Nowadays, people look at more than just a salary and hours when choosing where to work. Flexible benefits are one of the best ways for businesses to retain loyal employees, but you need an insurance policy that provides the right coverage. So today, Group Enroll is here to discuss the advantages of flexible benefits and why your business should offer them.
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What Are Flexible Benefits?
Flexible benefits are a type of small business insurance that allow employees to choose benefits and contributions on their work insurance plans. Flexible benefits allow employees to prioritize benefits according to their preferences to create a personalized insurance plan.
Additional benefits on top of Canada’s universal healthcare help businesses attract and retain top-tier talent. According to a 2021 employee confidence survey from Glassdoor, nearly 80% of employees say they would accept additional benefits rather than a pay increase.
Flexible benefits include several types of coverage, including:
- Remote work expense coverage
- Professional development
- Career planning
- Flexible spending accounts
- Additional healthcare coverage (e.g., vision and dental)
- Accident and life insurance
- Tuition reimbursement
- Wellness program coverage
- Income and unemployment protection
- Retirement saving accounts
- Employer-matched donations
- And more
How to Implement a Flexible Benefits Plan
If you are considering switching your business to a flexible benefits plan, ask yourself the following questions.
- How quickly do I need to implement this plan?
- What kind of administration do I need for flexible plans?
- How can I facilitate communication about plan benefits?
- What will the flex dollar structure look like?
- What anti-selection controls will I need?
- What kind of benefits do employees prefer?
- How should I structure employee feedback channels?
Types of Flexible Benefits Plans
Most flexible benefits plans work by providing employees with “flex” dollars that they can use to add additional benefits to their plan. Employers have several options to implement their flexible benefits plans for employees.
Modular
Modular-based plans split benefits into individual “modules” that employees can choose. Modules offer different coverage options and allow employees to customize plans and enhance coverage by modifying payroll deductions for contributions.
Add-On
Add-on plans are a simple flexible benefits option that allows employees to pick and choose additions to their traditional insurance plan. Through add-on packages, employees can use flex dollars to receive additional coverage like optional life insurance or disability insurance.
Core Plus
Core plus plan options reduce traditional coverage to a standardized level of mandatory coverage. Employees can then spend their flex dollars to purchase additional coverage as they see fit. Employees who do not have enough flex credits to pay for additional coverage can opt for additional payroll deductions to cover the cost.
Cafeteria
A “cafeteria” style plan offers the greatest level of flexibility as employees can choose any combination of benefits that the employer offers. Like the other types of flex plan options, employees can allocate flex credits to purchase the coverage they want and get additional coverage with payroll deductions.
Healthcare Spending Account (HSA)
Healthcare spending accounts involve setting up a separate account for plan members that they can spend on additional healthcare, dental, and vision care. You can think of an HSA as a special type of chequing account specifically for paying for healthcare. Employers can provide HSA options for flexible plans or as part of a traditional insurance plan.
Coverage Waivers and Plan Restrictions
Employers must consider two important factors when designing flexible benefits plans for employees: coverage waivers and anti-selection restrictions.
Coverage waivers. With a flex plan, an employee can choose not to select benefit options by waiving coverage. Generally, employers require all employees to have certain benefits to cover them from things like critical illness.
Anti-selection limitations. With flex plans comes the risk that employees will over-choose only those benefits they think they will utilize the most. To combat this kind of anti-selection bias, employers institute a few types of anti-selection restrictions on flex plans.
- Step-down limitations prevent employees from increasing or decreasing coverage levels more than a few times per year. That way, employees cannot immediately change benefits if they discover they have a condition that warrants specific coverage.
- Packaged plans combine benefits into a single option to prevent increased utilization. For example, employers may combine an extended health insurance policy with a dental policy.
- Locked-in plans lock employees into a particular benefits allocation at the beginning of every two or three years. Locking employees into benefits prevents them from changing plans throughout the year.
Advantages of Flexible Benefits
Flexible benefits are not just for small or large businesses. Below are some ways that all businesses can benefit from flexible benefits plans for their employees.
Retain Workers
In today’s job market, employees are abandoning ship right and left. Companies that can retain employees have the upper hand in their industry. Flexible benefits and perks provide more perceived value to each individual employee as they can choose the coverage they want.
For example, one employee can choose extended health coverage while the other chooses disability coverage, letting both parties get the most out of their coverage. With a flexible plan, all employees can meet their own preferences for increased satisfaction.
Attract Top Talent
Similarly, workers say that benefits are one of the prime reasons to consider a job. Employers that want to attract top talent in their industries stand to offer generous flexible benefits packages. In some cases, a flexible benefits plan might be worth more to a prospective hire than salary or working hours.
Manage Benefits Costs
Additional insurance coverage can cost employers a significant amount of money over the year. Flexible plans provide expanded coverage but also help employers keep costs low by letting employees choose the kinds of coverage they want.
Instead of having a single plan for all employees with the same coverage, flexible plans create smaller, specialized plans for individual employees. Trimming out unnecessary coverage keeps your budget manageable and reduces overhead.
Address Employee Needs
One of the best things about flexible benefits plans is that they can efficiently meet employee needs. Traditional insurance plans that mandate the same coverage for all employees flatten the landscape and may not be as effective for some employees as they are for others.
For instance, one employee might want to safeguard against a catastrophic health event, and another might want mental health coverage. On a traditional plan, both employees may not have the sufficient coverage they need. Flexible plans allow coverage to target specific employee needs.
Increase Productivity
Employees nowadays place a premium on good benefits when looking for a job. Happier employees with high job satisfaction are more productive. In fact, high levels of employee satisfaction translate into a nearly 31% boost in average productivity.
Conversely, low average work satisfaction numbers can reduce productivity by up to 10%. As such, employers have a vested interest in ensuring that their employees are happy. Flexible benefits are one extremely effective method of improving workplace satisfaction and employee loyalty.
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Flexible Benefits Packages for Small Businesses
Group Enroll offers a quick and easy way to compare the best small business insurance policies. Whether you are looking for group dental, disability, or extended health care insurance, our quote tool can help you compare quotes from Canada’s top group benefits insurance providers.
If you would like to explore flexible benefits options for group insurance policies, receive a quote today by filling out our quote form!
For more information about group benefits, email our Group Enroll team at hello@groupenroll.ca or visit our office at 10 Great Gulf Drive, Unit 5, Vaughan, ON, L4K 5W1.