Flexible Benefits – Not Just for Big Companies

28 Mar Flexible Benefits – Not Just for Big Companies

You may have had a situation in the past where an employee has asked if they can top up their benefits plan themselves. Perhaps they have been told that they have a significant dental procedure on the horizon, or large prescription drug claims.

Flexible health and dental benefit programs are now available for as few as three employees – and the advantages are not limited to the employees’ flexibility to build a program that meets their family’s needs.

  1. Plan member engagement:
    • Some employers find that employees don’t truly understand the value of the investment made into benefits.
    • Flexible benefit plans mean that employees see a dollar figure associated with the cost of the program.
    • When employees choose levels of coverage that are meaningful to them, they feel like their benefits program is reflecting their needs.
    • Employers are juggling diverse needs of their workforce. From millennials to boomers, there is a gap between what these generations value most in their plans.
  1. 24-month rate guarantee:
    • Employers choose a dollar figure that they can afford for benefits. That amount could be the same for all employees or different based on single/ couple/ family status or other class division.
    • When a plan sponsor can choose how much to budget for benefits over a two-year period, they can be empowered to make other business decisions and other investments because the cost of benefits is understood.
  1. Pooling:
    • High-cost drugs and the risk of significant fluctuation in benefit premiums from year to year make some employers shy about committing to benefits for their employees. But pooling means a spread of risk among a large group of employers and employees – leading to increased stability of rates over the long term.
    • Pooling also means that smaller employers can offer real protection to employees against the risk of high-cost claims.

 

How difficult is it to implement this program? How tough is ongoing administration?

Step 1: Plan sponsor chooses how much to give to each employee. Contribution amounts must constitute a minimum of 50% of total premiums. Employees can be given different amounts based on a percentage of salary, single/couple/family status or a flat amount for all employees.

Step 2: Plan sponsor chooses from three benefit levels, from foundation level to premier benefit solutions.

Step 3: Employees select their benefits using an interactive online tool. If the employee chooses a plan that costs less than the employers’ contribution, the employee ends up with a health spending account.

 

If the employee chooses a basket of options that cost more than the employer’s contribution, they would contribute via payroll deduction.

Ongoing enrolment is much like a traditional plan, so ongoing administration adds little additional burden.

Introducing flexibility must always reflect your plan philosophy. Please talk to us if you’d like to hear more about how this program could work with your benefit strategy.