Valuing Benefits in a Job Offer: 401(k) Match, Health Cover and PTO
Offer letters lead with salary because salary is easy to state. Benefits come in a separate document, in percentages and plan names, and they are much harder to compare. Yet for many jobs the benefits are worth tens of thousands of dollars a year, and two offers with different salaries can end up almost level once they are counted. This guide shows how to turn the three biggest benefits, the retirement match, health cover and paid time off, into dollar figures you can enter in the Job Offer Comparison Calculator, and how to read the result honestly.
1. The retirement match
A match is money your employer adds to your retirement account when you contribute. It is usually stated as a formula. Two common shapes:
- 50% of your contributions, up to 6% of salary. Contribute 6% and the employer adds 3%. On an $80,000 salary that is $2,400 a year.
- 100% of your contributions, up to 4% of salary. Contribute 4% and the employer adds 4%. On $80,000 that would be $3,200; on an $83,000 salary it is $3,320.
Both formulas are sometimes described loosely as "a good match", but they are worth different amounts and require different contributions from you to collect in full. Read the plan summary for three things:
- The exact formula, and what pay it applies to (some plans count bonuses, some do not).
- How much you must contribute to receive the full match.
- Vesting: whether the employer's contributions are yours immediately or only after a period of service. If you might leave before the match vests, discount it.
Enter the match as a dollar amount per year, and only the amount you will actually receive.
2. Health cover
For health insurance, the number that belongs in the calculator's benefits field is what the employer pays toward your premiums each year. Benefits guides often show this as a monthly figure, or show the total premium and your share, in which case the employer's share is the difference.
In our example, Offer A's employer pays $550 a month toward your cover, $6,600 a year. Offer B's pays $380 a month, $4,560 a year. That is a $2,040 difference before you look at anything else.
The employer's share is only half the story. Your own share of the premium comes out of your paycheck, and the plan's deductible, copays and out-of-pocket maximum decide what you pay when you use it. The calculator takes a single benefits figure, so it cannot model those. If you expect significant medical costs, estimate what you would likely pay out of pocket under each plan and subtract the difference from the more expensive plan's benefits value. If you would not use a particular benefit (for example, you are covered on a partner's plan), do not count it.
Other benefits can go in the same field if they have a clear cash value to you: dental and vision premiums, a commuter subsidy you would use, a learning budget you would spend. Leave out perks you would not miss.
3. Paid time off
The calculator values each paid day off at your base salary divided by 260 working days. At $80,000 a day is worth $307.69; at $83,000 it is $319.23.
It is important to be clear about what this number is. It is not extra cash. Your salary already pays you on your days off; a job with 20 days off does not put more money in your account than one with 12. What the calculator is doing is crediting the offer with more paid days off, because you receive the same salary for fewer working days. That is a fair way to rank offers, but you should never add the PTO value to a budget.
A second way to see the same thing is pay per day actually worked. Using the Salary to Hourly Calculator with the weeks you would really work (52 weeks minus PTO, at five days a week), $80,000 with 20 days off is $41.67 an hour worked, and $83,000 with 12 days off is $41.83. Almost identical: the higher salary is largely paying for the extra eight working days.
Putting it together
| Offer A | Offer B | |
|---|---|---|
| Base salary | $80,000 | $83,000 |
| Retirement match | $2,400 (50% up to 6%) | $3,320 (100% up to 4%) |
| Employer health contribution | $6,600 | $4,560 |
| Paid time off | 20 days | 12 days |
| PTO value (calculator) | $6,153.85 | $3,830.77 |
| Total compensation | $95,153.85 | $94,710.77 |
Salary alone says Offer B is $3,000 better. The full calculation says Offer A is $443.08 better. The match favors B by $920, the health contribution favors A by $2,040, and the extra eight days off favor A by $2,323.08 in the calculator's terms.
