“Flex is really defined when the employee has a choice of how to spend the company’s money,” said Tim Hadlow, senior benefits consultant at Hewitt Associates, explaining flexible benefits plans at the Ontario Club in Toronto today.
Although there is a range of flex plans, the most common, Hadlow said, is the full flex. In it, there is a pool of funds at the top and employees choose how to spend that money.
Pros of full flex plans are employer control over costs, maximum choice of benefits for employees and maximum employee understanding. But cons include administration and communication headaches and dealing with equity(couples, singles, families)issues.
At the core level, option one of a full flex plan needs to have some measure of life insurance and catastrophic medical, said Hadlow. At the next level is a full range of choice, he continued, such as medical, dental, spousal life. Finally, if there is money left over(“flex dollars”), he said, it can be used for such benefits as health spending accounts or group RRSPs.
In 2005, Hewitt conducted a survey on flexible benefits across Canada. Of the participants, 44% have or were currently implementing flex plans, and 42% were expecting to implement flex plans in the next two years.
What about those employers that haven’t jumped on the flex bandwagon? Hadlow said he hears a lot of myths about flex, but quickly quashed them with a little assistance from the Hewitt survey.
Myth 1: Flex plans cut costs and benefits
According to the survey, reducing current benefit costs was last(21%)on a list of flex advantages.
Myth 2: Only many-employee companies can incorporate flex
In the survey, 26% of companies with 5,001-plus employees implemented flex plans, but 24% of companies with under 500 employees, implemented them, too.
Myth 3: With flex, costs get out of control.
“Benefit costs don’t go up with flex,” said Hadlow, “in fact, they more typically will go down.” Of the survey participants with a flex plan for at least one year, “78% said the plan met or exceeded expectations around containing benefit cost increases.”
“Myth 4: Administrating flex is a challenge for employers and employees
Surveyed on flex administration, participants rated such points as enrollment, payroll interfaces and employee support “well” or “very well” more than 90% of the time.
Myth 5: Flex is too complicated for employees to understand
A few “post-flex” surveys conducted by Hewitt clients reported that 92% to 98% of employees said they understood their flex plans “well” or “very well.”
Need more proof about the benefits of flex? Hadlow ended with the final question from the Hewitt survey. “If your organization had the choice again, would you implement a flex plan?” 100% said yes.
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