How To Get Flex Benefits for Any Size Business
Business owners know that employees are looking for flexibility in work-life balance, compensation, and benefits. The 2015 Sanofi Canada Healthcare Survey asked plan members about their preferences and their current coverage under group benefits plans. 91% of responding plan members said they would like the option to choose specific benefits that are best suited for their current personal situation. Across companies of all different sizes, nearly 2/3 of responding plan members in the survey preferred some form of flexible plan over a traditional plan. Given employees’ preference for flexible alternatives, flex benefits are an enticing idea. The challenge, however, can be finding the right plan that’s affordable for small businesses.
“Flex plans” have historically meant cafeteria style plans with a points system and an array of coverage and cost choices for employees to mix and match. But for smaller employers the extra administrative costs charged by benefits providers and the time needed to manage this kind of plan can put flexible benefits out of reach.
So how do you provide flexible benefits for a small business? There are at least two simpler, affordable options that allow businesses to give their employees the flexibility to choose: Healthcare Spending Account Plans, and Modular Benefits Plans.
Healthcare Spending Account (HSA) Plan
With an HSA plan, the employer chooses a fixed annual funding amount for each class of employees. Within their annual funding amount, each employee has full discretion to choose where to spend their healthcare dollars. Most plan providers can manage multiple classes structured by occupational role, seniority, percentage of earnings, or other legitimate distinctions. For example, an HSA plan could provide $600 for employees with less than 2 years of service, increase to $1,300 for 2 to 5 years of service, and $2,800 after 5+ years at the company.
The HSA funding amounts and classes are typically reviewed annually, allowing the business owner to decide on any changes to be made for the upcoming year. With fixed benefit amounts for each employee, there are no renewal increases. In addition, an HSA plan allows a diverse group of employees to claim a wide range of eligible expenses defined by the Medical Expense Tax Credit guidelines. Employee choice is built right in to the nature of the plan.
Modular Benefits Plan
With a modular benefits plan, the employer makes several tiers of coverage available through their plan provider for employees to choose from (eg. Level 1, Level 2, Level 3). These plans include traditional defined elements like a prescription drug card, dental care, paramedical services, and vision care. As employees move up in levels, typically the percent payable, dollar maximums, and/or range of eligible expenses increases. Each employee selects their level of coverage once per year, and most often pays a top-up cost through payroll deduction for coverage above the “base” plan.
A modular benefits plan allows employees to choose their desired plan coverage each year based on family needs and cost. For example as children grow and leave home, an employee may choose to shift to a lower tier because their family’s claims have reduced. Modular plans are a simplified approach to flexible benefits compared to cafeteria style plans, combining employee choice with simpler administration and managed costs.
Because you need your business to stand out when you’re competing for top talent, and employees consistently prefer flexible benefits options, an HSA plan or a modular benefits plan might be the solution. Even better, flex benefits like these will help to keep the cost of your benefits plan under control year over year. Talk to Beagle Benefits about finding the right provider for flex benefits for your small business.