Now the honest test: remove the PTO value (set both offers' PTO to zero) and Offer B leads by $1,880. In other words, on cash and cash-like benefits B is ahead; Offer A only wins if you value eight extra days off at roughly your daily rate. Many people would. Some would rather have the money. The calculator cannot make that choice for you, but it shows you that this is the choice.
What you will see in each paycheck
Benefits also change take-home pay, because your own contributions come out before you are paid. Suppose you contribute enough to get each full match (6% at Offer A, 4% at Offer B), and your own share of health premiums is $1,200 a year at A and $2,640 at B. Running both through the Take-Home Pay Calculator, biweekly, at a 24% combined effective rate:
- Offer A: $2,163.08 net per paycheck
- Offer B: $2,251.94 net per paycheck
Offer B pays $88.86 more per paycheck, partly because of its higher salary and partly because you contribute a smaller percentage to get its match. The 24% rate is an illustration. The take-home calculator applies one combined effective rate that you supply; it does not model any country's or state's tax rules, brackets or tax year, and it treats your retirement contribution and premiums as reducing the base for that whole rate, which real payroll may not do. It is a planning estimate, not tax advice. For your own figures, use a recent pay stub, your tax authority's guidance or a tax professional; our guide to 401(k) contributions and your paycheck explains the main caveat.
Your first year can look different
The figures above describe a full, settled year. The first year at a new employer is often less generous, and it is worth checking before you compare:
- Waiting periods. Some plans start health cover on day one; others start it after a month or more. If there is a gap, you may need to keep your old cover in the meantime, which is a real cost to set against that offer.
- Retirement plan eligibility. Some employers let you join immediately; others make you wait before you can contribute or before the match begins. A match that starts after six months is worth about half as much in year one.
- Paid time off. Accrual usually starts at zero, so a 20-day allowance may mean only a handful of days available by your first summer. Some employers also restrict leave during an initial period.
- Bonus eligibility. A first-year bonus is often prorated by start date, or not paid at all if you join late in the year.
If one offer is noticeably thinner in year one, run the calculator twice: once with first-year values and once with the settled values. Then decide which matters more to you, given how long you expect to stay.
A checklist for any offer
- Ask for the benefits summary before you decide, not after you sign.
- Write down the match formula, the contribution needed to get all of it, and the vesting schedule.
- Find the employer's yearly contribution toward health cover for the tier you would choose (just you, you and a partner, family).
- Note the deductible and out-of-pocket maximum, and estimate your likely costs if you use care regularly.
- Count paid days off, including holidays and any days that are not available in your first year.
- Enter everything in the Job Offer Comparison Calculator.
- Run it again with PTO set to zero, so you can see how much of the result depends on how you value time off.
- Check the per-paycheck figures with the take-home calculator.
Common questions
Should I count the employer's payroll taxes or other legally required contributions?
No. Those are costs to the employer that every comparable job carries, so they do not help you choose between offers. Stick to what differs between the offers and what you would value.
How do I value an employer-paid life or disability policy?
If you would otherwise buy similar cover yourself, its cost to you is a reasonable value. If you would not, it is worth less to you, and leaving it out is fine. Either way, it is usually small compared with health cover and the match.
What about unlimited PTO?
An unlimited policy has no fixed number of days, so ask current employees what people typically take, and enter that. Be aware that unlimited policies usually have no balance to pay out when you leave; whether accrued leave is paid out at all varies by employer policy and local law.
Can I ask for better benefits instead of more salary?
Sometimes. Benefits are often set company-wide, but paid time off, a signing bonus or a start date can be more flexible. Our guide to negotiating an offer honestly shows how to check what a change is worth.
What the calculator leaves out
- It takes one benefits number per offer and cannot model deductibles, networks or plan quality.
- It credits PTO at your daily rate; that ranks offers, it is not money.
- It does not discount the match for vesting or for contributions you will not make.
- It does not know taxes, which differ by place and by benefit.
Benefits are pay in a different form. Once each one is a dollar figure, an offer that looked $3,000 behind can turn out to be level, or ahead, depending on what you value. Compare your own offers side by side with the Job Offer Comparison Calculator.