how flexible are you when it comes to benefits? february 2011

How flexible are you when it comes to benefits

by Toronto Training and HR

February 2011

Contents

3-4 Introduction to Toronto Training and HR5-8 Types of flexible benefits plan9-11 Implementing and structuring flexible

benefits12-13 Gauging employee feedback14-15 Drill A16-17 US changes for 201118-20 Section 125 (US)21-24 Case studies A & B25-26 Drill B27-28 Administration systems29-31 Advantages of flexible benefits32-34 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 provider43-44 Drill C45-50 Case studies C, D & E51-52 Conclusion and questions

Introduction

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

Types of flexible benefits plan

Types of flexible benefits plan 1 of 3

A premium-only plan allows an employee tochoose between salary and payment of theemployee’s premium contribution to participatein the employer’s medical plan via tax-free salary reduction


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


Under what is sometimes referred to as aflexible benefits plan, the employer may offera menu of qualified tax-free and taxable benefitsthat the employee may elect to purchasewith a combination of flex credits (employercontributions) and employee contributions

Implementing and structuring flexible

benefits

Implementing and structuring flexible benefits

1 of 2Carry out a feasibility study to ascertain how a flexible benefit scheme could best work for the organizationSurvey 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 strategyIssue employees with total rewardstatements so they know exactly what their benefits are and how much they are worth

Implementing and structuring flexible benefits

2 of 2Communicate the scheme properly to staff so they know exactly what benefits are on offer and how to sign up tor themBuild 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

Gauging employee feedback

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 resultsSurveys can reach a large number of people, but tend not to yield as much in-depth dataA blend of focus groups and surveys can work wellConjoint analysis asks employees to rank benefits against one another to provide an idea of which options they value

Drill A

US changes for 2011

US changes for 2011

Must eliminate reimbursement of non prescription medications (other than insulin) from health flexible spending accountsMay expand the dependent child definition for purposes of health flexible spending account reimbursementsShould 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

Section 125 (US)

Section 125 (US) 1 of 2

A specific description of all benefits offeredunder the planA description of the requirements for eligibilityand participationThe procedure by which participants electamong the available benefitsA statement that participant elections areirrevocable, except in limited situationsA description of how contributions are madeto the plan

Section 125 (US) 2 of 2

Any annual dollar limitations on plan contributionsThe plan’s annual non-discrimination testingrequirementsA designation of the relevant plan yearIf flexible spending accounts are used, a description of the “use-it-or-lose-it” and uniform coverage rules

Case study A

Case study B

Drill B

Administration systems

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?

Advantages of flexible benefits

Advantages of flexible benefits 1 of 2

It recognises the diverse needs and values of the workforce It improves image of employerIt promotes employee understanding/appreciationof benefitsIt helps improve retentionIt reinforces the concept of total rewardIt communicates the value of benefitsIt helps improve recruitment

Advantages of flexible benefits 2 of 2

It makes the most of tax breaksIt helps improve motivationIt helps improve engagementIt is valued more highly than traditional benefitsIt reinforces corporate culture/objectivesIt helps reduce/control costsIt assists with the integration of businesses

What problems exist in setting up and running

flexible benefits?

What problems exist in setting up and running flexible

benefits ? 1 of 2Complexity of administrationCost of administrationCost of implementationGetting approval for the business caseUpdating 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 decisionsInternal resourcing constraints

What problems exist in setting up and running flexible

benefits ? 2 of 2Impact on internal HR and processesNot enough benefits that can be flexed Lack of employee interest Amending staff contracts Integration with current benefits, such as differentcontract 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

How do employers believe the flex system

has been effective?

How do employers believe the flex system has been effective?

1 of 2Showing employees the value of their benefitsIncreasing the employee perception of the packageAiding recruitmentImproving retentionHarmonising benefitsReinforcing company cultureImproving the image of the organizationMaking you an employer of choice

How do employers believe the flex system has been effective?

2 of 2Improving/maintaining staff motivationReducing/containing the cost of rewardRemoving/reducing status symbols/hierarchyimproving/maintaining staff engagement

Will flexible benefits work for us?

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 cultureThey should also meet key stakeholders inthe 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 introducedEmployers should also fully consult with their employees

Selecting a provider

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, orsimply by communicating better?Could savings be made or benefits improved byimplementing salary sacrifice arrangements?Can money be saved by rebroking benefits (withoutcompromising the integrity of the scheme or incurring extra costs further down the line)?

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'?

Drill C

Case study C

Case study D

Case study E

Conclusion & Questions

Conclusion

SummaryQuestions

how flexible are you when it comes to benefits? february 2011

Business

specialist training

hrtoronto training

benefitsby toronto training

training course delivery

training course design

flexible benefits12

drill a16

drill b27