“Our benefits suck.” Have you ever heard that from your employees? If you have, maybe your benefits program lacks variety or pizzazz. If it were an action figure, it would be a Ken doll—boring and uptight. But you can make your program more exciting by introducing some flexibility. There are three main options for adding flexibility to your employee benefits: modular plans, cafeteria plans and healthcare spending accounts (HCSAs).
These plans give employees the choice of a number of prepackaged options. Think Bob Barker and Showcase No. 1, 2 or 3: the better the showcase, the more employees will be asked to dip into their pockets. Employees generally like modular flex plans because they appreciate the choices they offer. However, their design must address the company’s unique employee demographics. Companies considering modular flex plans should employ at least 200 people, and they should offer no more than three options. This structure allows the company to spread the risk of having too few employees in each option and prevents an imbalance of premiums versus claims.
As their name suggests, these plans let employees browse through a menu of options, fill their trays and check out at the register. Employees like the freedom these plans offer, but they’re more difficult to administer. They’re also more expensive to provide because when given choices, members pick the options they know they’ll use more—which, in turn, generates more claims. Plus, they require more communication with employees because they tend to be complex and involve employee self-service. Companies should have at least 1,000 employees before considering this option. That’s because these plans generally require dedicated internal administration due to additional employee inquiries and the need for re-enrollment campaigns every 12 to 24 months. Having more employees also helps spread out the risk of not having enough premiums in a pool to align proportionately with claims.
These accounts provide a predetermined amount of money to employees at the beginning of each benefit year to reimburse medical and dental expenses. Think of it as a personal bank account employees can use, but only for boring and responsible expenses. Fashionable eyeglasses and relaxation massages aside, the Canada Revenue Agency has a long list of approved items. Those include regular dental work, medical marijuana, laser eye surgery, cancer treatment in or outside of Canada and medically necessary gluten-free foods (what’s eligible is the cost difference between conventional and gluten-free foods). One Canadian insurance carrier offers the product in the form of a VISA card loaded with employer flex dollars. Companies of all sizes can have HCSAs because they are easy to implement and administer. They can also be affordable, especially if the company scales back some of its core benefits or offers a smaller annual amount, such as $100 or $200.
So ask yourself: is your employee benefits program a boring and uptight Ken doll? If it is, don’t despair. With some energy and effort, you could transform it into a new G.I. Joe action figure.
Kevin McFadden is president of McFadden Benefits & Pension Ltd. firstname.lastname@example.org
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