How do flexible benefits work

See chart 2. The employee then chooses from various benefits and benefit levels, using credits to purchase the desired benefits. If the credits do not pay for the benefit, employees may be able to fund the difference with pretax dollars.

Several options are usually available in flexible benefits plans, including various levels of coverage for life insurance, dental care, medical care, or long-term disability insurance. Employees covered by flexible benefits plans may receive cash in place of benefits or deposit unused credits into reimbursement accounts such as dependent care or flexible spending account. Or they may purchase short-term disability coverage, deposit credits into a retirement plan, or buy and sell vacation days.

Participants are often required to purchase minimum levels of coverage, such as a basic level of life insurance. Source: U. Forty-three percent of civilian workers had access to dependent care flexible spending accounts in Within private industry occupational groups, access to dependent care benefits ranged from 18 percent for workers in service occupations to 60 percent for workers in management, professional, and related occupations.

In , 34 percent of private industry workers had access to this benefit and 39 percent had access in See chart 3. Employees can use these pre-tax benefits to pay for dependent care services for child care and for elderly or disabled relatives.

This benefit provides workers with flexibility to pay for dependent care programs such as preschool, summer day camp, before and after school programs, and child or adult daycare. The expenses of these dependent programs can be a significant flexible commitment for employees, and employees can take advantage of the tax benefits to reduce the burden.

The percentage of private industry workers with access to healthcare flexible spending accounts in was 36 percent and 43 percent in Seventy-one percent of state and local government workers had access in See chart 4. Health Care Spending Accounts are similar to chequing accounts. These accounts can be provided on a stand-alone basis within a traditional benefits plan or as part of a flexible benefits plan. A more detailed description can be found in the section titled Health Care Spending Accounts.

Two important considerations when designing a flexible benefits plan are waivers of coverage and anti-selection:. The decision to implement a flexible benefits plan is a large undertaking and should not be taken lightly. Successful implementation requires significant up-front time and costs. When implementing a plan, the following guidelines are recommended:. Home Get a quote Contact us. Flexible Benefits Flexible benefits plans recognize changes in employee's needs by permitting them to choose their benefit types and allocate their contributions according to their priorities.

There are five common approaches to setting up a plan: Add-On Benefits are added on to the current traditional benefits plan. Modular Employees are given the choice of purchasing two or more pre-defined plans or modules using their flex credits. Core Plus Options: The current benefit plan is reduced to a basic or core level of benefits that are provided to all employees on a mandatory basis.

Cafeteria Style: This type of plan offers the most flexibility. Two important considerations when designing a flexible benefits plan are waivers of coverage and anti-selection: Waivers of Coverage: Employees may be permitted to waive or decline coverage of certain benefits by not selecting a benefit option.

Certain benefits may be compulsory or employees may be allowed to waive all benefits. Although requiring employees to have a particular benefit reduces flexibility, many employers believe that all employees should have coverage to protect them from catastrophic expenses. Anti-selection: Given the choice, employees will always select those benefits most likely to be utilized. Flexible benefits really are flexible for both employers and employees.

Alternatively, take a look at our flex benefits platform overview. The Technology Scheme has become even more popular with employees with our reliance on tech to work, study and play ever increasing. The links below will take you through to the Salary Extras platform to access your benefits. Log in as an Employee Log in as an Employer. Skip to content. How do flexible benefits work? Flexible benefits give choice to employers as well as employees.

But how do they work? So, how do flexible benefits work? Selecting the best employee benefits The first stage typically involves the company choosing which employee benefit schemes to include in their flexible benefits plan. You may have employee benefits unique to your company or brand that could be included.

Setting a flexible benefits allowance for employees Once the flexible benefits scheme has been set up the employer then sets a flexible benefits allowance for employees. Employees can then tailor their benefits Employees can then tailor their employee benefits to suit them using their flexible benefits allowance.

Getting the most from flexible benefits Flexible benefits can give employers a really clear idea of which employee benefits employees value the most. Flexible for you and for your employees Flexible benefits really are flexible for both employers and employees. Other articles you may like. How the Technology Scheme can support employees. The benefits of offering employee discounts to your employees.

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