Time has changed when employers are getting creative in attracting new talents through appealing compensation package. After rounds of intensive interviews, you now find the perfect fit for your company. The candidate will then ask about the base salary. And the next question would be: What is the benefit plan you offer?
There are increasing number of companies, big and small who opt for flexible benefits plan. So what is it and why it benefits your employees and your business?
Flexible benefits plan is the plan where employees choose the types of benefits and the level of coverage that are suitable for their needs. Each person has different needs and it can fluctuate year to year so should their benefits. Take an example of an employee who has two kids who she anticipates that would need wisdom teeth extraction this year, she then would want to plan such that her insurance will cover 100% of that expense. Under the traditional group benefit, she might not be able to do. She might either need her spouse’s plan to cover the balance that her insurance doesn’t pay or she might have to pay it out-of-pocket. Under the flexible plan however, she can choose to use the highest level for dental this year so all of her expenses will be covered. Next year, when her family dental expenses are normalized, she can reallocate the benefits to other areas where she sees fit.
The flexibility of the plan provides tremendous control to employees. It is no longer a cookie cutter where some employees use and others don’t. There are ranges of plans that companies can choose depending on the industries and what would be the most valuable added benefits to their employees. Some companies choose to have three levels of coverage and allotted dollar amount that is reduced as the higher coverage is chosen. Some companies, especially small business, go with just fixed dollar amount that can be allocated to Health Spending Account (non-taxable) or Wellness Spending Account (taxable) or a combination of both. The allocation is reset at the beginning of the year. Employees are given a period of time to determine their plan. Once the allocation is placed, it is locked in for the year.
Depending on how well an employee plans for the year, his/her dollar can stretch really far and a lot or all of it can be tax-free. Employees are likely to stay with a company which meets their needs and in turns reduce the cost of turnover. To the new talents, your flexible benefits plan makes your company stands out from the crowd. It is a win-win situation.