary by 260 to find her daily rate. Then, we multiply her daily rate by the number of PTO days (10).
PTO Value 260 52000 × 10 = 200 × 10 = 2000
The value of Hannah's PTO is $2 , 000 .
Calculate Total Benefits Next, we calculate the total value of benefits by summing the retirement matching, health insurance subsidy, and PTO value.
Total Benefits Value 3120 + 6000 + 2000 = 11120
The total value of Hannah's benefits is $11 , 120 .
Calculate Benefit Rate Now, we calculate the benefit rate by dividing the total value of benefits by Hannah's annual salary.
Benefit Rate (Decimal) 52000 11120 = 0.21384615384615387
Convert to Percentage To express the benefit rate as a percentage, we multiply the result by 100.
Benefit Rate (Percentage) 0.21384615384615387 × 100 = 21.384615384615387
Round to Nearest Percentage Point Finally, we round the benefit rate to the nearest percentage point.
Final Answer 21.384615384615387 ≈ 21
The benefit rate, rounded to the nearest percentage point, is 21%.
Examples
Understanding benefit rates is crucial in personal finance and career planning. For instance, when evaluating job offers, knowing the benefit rate helps you compare the total compensation packages, not just the salaries. A higher benefit rate signifies more value in areas like health insurance, retirement, and paid time off. This comprehensive view aids in making informed decisions about your financial well-being and job satisfaction. For example, if two jobs offer the same salary but one has a significantly higher benefit rate, the latter might be the better choice due to the additional perks and security it provides.
Hannah's benefit rate is calculated to be approximately 21% based on the total value of her benefits compared to her annual salary of $52,000. This includes her retirement matching, health insurance subsidy, and PTO value. The total benefits amount to $11,120, which is then divided by her salary and converted to a percentage.
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