Benefits on the fringe

Providing employees voluntary benefits is a cheap way to expand packages, but some HR practitioners are wary they are endorsing services and could be held accountable

Gypsy is one relaxed feline. Long the most-pampered member of the household, the 18-year-old cat now rests even easier knowing she has health-care coverage.

That’s because her owner, Ramona Lewis, the HR manager for Novartis Animal Health Canada Inc., a Mississauga, Ont.-based manufacturer of medication for animals, has signed up for a discounted pet health insurance plan provided by an outside company that is available to employees at Novartis.

Pet health insurance is one of the more unique offerings in a growing list of fringe benefits that can be offered to employees at little or no cost to the employer. The way it works is simple: many companies are more than happy to sell products at a discounted rate in exchange for getting access to groups of employees at work.

The list of products available is almost inexhaustible — including things like dry cleaning, cellular phone service, home and auto insurance, on-site massages and tickets to movies, plays and sporting events. Almost anything can be offered to employees at a discount because many vendors are willing to take a bit off the top to get access to groups. It seems like a no-brainer to offer these types of programs to staff, but is it always a good idea? There are two basic trains of thought on the subject: either it’s an added benefit an employer can provide without shelling out money from the corporate coffers or it’s an administrative headache that could turn into a nightmare if something goes wrong.

Elaine Noel-Bentley, senior director of total compensation for Calgary-based Petro-Canada, falls into the latter school of thought. She said an organization is, in effect, endorsing one company over another by bringing in an offer for employees and that can have ramifications.

“If an organization allows a particular provider access to employees, then that organization has made a statement that that’s an appropriate provider,” said Noel-Bentley. “Simply by virtue of the organization selecting provider ‘A’ over provider ‘B,’ it becomes a party to that choice should anything go wrong.”

She said Petro-Canada doesn’t offer any of these types of fringe benefits to staff because of that concern and because the company has a strong conventional benefits package.

“I don’t think we need those other things to make the package good for employees,” said Noel-Bentley.

But that doesn’t mean employees at Petro-Canada don’t have access to these types of voluntary benefits.

“We have social clubs that are supported by employee membership fees, and some of the clubs do make arrangements for these sorts of programs,” she said. “For example, maybe the Bay will come in with a special discount for social club members and that kind of thing, so they have the ability to sponsor that if they wish.”

But Petro-Canada does not sanction it at a corporate level, will not play an administrative role and will not do payroll deductions to pay for any services.

At Novartis Animal Health, a division of pharmaceutical firm Novartis, Lewis said she knows there is concern about offering these types of benefits to staff. But she thinks the benefit outweighs the risk and that risk can be mitigated by subjecting these types of benefits to the same stringent approval process as any other benefit.

“We’re pretty diligent and we wouldn’t go into something like this lightly,” said Lewis. “When we signed up, it wasn’t without having done our research. There are numerous companies offering pet plan insurance, and we did our homework on them. You are trying to provide a benefit to employees and you want it perceived that way all the way down the line.”

If an employer were to offer this kind of benefit without doing its homework, it would be doing employees a real disservice and could damage the employer-employee relationship if something were to go wrong, she said.

“Just because it’s no cost to us, you don’t want anything negative coming back from employees afterwards,” said Lewis. “It’s part of the trust factor. You do this one and, if you make a mistake along the way, then when you want to offer another benefit it will be with hesitation that employees view it as a benefit.”

The pet health insurance is available to all of parent firm Novartis’ 1,350 Canadian employees, but Lewis was the first to bring it in the door for the 34 employees in the company’s animal health division. She was sure it would be a popular benefit for her staff because about 80 per cent of them own pets and many of those own multiple pets.

In addition to pet health insurance, employees at Novartis also have access to a dry cleaning service that picks up and drops off clothing at work as well as on-site massages — all facilitated by the company but paid for out of the employees’ pockets. Lewis hopes to add similar benefits in the future.

“It’s all these other things people are looking for now,” said Lewis. “It’s not just compensation they want, but what I would call lifestyle enhancements. If we’re able to provide them with pet insurance or on-site massages during their lunch hour or dry cleaning that they don’t have to run out and pick up after work, it can go a long way in helping work-life balance.”

Randy Valpy, vice-president and general manager of Winnipeg-based Petplan Insurance, the company that provides Novartis with the service, said many HR professionals view pet health insurance as a gimmick.

“A lot of the reaction is kind of like, ‘You’ve got to be kidding,’” he said. “They don’t appreciate the relationship that employees have with their pets, they don’t appreciate the cost of veterinary medicine and they don’t believe they’re bringing any benefit to the employee.”

The plan works similar to dental insurance. Companies offering pet health insurance in Canada have different coverage options, but most cover veterinary costs — which can be significant — to the tune of about 80 per cent. Valpy said it costs about $2,000 to treat a hip disorder in a golden retriever and treating cancer can easily top the $5,000 mark.

The number of employees who choose to take the insurance varies — ranging anywhere from two per cent to 20 per cent of employees in an organization, he said. Petplan waives a $15 initiation fee for employees and offers a five-per-cent discount on the monthly premiums.

Dean Howard, president of wealth management and employee benefits for the HUB Group, a provider of various benefits based in Brampton, Ont., said most employees appreciate the offering of these voluntary benefits because it gives them more options and the potential to save cash. One of the benefits HUB offers is critical illness insurance, which pays cash to an employee who survives a critical illness such as a heart attack or stroke.

“There’s huge goodwill attached to the organization if something happens,” said Howard.

He said he understands why many HR professionals are reluctant to sign on for voluntary benefits, but it doesn’t mean they should shut the door completely.

“Most HR departments are pretty leery of people coming in and selling concepts and selling products to their employees,” said Howard. “They get pitched everyday. But when you start to prove you can provide value, and the HR departments see that we’re there to partner with them and assist them in building their employee loyalty and retention, it works well for them.”

And payroll deduction isn’t as big of an administrative problem as it used to be, he said.

“Many employers are doing it that way now,” said Howard. “It’s not a hard sell because most of them are doing it through payroll services like ADP, so it’s just a matter of going into their system once and setting it up.”

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