These types of plans are gaining in popularity primarily since they help identify the varying needs of your employee group.  Many advantages to some form of flex benefits are:

• Benefit Cost Management
• Better prepared for plan changes
• Responsive benefits
• Attract, Motivate and Retain Employees
• On-line enrollment
• On-line management
• Employee makes the choice
• Value to the employee
• Choice based on lifestyle changes
• Tax advantages
• Employees understand their plans

Flex plans can vary in complexity, design and nature. Depending on the size of your organization, a flex plan can take many forms.  The simplest form of flexibility is the Health Spending Account (HSA). An HSA is an addition to a basic plan with any expenses permissible under the Income Tax Act but not payable under the basic plan eligible to be claimed under the HSA up to a specified annual limit. For example, vision care expense, major restorative dental or even annual deductibles or coinsurance amounts. Some plan sponsors have the intention of gradually shifting more from the basic plan to the HSA. The more health and dental expenses covered under the HSA rather than the traditional plan gives the employer greater control of costs. The shift is from a "defined benefit" plan to a "defined contribution" plan.

A slightly different form is referred to as a "Cost Plus" benefit. This is usually reserved for executive or business owners and allows medical or dental expenses not covered by the basic plan to be paid outside the basic plan with the insurer or other provider charging a separate service fee for the transaction. There may or may not be an annual maximum.

A "Full Flex" plan is typically provided by the largest of employers, as they can be expensive to implement and communicate. Cost savings are usually seen overtime rather than immediate. Usually there is a set of core benefits that cover all employees in the particular class. Each employee is awarded a number of points or flex dollars that he or she can allocate to various upgrades to the basic plan. For example: enriched dental benefits, greater life insurance amounts, richer long term disability benefit, or greater retirement benefits. Some plans allow employees to buy and sell vacation days as part of the flex program. The number of points or dollars awarded may be scaled according to position, length of service, salary or a combination of elements.

Flex benefits are very popular with employees. They get to choose those benefits that will be most advantageous to them and their dependents. Their expectation is that they will get more out of the flex plan than they got out of the traditional plan. That leads to something that should not come as a surprise to plan sponsors: costs invariably increase, and usually sharply in the first couple of years. This is often under estimated by consultants. After the first couple of years increases tend to stabilize because the employer has control of how many points or flex dollars each employee is awarded at the beginning of each year.

The other aspect of flex benefits that may be cumbersome is the amount of administration involved. There is a very large communications challenge each year. The plan rules have to be carefully explained to each employee and then each employee's new election must be accurately recorded. In effect, each employee must be re-enrolled each year.

Flex is definitely a commitment by HR to deliver a state of the art benefits plan. If choice is important to you, talk to your consultant about how it can be applied in your organization.

Considering flex, here are some areas we can be of assistance: Preliminary analysis and feasibility study

• Evaluation of current benefit plans as compared to market
• Design of the flexible benefit plans
• Analysis of the funding mechanisms available
• Financial projections and the study of alternative structures
• Preparation of bid specifications
• Analysis of proposals received
• Employee communication
• Preparation of policy wording and employee booklets
• Preparation and/or analysis of underwriting agreements