Rachel earns $52,000 per year, receives 15 days PTO, 8% retirement matching, and receives 60% employer-subsidized health insurance which totals $10,000. Calculate the benefit rate.
| Employee Benefits |
| --- |
| Health Insurance | 60% |
| FICA | 7.65% |
| Paid Vacation (PTO) | 15 days |
| Retirement Matching | 8% |
[?] %
Round to the nearest percentage point.
Answer (1)
Calculate the employer's health insurance contribution: 0.60 × 10000 = 6000 .
Determine the value of PTO: 260 15 × 52000 = 3000 .
Compute the retirement matching amount: 0.08 × 52000 = 4160 .
Calculate the benefit rate: 52000 6000 + 3000 + 4160 × 100 ≈ 25 .
25 %
Explanation
Calculate Health Insurance Contribution First, we need to calculate the employer's contribution to health insurance. The employer subsidizes 60% of the total health insurance cost of $10 , 000 . So, the calculation is: 0.60 × 10000 = 6000
Calculate PTO Value Next, we calculate the value of the Paid Time Off (PTO). Rachel receives 15 days of PTO. We assume there are 260 working days in a year (5 days a week * 52 weeks). The value of her PTO is calculated as: 260 15 × 52000 = 3000
Calculate Retirement Matching Now, we calculate the retirement matching amount. The employer matches 8% of Rachel's annual salary. So, the calculation is: 0.08 × 52000 = 4160
Calculate Total Benefits We then calculate the total benefits by summing the health insurance contribution, PTO value, and retirement matching amount: 6000 + 3000 + 4160 = 13160
Calculate Benefit Rate To find the benefit rate, we divide the total benefits by Rachel's annual salary and multiply by 100: 52000 13160 × 100 = 25.30769230769231
Round to Nearest Percentage Point Finally, we round the benefit rate to the nearest percentage point: 25.30769230769231 ≈ 25
Examples
Understanding benefit rates is crucial in evaluating job offers. For instance, consider two job offers with the same salary but different benefit packages. Calculating the benefit rate helps you quantify the additional value provided by each package, including health insurance, retirement contributions, and paid time off. This comprehensive assessment enables you to make an informed decision based on the total compensation, not just the base salary. By understanding the true value of your benefits, you can better plan your financial future and choose the offer that best suits your needs.
