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How flexible are you when it comes to benefits? February 2011


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Half day interactive workshop in Toronto on flexible benefits.

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How flexible are you when it comes to benefits? February 2011

  1. 1. How flexible are you when it comes to benefits<br />by Toronto Training and HR <br />February 2011<br />
  2. 2. Contents<br /> 3-4 Introduction to Toronto Training and HR<br />5-8 Types of flexible benefits plan<br /> 9-11 Implementing and structuring flexible benefits<br /> 12-13 Gauging employee feedback<br /> 14-15 Drill A<br /> 16-17 US changes for 2011<br /> 18-20 Section 125 (US)<br /> 21-24 Case studies A & B<br />25-26 Drill B<br /> 27-28 Administration systems<br /> 29-31 Advantages of flexible benefits<br /> 32-34 What problems exist in setting up and running flexible benefits?<br />35-37 How do employers believe the flex<br /> system has been effective?<br />38-39 Will flexible benefits work for us?<br />40-42 Selecting a provider<br />43-44 Drill C<br />45-50 Case studies C, D & E<br />51-52 Conclusion and questions<br />Page 2<br />
  3. 3. Page 3<br />Introduction<br />
  4. 4. Page 4<br />Introduction to Toronto Training and HR<br />Toronto Training and HRis a specialist training and human resources consultancy headed by Timothy Holden <br />10 years in banking<br />10 years in training and human resources<br />Freelance practitioner since 2006<br />The core services provided by Toronto Training and HR are:<br /><ul><li>Training course design
  5. 5. Training course delivery</li></ul>- Reducing costs<br /><ul><li>Saving time
  6. 6. Improving employee engagement & morale
  7. 7. Services for job seekers</li></li></ul><li>Page 5<br />Types of flexible benefits plan<br />
  8. 8. Page 6<br />Types of flexible benefits plan 1 of 3<br />A premium-only plan allows an employee to<br />choose between salary and payment of the<br />employee’s premium contribution to participate<br />in the employer’s medical plan via tax-free salary reduction<br />
  9. 9. Page 7<br />Types of flexible benefits plan 2 of 3<br />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<br />
  10. 10. Page 8<br />Types of flexible benefits plan 3 of 3<br />Under what is sometimes referred to as a<br />flexible benefits plan, the employer may offer<br />a menu of qualified tax-free and taxable benefits<br />that the employee may elect to purchase<br />with a combination of flex credits (employer<br />contributions) and employee contributions<br />
  11. 11. Page 9<br />Implementing and structuring flexible benefits <br />
  12. 12. Page 10<br />Implementing and structuring flexible benefits 1 of 2<br />Carry out a feasibility study to ascertain how a flexible benefit scheme could best work for the organization<br />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<br />Issue employees with total reward<br />statements so they know exactly what their benefits are and how much they are worth <br />
  13. 13. Page 11<br />Implementing and structuring flexible benefits 2 of 2<br />Communicate the scheme properly to staff so they know exactly what benefits are on offer and how to sign up tor them<br />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<br />
  14. 14. Page 12<br />Gauging employee feedback<br />
  15. 15. Page 13<br />Gauging employee feedback<br />Focus groups can provide in-depth qualitative data, but employers need to ensure good facilitation of discussions to ensure they produce the right results<br />Surveys can reach a large number of people, but tend not to yield as much in-depth data<br />A blend of focus groups and surveys can work well<br />Conjoint analysis asks employees to rank benefits against one another to provide an idea of which options they value<br />
  16. 16. Page 14<br />Drill A<br />
  17. 17. Page 15<br />Drill A <br />
  18. 18. Page 16<br />US changes for 2011<br />
  19. 19. Page 17<br />US changes for 2011 <br />Must eliminate reimbursement of non prescription medications (other than insulin) from health flexible spending accounts<br />May expand the dependent child definition for purposes of health flexible spending account reimbursements<br />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<br />
  20. 20. Page 18<br />Section 125 (US)<br />
  21. 21. Page 19<br />Section 125 (US) 1 of 2<br />A specific description of all benefits offered<br />under the plan<br />A description of the requirements for eligibility<br />and participation<br />The procedure by which participants elect<br />among the available benefits<br />A statement that participant elections are<br />irrevocable, except in limited situations<br />A description of how contributions are made<br />to the plan<br />
  22. 22. Page 20<br />Section 125 (US) 2 of 2<br />Any annual dollar limitations on plan contributions<br />The plan’s annual non-discrimination testing<br />requirements<br />A designation of the relevant plan year<br />If flexible spending accounts are used, a description of the “use-it-or-lose-it” and uniform coverage rules<br />
