Optimizing plans can help cut costs while improving wellness
In the past, companies considering changes to the benefits offered to employees had the luxury of time. Not so today.
The global economic downturn is pulling company benefits plans in opposite directions: management is looking for cost reductions, while employees are looking for more or better benefits that will help them cope with significant personal stress they are feeling at work and at home.
Companies can institute a flex plan, or increase the choices available within an existing flex plan.
By far the most popular structure is to provide “flex credits” to employees to purchase one of several modules or packages of health and dental coverage offered within the plan. Such flexibility allows employees to select, to the extent possible, modules that best meet their specific needs.
This approach removes the responsibility of the company to decide on where benefits money is best spent.
Depending on which modules employees select, they may have flex credits left over, or they may have to add funds to cover the cost of “premium” modules.
For the company, this provides a means of offering benefits that address most employees’ needs without increasing costs — as would be the case of attempting to improve the level of benefits in a traditional “one size fits all” plan.
In conjunction with flex plans, about one-third of Canadian companies that offer such plans also offer, or are considering, health care spending accounts (HCSAs).
HCSAs allow employees to contribute tax sheltered dollars to pay for medical expenses not covered by a group plan.
A prime example is vision care. For some employees with unique vision care needs the coverage provided is inadequate.
Having an HCSA available allows those employees to meet their needs with tax free dollars.
With companies currently downsizing, the workload for “surviving” employees has increased. In addition to the stress at work, some are coping with difficulties at home — perhaps a spouse has been laid off.
Companies often overlook the potential for proactive wellness programs to help reduce health care costs.
“Employers will need to maintain the productivity of the employees they have,” said Anthony Perlman, a senior benefits consultant with Hewitt Associates. “Employee health and wellness therefore becomes essential, not a perk.”
In fact, the majority of Canadian companies in Hewitt’s rapid response survey said they will be improving employee health and wellness programs as opposed to cutting them.
Approximately 80 per cent of respondents said they had no plans to change medical or dental benefit plans.
Instead of reducing benefits, employers are using their HR budgets wisely by reducing the cost of benefits expenses. For example, reducing benefits insurers’ administration fees, commissions and other outside supplier fees.
Offerings such as employee assistance programs (EAP), child daycare, subsidized (healthy foods) cafeteria services, ergonomics assessments and fitness programs may at first glance appear to be increasing costs.
However, in the long run, such programs have been shown to reduce costs associated with casual absenteeism, sick days, short-term disability and employee turnover while improving the attractiveness of the company to potentially new employees.
EAPs in particular offer employees services that can help address stress they feel at work and home.
Another area often not contemplated as a benefit is alternative work arrangements. Many employees value arrangements that permit them to work flexible hours, shorter work weeks, part-time, telecommute or work from home.
When considering the demographics and multi-generational aspect of today’s workplace, as well as individual needs, giving employees a choice in selecting benefits makes a lot of sense.
Determining the structure and content of benefits plans should not be made without hearing from the employees. Whether through the use of surveys or employee focus groups, companies can learn what benefits are most valued by their employees.
Jim Thomson is vice-president, human resources operations at Ceridian Canada. He can be reached at (905)947-7130.
