How to Evaluate a Job Offer: Total Compensation Guide
Base salary is the easiest number to compare when you evaluate a job offer, so it's usually where people stop looking. It's rarely the whole picture, though. Health insurance costs, retirement contributions, bonuses, equity, paid time off, and the work itself can shift the real value of an offer quite a bit. Sometimes they shift it enough to flip which of two offers is actually the better one.
I'll take a typical U.S. offer apart piece by piece, flag the questions worth asking about each one, and finish with a simple side-by-side comparison. If you haven't negotiated yet, read our salary negotiation guide first. This one is about deciding what an offer is really worth to you.
Start by Getting Everything in Writing
Before you try to evaluate anything, ask for:
- The written offer letter: title, base pay, start date, reporting line, and location or remote terms
- The benefits summary, ideally the plan documents or a benefits guide rather than a one-line description
- Details of any bonus plan or equity grant
- The paid time off and leave policies
CareerOneStop, the U.S. Department of Labor's career site, suggests taking at least 24 hours to consider an offer even if you plan to accept, and making sure you understand the responsibilities, schedule, remote policy, insurance, retirement plan, and training before you decide. I'd treat that as the bare minimum. Asking for a day or two to read the fine print is a perfectly normal request.
Health Insurance
For many U.S. workers, employer health coverage is the single most valuable benefit after pay. Two offers with the same salary can leave you with very different take-home amounts once premiums and out-of-pocket costs come out of your pocket.
What to Compare
- Monthly premium: what you pay out of each paycheck, for yourself and for any dependents
- Deductible: what you pay before the plan starts covering most costs
- Out-of-pocket maximum: the most you'd pay in a year for covered care
- Network: whether your doctors and nearby hospitals are in network
- HSA or FSA: whether the employer offers a health savings account or flexible spending account, and whether it puts money into an HSA
- Dental and vision: often separate plans with their own premiums
A Simple Way to Estimate Cost
For each offer, add up a full year of premiums. Then add a realistic estimate of your out-of-pocket spending, based on how much care you typically use. If you have ongoing prescriptions or a family, run the numbers for a "bad year" too, using the out-of-pocket maximum.
When Coverage Starts
Ask when coverage begins. Some plans start on day one, and others kick in after a waiting period. If you're leaving a job, the Department of Labor explains that COBRA may let you keep your former employer's group health coverage temporarily, generally for up to 18 months. For private-sector employers, it generally applies to group health plans at employers with 20 or more employees (state and local government plans are covered under the Public Health Service Act instead), and the plan can charge the full premium plus a 2% administrative fee. That can get expensive, so a gap between jobs is worth planning for ahead of time.
Retirement Contributions
The 401(k) Match
Many employers match part of what you put into a 401(k) or similar plan. A match formula like "50% of the first 6% of salary" is effectively extra compensation, but only if you contribute enough to actually get it.
Vesting: The Part People Miss
Vesting decides when the employer's contributions become yours. According to the Department of Labor, you're always 100% vested in your own contributions, but you may have to work several years before you fully own the employer match. Federal rules let employers use either of these maximum schedules for matching contributions (IRS):
- Cliff vesting: 100% vested after 3 years of service, and nothing before that
- Graded vesting: at least 20% after 2 years, rising 20% a year to 100% after 6 years
Some plans are more generous, including immediate vesting. The Department of Labor notes that SIMPLE and safe harbor 401(k) plans vest required employer contributions immediately, though the IRS notes that one type of safe harbor plan (a QACA) can require up to two years. If you think you might not stay long, a generous match with a long cliff could be worth less to you than a smaller match that vests right away.
Questions to ask: What's the match formula? What's the vesting schedule? When can I start contributing?
Bonuses and Variable Pay
A bonus "target" isn't a guarantee. Ask:
- What is the target bonus, as a percentage of salary or a dollar amount?
- What does it depend on: company results, team results, individual performance, or some mix?
- How has the plan actually paid out in recent years?
- Is a first-year bonus prorated based on your start date?
- Does a sign-on bonus have to be repaid if you leave within a certain period?
When you're comparing offers, I'd suggest counting a discretionary bonus at a conservative figure rather than the full target.
Equity
Equity can mean a lot at some companies and close to nothing at others. The details matter more than the headline number.
- Type: Restricted stock units (RSUs) at public companies have a market value you can look up. Stock options give you the right to buy shares at a set "strike price," and they're only worth something if the share value rises above it.
- Vesting schedule: how many years until the grant fully vests, and whether there's a waiting period before the first portion vests
- Company stage: Private-company equity may not be sellable for years, if ever.
- Refreshers: whether employees typically get additional grants over time
If an offer leans heavily on equity, it's fair to ask for the information you'd need to value it, such as the number of shares, the strike price, and, for private companies, the most recent valuation. Think about talking to a tax professional before you exercise options.
Paid Time Off and Leave
U.S. employers vary a lot on time off, so compare:
- Vacation days, sick days, and holidays, or whether PTO comes as a single pool
- Whether unused days roll over or get paid out
- Parental and family leave policies, and how much of that leave is paid
- "Unlimited" PTO policies. Ask how much time people on the team actually take.
Role Scope and Growth
The money pieces are easier to compare, but over a multi-year horizon the role itself often matters more. Ask:
- What does success look like in the first six to twelve months?
- Where have people in this role moved on to?
- How are promotions and raises decided, and how often are compensation reviews?
- Is there a training or education budget?
