A New Design for Benefit Plans? Hint: It’s Not One Size Fits All

Sep 11, 2017

doors-1587329_1280Been on holiday yet? If not, join me on a quick trip around the office and we’ll see who’s around. Starting in the far corner we see a married male of about age 40 with 2 kids under 10. Next to him there’s a married female around age 50, no children. Sitting beside her is another female, this one single, probably around age 30, also no children. And, here we are back at my office…I’m a 50ish married male, with 2 teenagers. All very nice you say but where am I going with this? Please bear with me.

Imagine you’re on a real holiday and you feel like taking a tour. Now, decide from the huge array, what kind of tour. Would you like a bus tour, a walking tour, or maybe even a budget tour like the one we just took? Humour aside, what I’m saying is: travelers like choice, so do our Gen X, Gen Yers and Boomers. They want and value different kinds of features in their group benefit plans. Seem obvious? Yet most employers, especially smaller ones in Canada, commonly choose one plan with the same coverage for all employees, albeit sometimes with some variation for employees who are salaried, hourly or union.

These kinds of benefits, usually bra Flex or Choice Benefits, are a hot topic (just behind prescription drugs and their increasing costs). It’s not surprising if you think about it. Because what childless Boomer wants or needs expensive orthodontic coverage? Well, maybe if they missed it when they were young, although that’s unusual. But this is my point. Everyone’s different. Customization is the name of the game, whether it’s vacation tours or designing benefit plans. Clearly, it’s time to revisit the one size fits all approach.  

It’s true that individuals’ benefits needs and requirements are different. On the flip side, it’s also true that most employers’ benefits needs are similar in that they generally have a smattering of employees across all generations: Boomers, Veterans, Gen X, Y and Z, the latter being first time entrants to the workplace. All these types of employees need a similar level of certain coverage. This means we typically see employers wanting to set policy for catastrophic concerns such as death and disability, out of country and possibly drug coverage. This approach reflects employers’ values and gives them assurance of solid, broad coverage.

However, looking beyond catastrophic coverage to extended health and dental items we can see how great creativity is possible. This is true even for smaller employers who can also furnish employees with individual healthcare spending accounts. Each employee can then tailor their specific dollar amounts as they see fit.

Offering this kind of customization can give employers a hiring edge in competitive markets. It’s also a tremendous tool for subtly reminding existing employees that such options are a highly valuable benefit. This is because the choice that’s inherent in the structure nudges engagement and active participation during the selection period, which usually happens every 2nd year.  

Admittedly, the communication channels with a Flex Plan must be wide open to ensure each employee is fully aware of their choices, implementation and benefit periods. All of which highlights one small the drawback of Flex/Choice Plans: more administration. That said, using an approach that is not too complicated along with ever improving communication tools, the extra effort can be minimized.

So it’s simple really. We’ve all grown accustomed to having a vast array of choice and flexibility in nearly every area of our lives. But when it comes to our health and long term well being the stakes are much higher. Ask yourself…would you like to have greater choice over what benefits are provided by your employer plan? If you are thinking yes, it’s likely all your employees are feeling the same way…especially the younger ones.

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