Wyatt earns $65,000 per year, receives 15 days PTO, 6% 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: 6%
[?] %
Round to the nearest percentage point.
Answer (2)
Calculate the retirement matching: 0.06 × 65000 = 3900 .
Calculate the health insurance subsidy: 0.60 × 10000 = 6000 .
Calculate the PTO value: 260 15 × 65000 = 3750 .
Calculate the benefit rate: 65000 3900 + 6000 + 3750 × 100 = 21 . The benefit rate is 21 % .
Explanation
Understanding the Benefits First, we need to determine the dollar value of each benefit. Wyatt's annual salary is $65,000.
Calculating Retirement Matching The retirement matching is 6% of Wyatt's salary. To calculate this, we multiply 0.06 by 65 , 000 : 0.06 × 65000 = 3900 S o , t h ere t i re m e n t ma t c hin g i s $3,900$.
Calculating Health Insurance Subsidy The employer-subsidized health insurance covers 60% of the total health insurance cost of $10 , 000 . To calculate this, we multiply 0.60 by 10 , 000 : 0.60 × 10000 = 6000 S o , t h e h e a lt hin s u r an ces u b s i d y i s $6,000$.
Calculating PTO Value Wyatt receives 15 days of PTO. To determine the dollar value of this, we need to know how many working days there are in a year. We'll assume there are 260 working days in a year. The value of the PTO is calculated as (15 days / 260 working days) * 65 , 000 : 260 15 × 65000 = 3750 S o , t h e v a l u eo f t h e PTO i s $3,750$.
Calculating Total Benefits Now, we sum the dollar values of all the benefits: $3 , 900 (retirement) + $6 , 000 (health insurance) + $3 , 750 (PTO) = $13 , 650 .
Calculating Benefit Rate Percentage To find the benefit rate, we divide the total dollar value of the benefits by Wyatt's annual salary and multiply by 100 to express it as a percentage: 65000 13650 × 100 = 21
Final Answer Therefore, the benefit rate is 21%.
Examples
Understanding benefit rates is crucial when evaluating job offers. For instance, if two companies offer the same salary but different benefit packages, calculating the benefit rate helps you determine which offer provides better overall compensation. A higher benefit rate means more value in benefits like health insurance, retirement, and paid time off, which can significantly impact your financial well-being. By quantifying these benefits as a percentage of your salary, you can make a more informed decision about your employment.
Wyatt's benefit rate is calculated by determining the value of his benefits, which total $13,650. When divided by his $65,000 salary and expressed as a percentage, the benefit rate amounts to 21%. Therefore, Wyatt's benefit rate is 21%.
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