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Flexible benefits

VIEWS: 9 PAGES: 52

									How flexible are you when it comes
            to benefits


        by Toronto Training and HR

              February 2011
           3-4      Introduction to Toronto Training and HR
           5-8      Types of flexible benefits plan

Contents   9-11     Implementing and structuring flexible
                    benefits
           12-13    Gauging employee feedback
           14-15    Drill A
           16-17    US changes for 2011
           18-20    Section 125 (US)
           21-24    Case studies A & B
           25-26    Drill B
           27-28    Administration systems
           29-31    Advantages of flexible benefits
           32-34    What problems exist in setting up
                    and running flexible benefits?
           35-37    How do employers believe the flex
                    system has been effective?
           38-39    Will flexible benefits work for us?
           40-42    Selecting a provider
           43-44    Drill C
           45-50    Case studies C, D & E
           51-52    Conclusion and questions
                   Page 2
Introduction




     Page 3
Introduction to Toronto Training
            and HR
• Toronto Training and HR is a specialist training and human
  resources consultancy headed by Timothy Holden
• 10 years in banking
• 10 years in training and human resources
• Freelance practitioner since 2006
• The core services provided by Toronto Training and HR are:
              - Training course design
              - Training course delivery
              - Reducing costs
              - Saving time
              - Improving employee engagement & morale
              - Services for job seekers

                            Page 4
Types of flexible benefits
           plan




           Page 5
Types of flexible benefits plan 1 of 3
A premium-only plan allows an employee to
choose between salary and payment of the
employee’s premium contribution to participate
in the employer’s medical plan via tax-free salary
reduction




                       Page 6
Types of flexible benefits plan 2 of 3
A Flexible Spending Arrangement (FSA) allows an
employee to elect to have a certain amount of
money withheld tax-free from the employee’s
salary and to use the dollars to reimburse qualified
health care, dependent care, or adoption
assistance expenses




                       Page 7
Types of flexible benefits plan 3 of 3

Under what is sometimes referred to as a
flexible benefits plan, the employer may offer
a menu of qualified tax-free and taxable benefits
that the employee may elect to purchase
with a combination of flex credits (employer
contributions) and employee contributions




                      Page 8
Implementing and
structuring flexible
      benefits




        Page 9
 Implementing and structuring
    flexible benefits 1 of 2
Carry out a feasibility study to ascertain how a
flexible benefit scheme could best work for the
organization
Survey staff to find out what benefits they would
most like to receive through flex and balance these
with perks that best fit in with the business strategy
Issue employees with total reward
statements so they know exactly what their benefits
are and how much they are worth


                        Page 10
 Implementing and structuring
    flexible benefits 2 of 2
Communicate the scheme properly to staff so they
know exactly what benefits are on offer and how
to sign up tor them
Build up a flexible benefits scheme gradually-it
might be best to add benefits to the scheme at
intervals so employees are not overwhelmed by a
large choice of options




                     Page 11
Gauging employee
    feedback




      Page 12
   Gauging employee feedback
Focus groups can provide in-depth qualitative data,
but employers need to ensure good facilitation of
discussions to ensure they produce the right results
Surveys can reach a large number of people, but
tend not to yield as much in-depth data
A blend of focus groups and surveys can work well
Conjoint analysis asks employees to rank benefits
against one another to provide an idea of which
options they value


                       Page 13
Drill A




  Page 14
Drill A




 Page 15
US changes for 2011




        Page 16
         US changes for 2011
Must eliminate reimbursement of non prescription
medications (other than insulin) from health flexible
spending accounts
May expand the dependent child definition for
purposes of health flexible spending account
reimbursements
Should ensure that the definition of dependent child
under the pre-tax premium payment plan is
consistent with the newly expanded definition of
dependent child under the medical plan

                       Page 17
Section 125 (US)




      Page 18
       Section 125 (US) 1 of 2
A specific description of all benefits offered
under the plan
A description of the requirements for eligibility
and participation
The procedure by which participants elect
among the available benefits
A statement that participant elections are
irrevocable, except in limited situations
A description of how contributions are made
to the plan

                        Page 19
      Section 125 (US) 2 of 2
Any annual dollar limitations on plan contributions
The plan’s annual non-discrimination testing
requirements
A designation of the relevant plan year
If flexible spending accounts are used, a
description of the “use-it-or-lose-it” and uniform
coverage rules




                      Page 20
Case study A




    Page 21
Case study A




    Page 22
Case study B




    Page 23
Case study B




    Page 24
Drill B




  Page 25
Drill B




 Page 26
Administration systems




         Page 27
       Administration systems
What are they?
What are the origins?
How much does it cost?
Who are the market leaders?
What are the legal implications?
What are the tax considerations?




