Have you ever interviewed at a company that offered you a low salary but tried to woo you with a great benefits program? In other words, they offer a salary that is actually below-poverty level, but they claim the benefits actually equal out to an extra 700 bazillion dollars.
Benefits are great, don't get me wrong. And the older I get, the more willing I am to sell my soul for some good health insurance. But sometimes the equation used to explain the monetary equal of benefits is not accurate.
In an article from TrueCareers.com, Michal Bergman explains what you really need to look for:
Assume that XYZCorp pays 50% of a $250 per month premium for good health insurance. LMN.com has the same plan but you have to pay the whole premium. That means that you will pay $1,500 per year more with LMN.com than at XYZCorp. Simple, right? Now add this wrinkle - XYZCorp has a plan that lets you pay your share of the premium with pre-tax dollars (the aforementioned Section 125). And LMN.com makes you pay your cost with after-tax dollars. The difference is not $1,500 ($3,000 vs. $1,500) but $2,500. You have to earn over $4,000 to have the $3,000 Company B wants you to pay - but only $1,500 to pay your premium with Company A.
I'll be honest here, I've got a low attention span, so after "50% of a $250 per month premium," I zoned out quicker than an old guy waiting for his wife in the mall. However, I know that they make a good point by counseling you to consider the effect of pre-tax dollars on the equation. But this article, Understanding Company Benefits, provides a good overview if you are so inclined.