Henry earns $68,000 per year, receives 15 days PTO, 8% retirement matching, and receives 70% employer-subsidized health insurance which totals $10,000. Calculate the benefit rate.
| Employee Benefits |
| --- |
| Health Insurance | 70% |
| FICA | 7.65% |
| Paid Vacation (PTO) | 15 days |
| Retirement Matching | 8% |
[?] %
Round to the nearest percentage point.
Answer (1)
Calculate the retirement matching: 0.08 × 68000 = $5440 .
Calculate the health insurance subsidy: 0.70 × 10000 = $7000 .
Calculate the PTO value: 260 15 × 68000 ≈ $3923.08 .
Calculate the benefit rate: 68000 5440 + 7000 + 3923.08 × 100 ≈ 24% . The benefit rate is 24 % .
Explanation
Understanding the Problem We are given Henry's annual salary, PTO days, retirement matching percentage, and employer-subsidized health insurance details. Our goal is to calculate the benefit rate as a percentage of Henry's annual salary.
Calculating Retirement Matching First, we calculate the dollar value of the retirement matching. This is 8% of Henry's annual salary of $68,000.
Retirement Matching Value The retirement matching is calculated as: 0.08 × 68000 = 5440 So, the retirement matching is $5440 .
Calculating Health Insurance Subsidy Next, we calculate the dollar value of the health insurance subsidy. This is 70% of the total health insurance cost of $10,000.
Health Insurance Subsidy Value The health insurance subsidy is calculated as: 0.70 × 10000 = 7000 So, the health insurance subsidy is $7000 .
Calculating PTO Value Now, we calculate the dollar value of the PTO (Paid Time Off). We are given 15 days of PTO. We assume there are 260 working days in a year (5 days a week * 52 weeks). We calculate the value of PTO as a fraction of the annual salary.
PTO Value The PTO value is calculated as: 260 15 × 68000 ≈ 3923.08 So, the PTO value is approximately $3923.08 .
Calculating Total Benefits We calculate the total dollar value of benefits by summing the retirement matching, health insurance subsidy, and PTO.
Total Benefits Value The total benefits are calculated as: 5440 + 7000 + 3923.08 = 16363.08 So, the total benefits are approximately $16363.08 .
Calculating Benefit Rate We calculate the benefit rate by dividing the total dollar value of benefits by the annual salary and multiplying by 100.
Benefit Rate Value The benefit rate is calculated as: 68000 16363.08 × 100 ≈ 24.06 So, the benefit rate is approximately 24.06% .
Rounding Benefit Rate Finally, we round the benefit rate to the nearest percentage point, which is 24% .
Final Answer Therefore, the benefit rate is approximately 24% .
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. This calculation allows you to compare the total value, including health insurance, retirement, and paid time off, ensuring you make an informed decision about your employment.
