Flexible Benefit Plans

Flexible benefits are plans that allow employees to choose the benefits they want to receive from several alternatives. These flexible benefit plans may include cash, health insurance, retirement benefits, daycare, elder care, vacations, and reimbursement accounts [1].

Employers can contribute to these plans or leave them for the employees to pay for in their entirety. In a flexible benefit plan employees contribute to the cost of their selected benefits tax-free. The main types of flexible benefit plan types are cafeteria plans, healthcare reimbursement accounts, and flexible spending accounts.

Cafeteria Plan

Cafeteria plans enable employees to choose between receiving nontaxable benefits offered by the company, or taxable benefits such as cash or stock [2]. Funding of a cafeteria plan can come from the employer, employee, or both. Many companies use credits with which employees can “purchase” benefits from a list.

Healthcare Reimbursement Account (HRA) [3]

A Healthcare Reimbursement Account helps you to pay for covered health care services and other eligible medical expenses. HRAs are generally linked to some health insurance. Your employer owns your account, which means they can control what and how you can spend the money.

Only your employer can put money into the account, and there is no limit to how much money they can deposit. Money used from your HRA is tax-free and can carry over at the end of the year, but your employer can limit the amount of carryover.

 

Flexible Spending Accounts (FSA)

Companies establish flexible spending accounts, but both employer and employee can contribute to them, and you decide what to eligible expenses you want to pay for with the account. These accounts offer tax-free savings that can be used to pay for premiums, medical expenses your insurance doesn’t cover, and dependent care.

In 2016 there is a contribution cap of $2,550 for your FSA [4]. Your contribution amount can be adjusted only during an open enrollment period or if you qualify for a special enrollment period. Additionally, a maximum of $500 may carry over to the next year, and that is only if your company allows it.

Health Savings Account (HSA)

A health savings account is a tax-free, employee-owned account. Unlike an FSA, you must meet certain criteria to be eligible for one.

See Health Insurance For a Detailed Look at HSAs.

Voluntary Benefits

Voluntary benefits are benefits offered by an employer that employees can choose to partake in or not. Employees usually pay 100 percent of these benefits, but companies can opt to contribute if they want. There are two main advantages employees receive from voluntary benefits.

The first is that employees get to choose which benefits they want, and don’t have to deal with benefits that don’t matter to them. The second advantage is that employees receive these benefits at a discounted group rate they would be unable to obtain outside of the workplace [5]. Other positives of voluntary benefits include [6]:

— Employees can use pre-tax dollars to pay for the benefits

— They help with recruiting efforts

— Increased employee satisfaction

— Encourage preventative care

— Protect families in case of emergencies

There are many types of voluntary benefits that employers offer. The four most popular are disability, life, dental, and vision insurance. Still, there are many other voluntary benefits that employers can offer their workers.

Critical Illness Insurance

Critical illness insurance is a type of insurance that pays a lump-sum, tax-free benefit if the policyholder is diagnosed with a critical illness, such as a heart attack, stroke, or cancer. This money can be used to cover expenses that medical insurance doesn’t cover such as co-pays, transportation costs, and childcare.

No stipulations dictate where or how the benefit you receive must be spent; meaning the cash can also be used to pay bills, mortgages, and groceries. Over 2.7 million Americans will suffer from cancer, a first heart attack, or first stroke each year [7]. Critical illness insurance covers you and your family if you suffer from of these debilitating diseases.

Accident Insurance

Accident insurance offers the policyholder, financial protection in case of an accidental injury. Similar to critical illness insurance, accident insurance can be used to pay for out-of-pocket medical expenses for emergency treatment, hospital stays, and specialized exams.

It can also be used for lodging needs, transportation, and childcare. Accident insurance is another form of supplemental insurance that helps fill the gaps of your medical insurance in case of an accidental injury.

Auto/Home Insurance

Some employers offer employees a group auto and home insurance plan. These plans cover employees’ cars and houses at a discounted group rate. Policies offered through an employer can save employees money and time, as they no longer have to shop around for their policies.

 

Legal Services

Many companies offer their employees group legal services. For a monthly fee employees receive access to legal help through the provider. Most plans provide a specified amount of free legal aid, and then charge the employee for anything that surpasses that amount.

Financial Counseling

Financial counseling provides employees who opt-in with one-on-one counseling with a financial professional, or group learning through seminars [8].

Contact Us For more Information on Financial Counseling.

Identity Theft Protection

Identity theft is a growing problem in our technologically driven world. Over 17.5 million Americans experienced identity theft in 2014 [9]. Identity theft protection saves employees time, money, and energy from dealing with identity loss or theft.

Pet Insurance

Pet insurance offers protection to your employees’ pets. Approximately 65% of U.S. households own a pet [10]. This number shows that it is likely a significant percent of any company’s employees are pet owners. Pet insurance offers employees coverage for, what many people consider, another member of the family.

References

[1] http://smallbusiness.chron.com/examples-flexible-benefits-24896.html
[2] http://www.inc.com/encyclopedia/flexible-benefit-plans.html
[3] https://www.uhc.com/content/dam/uhcdotcom/en/Employers/PDF/CDHComparisonGridHSAHRAFSA.pdf
[4] https://www.nerdwallet.com/blog/health/employer-offers-hsa-fsa-whats-difference/
[5] https://www.shrm.org/hrdisciplines/benefits/Articles/pages/voluntary-benefits-results.aspx
[6] http://www.benefitspro.com/2014/05/28/5-benefits-of-voluntary-benefits?page_all=1&slreturn=1467814033
[7] http://www.criticalillnessinsuranceinfo.org/learning-center/individuals.php
[8] https://www.heffins.com/news-events/blog/are-financial-planning-perks-part-your-voluntary-employee-benefits
[9] http://www.bjs.gov/index.cfm?ty=pbdetail&iid=5410
[10] http://www.employeebenefitadviser.com/news/pet-insurance-popular-with-millennials-who-see-animals-as-family