Benefits Buffet: Flexible Benefits To Create Higher Employee Value Proposition 247

Flexible Benefits
Flexible benefits
Shantanoo Saxena, Senior Vice President – Health Solutions, AON Insurance India

As we nurse through the pandemic, the one gainer that has come out in the working life is the flexibility offered in our jobs. Today corporations have given us the flexibility to work from anywhere, design our compensation, and have briskly moved on to designing, planning and even funding our health and wellness benefits.

As job seekers have become more demanding and the “Great Resignation” heats the talent war; corporates are bracing to offer more in order to attract and retain talent. As per Aon’s compensation survey 2022, 70 percent of people resign for lack of choice to work remotely and a good percentage of employees want to move jobs due to poor benefits offered at the workplace or no flexibility in choosing health and wellness benefits. As the pandemic exacerbates issues of high debt and reduced emergency savings, workers are increasingly looking to employers for solutions to alleviate financial stress. Here’s where we see a growing trend toward employees scouting for employee benefits plans more aggressively. These employees are demanding a complete spectrum of benefits, from the traditional payment for hospitalisation to getting gym benefits and mental health support, and are evaluating all the options that suit the requirement based on their life stage. 

Also read: ‘Flex’ Those Benefits

Employers who look for options in employee benefit plans might want to consider flex benefits, also called “Benefits Buffet”. As the name suggests, these plans allow employers and employees more choices than standard benefits packages – to pick and choose what they want!

“Employers who look for options in employee benefit plans might want to consider flex benefits, also called “Benefits Buffet”. As the name suggests, these plans allow employers and employees more choices than standard benefits packages – to pick and choose what they want!”

What’s a “Buffet Plan” of Benefits and How Does It Differ from a Traditional Employee Benefits Package?

Flex benefits, or “Buffet Plans” are plans in which employers offer a long list of potential benefits, and employees could freely choose which options they’d like to enrol in. In a flex plan, employees have the same amount of money allocated to their total compensation, regardless of whether they apply for the benefits or receive it in cash as part of their taxable salary. Typically, employers set a limit to the number of benefits that they are willing to provide. If employees choose to purchase more benefits than their employer offers, they can pay for a portion of the benefits from their base salary.

As to the traditional employer-provided benefits, the employer covers a portion or fully sponsors the employee’s insurance premiums and provides a specific value for other benefits. An employee may choose not to select any of the offered benefits and can simply forfeit it, for example, consider a scenario when an employee is covered in the spouse’s health insurance plan. They don’t get to put that money towards another benefit. However, with a flex benefits plan, employees receive the amount of the allocated benefit regardless of how they choose to spend it. If the employer offers ₹10,000 in benefits, employees receive either ₹10,000 worth of benefits, ₹10,000 in cash, or some other combination that adds up to ₹10,000 in value. Keep in mind, though, that if the employee chooses to receive a cash payment, it will be taxed.

Some of these new-age benefits include:

  • Accident, disability, and health insurance benefits
  • Child and dependent care assistance plans
  • Infertility and adoption assistance plans
  • Group-term life insurance and critical illness plans
  • Employee assistance, outpatient benefits
  • Wellness plans along with gym enrolments

What Are the Pros and Cons of Employers Offering Flexible Benefits Plans?

Pros:

  1. High engagement and benefits penetration

Since the employees have to design the plans themselves, there is high participation. The overall awareness of utilising benefit plans increases and employees are highly engaged around the benefits and wellness usage ensuring that employees are more cognizant of using the benefits judiciously. Employees who choose to participate in the employer’s plan will obviously benefit from it. However, unlike traditional employer-paid insurance benefits, non-participating employees will benefit from the cash payments, making everyone happy!

  1. The benefits offered can be expanded

Employers can move beyond the traditional offering of benefits and include new-age benefits for retention and attraction of talent. Under the flex options, both insured and uninsured benefits can be offered to the employees where the employees can choose based on the requirement and life stage they are in.

“Employers can move beyond the traditional offering of benefits and include new-age benefits for retention and attraction of talent. Under the flex options, both insured and uninsured benefits can be offered to the employees where the employees can choose based on the requirement and life stage they are in.”

Cons:

  1. Administration and technology are complicated

These plans are difficult for the average employer or employee to understand and might be a bit more complicated to manage as well. Staying in compliance would be difficult for a non-professional. If you choose to offer a flex benefits plan, we recommend that you do so through an insurance broker or utilise HR software to help you get the most out of it and avoid administrative hassles.

  1. Employees are locked into their plan choices for one year

While the wallet is available at the program start, a choice to move away from the chosen benefit will not be available to the employees. They will have to stay invested in the plan for one full year before they can explore either adding or deleting any of the benefits or even if they would need to pay from their pocket.

Also read: For the First Time, We have Articulated EVP For the Employees: Satyajt Mohanty, Crompton Greaves Consumer Electricals

Decision to Implement Flexible Benefits

The decision to implement new-age benefits becomes challenging for a lot of corporates. The cost-benefit analysis, along with peer benchmarking, makes it harder to decide on flexible benefits. While there are other parameters like administration cost, technology, etc. to consider; an employer cannot afford to ignore this for a long-term or a short-term strong market trend. Employees who have more options of benefits have a higher benefits satisfaction than other employees which results in better retention and attraction of talent.

Thus, from a strategy point of view as well as gaining a competitive edge, more & more companies would move to flexible benefits and thereby create a higher employee value proposition. Flex benefits plans are a great option for employers who want to offer an unsparing variety of benefits to employees without spending too much money. 

Company Name: Aon India Insurance Brokers Private Limited
Presence: Globally, the holding company has approximately 50,000 employees in more than 120 countries and sovereignties.
Business Line: Global solutions provider for commercial risk, health, risk management, reinsurance, wealth, human resources, and outsourcing services.

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Shantanoo has over a decade of consulting and insurance experience. His expertise lies in leading large employee health & benefits clients, global benefits client management, and managing plans for multi-country client projects. He is an alumnus of IIM Indore.

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