Design Tips

Flexible Benefits (Benefit Tips ® - © 2001)

Many employers provide a benefit plan designed for a breadwinner, stay-at-home spouse and 2 children. They don’t consider that benefit priorities change over time and vary based on personal circumstances. You can accommodate your diverse workforce with a more progressive approach to compensation that empowers employees to select the level of coverage to suit their unique circumstances.

One method of providing flexibility is to use a flexible benefit program to accept employee and employer benefit contributions. Employees can then allocate flex-credits to various benefits based on their unique needs and values.

A number of plan design strategies are available.

  • Modular plans give employees a choice among a few plans designed to meet common needs. One option may emphasize health and dental coverage, while another maximizes retirement savings.
  • Core plus options specify minimum amounts of coverage and let employees use the remaining flex credits for enhancements.
  • Health Spending Accounts can be a component of the above or provide flexibility to health and dental benefits without affecting other benefits.

The simplest flex plan provides compulsory long-term disability coverage and lets employees choosing the funding level of their retirement plan (RRSP), health spending account and taxable wellness accounts.

Tax Savings (Benefit Tips ® - © 1998)

Most employees have medical, dental and vision expenses that are not covered by their benefit plan. Those with a high income need to earn $2,000 to pay $1,000 of expenses using after-tax dollars.

A better way is for the company to make a $1,000 taxable deductible contribution to a Health Spending Account and let the employee receive reimbursement for their health expenses without paying income tax or payroll taxes.

Consider rewarding, or motivating, key staff with tax-effective compensation by introducing a health spending account this year.