It would seem Quebec employers view flexible benefits as a cost-containment strategy and are moving away from traditional plan design as a result. However, perceived communication challenges may be holding them back from making a complete commitment to full flex, with many going only as far as introducing a modular flex program.
In addition to flexible benefits, at least one other cost-containment measure appears to be underutilized in Quebec: administrative services only (ASO) arrangements. Tired of facing annual increases in their employee benefits premiums, many companies have found that self-insuring with an ASO plan gives them more control over the predictable and budgetable benefits plan expenses. Anecdotal evidence suggests that ASO plans are less common in Quebec than they are in Ontario.
ASO plans can be administered through billed-in-arrears, direct debit from an employer’s bank account or budget rates based on projected claims plus associated expenses and taxes. Quebec-based employers generally use these budget rates to charge the taxable benefit to employees as part of regular payroll. However, Revenue Quebec requires that an annual reconciliation be conducted to ensure that the correct taxable benefit is charged to each employee based on the actual value of the benefit compared to the estimated budget rate. While this requirement adds an extra step, the cost savings may make it worthwhile for Quebec employers to consider an ASO arrangement.
Emerging benefits trends
The flexible benefits survey also asked employers about new types of employee benefits that they might or might not consider adding to their plans. Some benefits—such as income tax preparation, pet insurance and concierge services—aren’t gaining much traction with employers, regardless of location. However, others already seem well established in Quebec compared with Canada on the whole. Sabbatical leave, health club memberships and car insurance are offered by half of the Quebec respondents versus approximately one-third of Canadian employers in general.
Like others across the country, Quebec employers are looking to increase the prevalence of health fairs: about half plan to offer them by 2012. Other healthy living initiatives, such as wellness credits, are not expected to grow significantly in Quebec benefits plans over the next few years.
Twelve percent of the respondents to Hewitt’s Canadian Retirement Trends 2009 survey are based in Quebec, and 61% of them offer post-retirement healthcare benefits—directly comparable to the country as a whole. However, the type of coverage that Quebec employers offer to current retirees deviates from the national norm: 61% of Canadian employers that provide retiree benefits offer medical and dental coverage, while in Quebec, that figure is only 14%. Far more prevalent in Quebec is providing retiree medical benefits only—79% of respondents offer this coverage versus 32% in the rest of the country. The impact of taxable benefits in Quebec may help account for the lower prevalence of post-retirement dental plans. (In the rest of Canada, they are not taxed.)
Quebec employers, too, are considering how to manage the escalating cost of benefits coverage for future retirees. And, like the vast majority (86%) of Canadian employers that offer post-retirement benefits, more than three-quarters of Quebec employers are very unlikely to improve benefits for current or future retirees.