  23. 23. Page 21<br />Case study A<br />
  24. 24. Page 22<br />Case study A <br />
  25. 25. Page 23<br />Case study B<br />
  26. 26. Page 24<br />Case study B <br />
  27. 27. Page 25<br />Drill B<br />
  28. 28. Page 26<br />Drill B <br />
  29. 29. Page 27<br />Administration systems<br />
  30. 30. Page 28<br />Administration systems <br />What are they?<br />What are the origins?<br />How much does it cost?<br />Who are the market leaders?<br />What are the legal implications?<br />What are the tax considerations?<br />
  31. 31. Page 29<br />Advantages of flexible benefits<br />
  32. 32. Page 30<br />Advantages of flexible benefits 1 of 2<br />It recognises the diverse needs and values of the workforce <br />It improves image of employer<br />It promotes employee understanding/appreciation<br />of benefits<br />It helps improve retention<br />It reinforces the concept of total reward<br />It communicates the value of benefits<br />It helps improve recruitment<br />
  33. 33. Page 31<br />Advantages of flexible benefits 2 of 2<br />It makes the most of tax breaks<br />It helps improve motivation<br />It helps improve engagement<br />It is valued more highly than traditional benefits<br />It reinforces corporate culture/objectives<br />It helps reduce/control costs<br />It assists with the integration of businesses<br />
  34. 34. Page 32<br />What problems exist in setting up and running flexible benefits?<br />
  35. 35. Page 33<br />What problems exist in setting up and running flexible benefits ? 1 of 2<br />Complexity of administration<br />Cost of administration<br />Cost of implementation<br />Getting approval for the business case<br />Updating existing technology (such as HR or payroll systems) <br />Potential removal of tax breaks by HM Treasury <br />It is confusing/difficult for staff to make informed decisions<br />Internal resourcing constraints <br />
  36. 36. Page 34<br />What problems exist in setting up and running flexible benefits ? 2 of 2<br />Impact on internal HR and processes<br />Not enough benefits that can be flexed <br />Lack of employee interest <br />Amending staff contracts <br />Integration with current benefits, such as different<br />contract periods <br />National insurance and tax issues <br />Finding providers for the different benefits <br />Adverse selection and the impact on the cost of benefits <br />Unions/works councils<br />
  37. 37. Page 35<br />How do employers believe the flex system has been effective?<br />
  38. 38. Page 36<br />How do employers believe the flex system has been effective? 1 of 2<br />Showing employees the value of their benefits<br />Increasing the employee perception of the package<br />Aiding recruitment<br />Improving retention<br />Harmonising benefits<br />Reinforcing company culture<br />Improving the image of the organization<br />Making you an employer of choice<br />
  39. 39. Page 37<br />How do employers believe the flex system has been effective? 2 of 2<br />Improving/maintaining staff motivation<br />Reducing/containing the cost of reward<br />Removing/reducing status symbols/hierarchy<br />improving/maintaining staff engagement<br />
  40. 40. Page 38<br />Will flexible benefits work for us?<br />
  41. 41. Page 39<br />Will flexible benefits work for us?<br />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<br />They should also meet key stakeholders in<br />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<br />Employers should also fully consult with their employees<br />
  42. 42. Page 40<br />Selecting a provider<br />
  43. 43. Page 41<br />Selecting a provider 1 of 2<br />Is more effective and/or cost-efficient flex software available?<br />Can employee engagement be improved by restructuring the scheme, changing the benefits, or<br />simply by communicating better?<br />Could savings be made or benefits improved by<br />implementing salary sacrifice arrangements?<br />Can money be saved by rebroking benefits (without<br />compromising the integrity of the scheme or incurring extra costs further down the line)?<br />
  44. 44. Page 42<br />Selecting a provider 2 of 2<br />Can operating costs be reduced by outsourcing administration?<br />Would integrating the flex system with HR and payroll improve efficiency?<br />Can business objectives be better met without incurring extra costs?<br />Has the provider made clear the true cost of the arrangement and how these costs are recouped,<br />especially if offering 'flex for free'?<br />
  45. 45. Page 43<br />Drill C<br />
  46. 46. Page 44<br />Drill C <br />
  47. 47. Page 45<br />Case study C<br />
  48. 48. Page 46<br />Case study C <br />
  49. 49. Page 47<br />Case study D<br />
  50. 50. Page 48<br />Case study D <br />
  51. 51. Page 49<br />Case study E<br />
  52. 52. Page 50<br />Case study E <br />
  53. 53. Page 49<br />Conclusion & Questions<br />
  54. 54. Page 52<br />Conclusion<br />Summary<br />Questions<br />