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Group benefits plans – fixed menu or cafeteria style?

Nov 11, 2019 9:01:05 AM

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Setting up a traditional group benefits plan for your employees is like treating them to dinner with a menu you selected. Choosing a menu that will work for everyone is tough, and employees may not appreciate the decisions you made.

In contrast, a flexible group benefits plan is more like providing employees a meal plan at a cafeteria. Employees immediately see the contribution you are making, but they can pick and choose what suits their needs. In the end, you only pay for what truly satisfies your employees.

This metaphor isn’t perfect, but it’s a good starting point to understand the differences between traditional and flexible benefits plans. Let’s dive a little deeper.

Flexible plans offer more choice

Like choosing a menu, when you set up a traditional plan, you’re making decisions about what to offer for a wide variety of employees. When your workforce has similar needs, making these decisions is easier. If your budget is large enough, you can include a wider variety of coverage.

Contrast this with a cafeteria-style flexible benefits plan. You can offer a more extensive list of benefits since you won’t have to pay for all of them for all employees. However, employees can choose what appeals to them. A flexible benefits plan gives each employee the coverage they desire and shows them the value of their plan by letting them select where each budgeted dollar is allocated.

Flexible plans help with budget constraints

When you plan a meal, you’re bound by your budget. What you can offer depends on how much you can spend. Likewise, when you design a group benefits plan you must select your coverage based on what you can afford. Not every employee or job-seeker will appreciate the choices you have made.

A flexible benefits plan helps by creating options within an employer-defined budget. You begin by setting a budget that fits your business. Employees then choose only the benefits they desire – you don’t pay for benefits employees don’t want or use. During the benefits selection process employees will see the cost for their benefits, which drives increased appreciation for your contribution.

Perhaps the best benefit of the flexible plan is the ability for employees to either add coverage through their own contributions or use your budget to fund a Health Care Savings Account – the most flexible option to meet their needs.

Find the benefit plan that fits your business

Are you ready to learn more about flexible benefits plans (or are you just hungry from our cafeteria metaphor)? Sign up for our free email course, and don’t forget to read our other blogs for more insights into the world of benefits for small business.


Find out which style of benefits plan is right for you with our 2-step decision tool

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