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Flexible/Cafeteria Benefits (Challenges in administering a Flexible…
Flexible/Cafeteria Benefits
What are Flexible benefits plans?
Benefit plans that allow employees to choose their own benefits from a set range of benefits offered. With a flexible benefits budget they can “purchase” the benefits they want.
Types of flexible benefit plans
Core-Plus
Employees purchase additional or improved benefits through payroll deduction.
Modular
employees choose among pre-designed benefit packages
Full Choice
Employees claim any benefits under a specific amount of money that is given to them by the organisation.
Disadvantages and Advantages of Flexible Benefits Plans
Advantages
Healthier Employees
Better Morale and Job Performance
Recruitment and Retention Advantages
Extra cash in hand for employees
Control of Benefits and Expenses
Financial Control
Disadvantages
Potential for employees to Lose Money
Lack of Portability
Difficulty in Sharing Information
Setup Costs
Benefits to include in a flexible benefits plan
Core Benefits
Life Insurance
Medical Insurance
Dental Insurance
Additional attractive benefits
Transportation expenses
Retirement benefits
Holiday and fitness expenses
Payment of children's education
Steps in administering a Flexible Benefits Plan
Step 2: Developing and Implementing the Flexible Benefits System
Communication Plan
Step 3: Fine-tuning of Flexible Benefits System
Step 1: Information/Data Collection
Considerations in implementing a Flexible Benefits Plan
Issues that will impact the organisation
Age and Demographics of Employees
Challenges in administering a Flexible Benefits Plan
Adverse Selection Problem
Complicated to administer
Cost
Low Utilisation Rate
Evaluation of Effectiveness of Flexible Benefits System
Utilisation Rate
Staff Satisfaction Surveys