                      Page 28
Advantages of flexible
      benefits




         Page 29
Advantages of flexible benefits 1 of 2
It recognises the diverse needs and values of the
workforce
It improves image of employer
It promotes employee understanding/appreciation
of benefits
It helps improve retention
It reinforces the concept of total reward
It communicates the value of benefits
It helps improve recruitment


                      Page 30
Advantages of flexible benefits 2 of 2
It   makes the most of tax breaks
It   helps improve motivation
It   helps improve engagement
It   is valued more highly than traditional benefits
It   reinforces corporate culture/objectives
It   helps reduce/control costs
It   assists with the integration of businesses




                         Page 31
What problems exist in
setting up and running
   flexible benefits?




         Page 32
 What problems exist in setting up
and running flexible benefits ? 1 of 2
Complexity of administration
Cost of administration
Cost of implementation
Getting approval for the business case
Updating existing technology (such as HR or payroll
systems)
Potential removal of tax breaks by HM Treasury
It is confusing/difficult for staff to make informed
decisions
Internal resourcing constraints

                       Page 33
 What problems exist in setting up
and running flexible benefits ? 2 of 2
Impact on internal HR and processes
Not enough benefits that can be flexed
Lack of employee interest
Amending staff contracts
Integration with current benefits, such as different
contract periods
National insurance and tax issues
Finding providers for the different benefits
Adverse selection and the impact on the cost of benefits
Unions/works councils


                         Page 34
How do employers believe
the flex system has been
        effective?




          Page 35
 How do employers believe the flex
 system has been effective? 1 of 2
Showing employees the value of their benefits
Increasing the employee perception of the
package
Aiding recruitment
Improving retention
Harmonising benefits
Reinforcing company culture
Improving the image of the organization
Making you an employer of choice


                     Page 36
 How do employers believe the flex
 system has been effective? 2 of 2
Improving/maintaining staff motivation
Reducing/containing the cost of reward
Removing/reducing status symbols/hierarchy
improving/maintaining staff engagement




                     Page 37
Will flexible benefits work
           for us?




            Page 38
  Will flexible benefits work for
                 us?
Employers can identify whether a flexible benefits
scheme will be right for their organization by
assessing its financial feasibility and determining
whether it fits into their business culture
They should also meet key stakeholders in
the organization to find out whether they are all on
board of if they are aware of any potential issues
that may mean flex should not be introduced
Employers should also fully consult with their
employees

                       Page 39
Selecting a provider




        Page 40
    Selecting a provider 1 of 2
Is more effective and/or cost-efficient flex software
available?
Can employee engagement be improved by
restructuring the scheme, changing the benefits, or
simply by communicating better?
Could savings be made or benefits improved by
implementing salary sacrifice arrangements?
Can money be saved by rebroking benefits (without
compromising the integrity of the scheme or
incurring extra costs further down the line)?

                       Page 41
    Selecting a provider 2 of 2
Can operating costs be reduced by outsourcing
administration?
Would integrating the flex system with HR and
payroll improve efficiency?
Can business objectives be better met without
incurring extra costs?
Has the provider made clear the true cost of the
arrangement and how these costs are recouped,
especially if offering 'flex for free'?


                       Page 42
Drill C




  Page 43
Drill C




 Page 44
Case study C




    Page 45
Case study C




    Page 46
Case study D




    Page 47
Case study D




    Page 48
Case study E




    Page 49
Case study E




    Page 50
Conclusion & Questions




         Page 49
            Conclusion
Summary
Questions




               Page 52

								
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