A somewhat lower salary can make sense if the role offers clearly more scope, visibility, or skill development than your other options. A higher salary in a role with little room to grow may look a lot less attractive a few years out.
Culture and Working Conditions
You can't really judge culture from an offer letter. Use the interview process, and if you can, a conversation with a future peer, to ask about:
- How decisions get made and how much autonomy the role has
- Meeting load and typical working hours
- How the team handles competing priorities
- Remote, hybrid, or on-site expectations, and how firm they are
- Commute time and cost, and any travel requirements
Employee reviews on sites like Glassdoor can add context. Look for patterns across many reviews rather than reacting to a single comment.
Total Compensation vs. Base Salary
Base salary is the fixed amount you're paid. Total compensation adds up everything of value the employer provides: base pay, expected bonuses, the value of equity, employer retirement contributions, and the employer's share of benefits such as health insurance. Two offers with the same base can differ by thousands of dollars in total compensation. When recruiters quote "total comp," ask how they calculated it, and which parts are guaranteed and which are estimates.
RSUs vs. Bonus: Which Is Worth More?
A cash bonus and a grant of restricted stock units (RSUs) can look similar on paper, but they behave differently:
- Cash bonus: usually paid annually and often tied to company and individual performance. A target bonus isn't guaranteed. Ask what percentage of target was actually paid in recent years.
- RSUs: shares delivered on a vesting schedule. At a public company you can look up the share price, but the value moves with the stock and you only receive shares that vest while you're still employed.
A practical approach is to value guaranteed cash at full value, a target bonus at a conservative fraction based on the payout history you're told about, and RSUs at the current share price divided across the vesting years, with a mental discount for volatility. Both are typically taxed as income when paid or when they vest. A tax professional can help with your specific situation.
Comparing Offers Side by Side: A Benefits Value Worksheet
A simple spreadsheet keeps you honest. Here's one approach:
| Item | Offer A | Offer B |
|---|---|---|
| Base salary | ||
| Expected bonus (conservative) | ||
| Annual employer retirement contribution (vested portion you expect to keep) | ||
| Annual equity value (conservative) | ||
| Your annual health premiums | (subtract) | (subtract) |
| Estimated out-of-pocket health costs | (subtract) | (subtract) |
| Commute cost | (subtract) | (subtract) |
| Estimated annual value |
Next, list the non-financial factors, such as growth, manager, flexibility, and stability, and weight each one by what matters most to you right now. If you treat every factor as equal, you usually end up with a muddled decision.
Making the Decision
- If one offer clearly wins on what you care about most, take it and decline the other one politely.
- If they're close, think about going back to your preferred employer with one specific, reasonable request.
- Once you decide, confirm the final terms in writing, including start date and any conditions such as a background check, before you resign from your current job.
When you start, U.S. law requires you to complete Section 1 of Form I-9, which verifies your eligibility to work, no later than your first day of employment. USCIS says the employer must complete Section 2, including reviewing your documents, within three business days of your first day of work for pay. Have your documents ready. Our guide to your first 90 days covers what comes next.
Frequently Asked Questions
Is it rude to ask for the full benefits details before accepting? No. It's a standard request, and employers expect serious candidates to look over the benefits.
How should I value a 401(k) match? Count it only if you'll contribute enough to get it, and adjust for the vesting schedule if there's a chance you'll leave before you're fully vested.
Should I take a lower salary for better benefits? Sometimes. Run the annual numbers. Lower premiums and a strong match can outweigh a modest difference in salary.
How long can I take to decide? A few days is common. If you need more time, say because you're waiting on another offer, ask directly and give a specific date.
What if the offer is verbal only? Ask for it in writing before you resign from anything.
This article is general information, not tax, legal, or financial advice. See our disclaimer.
Related Guides
- Still deciding where to apply? Go back to square one with how to find a job in the U.S..
- Negotiate first with our salary negotiation guide.
- Starting soon? Read your first 90 days in a new job.
- Still interviewing? See common interview questions.
Sources
- CareerOneStop (U.S. Department of Labor), "Negotiate your salary" (understanding and evaluating an offer): https://www.careeronestop.org/JobSearch/Interview/negotiate-your-salary.aspx
- U.S. Department of Labor, EBSA, "FAQs about Retirement Plans and ERISA": https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/retirement-plans-and-erisa
- Internal Revenue Service, "Issue Snapshot – Vesting schedules for matching contributions": https://www.irs.gov/retirement-plans/issue-snapshot-vesting-schedules-for-matching-contributions
- U.S. Department of Labor, EBSA, "Protecting Retirement and Health Benefits after Job Loss": https://www.dol.gov/agencies/ebsa/workers-and-families/protecting-retirement-and-health-benefits-after-job-loss
- U.S. Department of Labor, EBSA, "A Worker's Guide to Health Benefits Under COBRA": https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/publications/workers-guide-health-benefits-cobra
- USCIS, "Completing Section 1, Employee Information and Attestation": https://www.uscis.gov/i-9-central/completing-form-i-9/completing-section-1-employee-information-and-attestation
- USCIS, "Completing Section 2, Employer Review and Attestation": https://www.uscis.gov/i-9-central/completing-form-i-9/completing-section-2-employer-review-and-attestation
If one offer is a contract role, our guide to W-2 vs 1099 pay shows how to compare it fairly with a salaried job. Retirement benefits can be worth thousands a year, so read how a 401(k) match works before you compare packages.