Are you looking for flexible benefit examples? If yes, you came to the right place.
Flexible benefits are an effective way of personalizing employee compensation. The flexibility allows employees to tailor their benefits package to suit their individual needs and lifestyle. This type of flexible benefits package is popular as it offers employees greater control over how they spend their benefits budget.
A well-designed benefits package helps an organization compete for talent, reduce turnover, and improve employee satisfaction and productivity. Flexible benefits allow employees to work in a healthy work environment, and help employers create a motivated and engaged workforce, which is essential for organizational success. By offering customized flexible benefits plans, employers show that they value their employee’s well-being and are willing to invest in their future.
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What are Flexible Benefits Examples?
Flexible benefits programs provide employees with choice and control as well as help them save money. By allowing employees to choose the benefits valuable to them, you can reduce your overall benefits costs.
If you are willing to offer flexible benefits for employees, learn about examples of such benefits to understand how these work. Below are the most popular flexible benefits plan examples to help you understand their benefits and perks.
1. Cafeteria Plan
This plan allows employees to choose between cash or pre-tax benefits, such as insurance, dental coverage, and life insurance. This custom employee benefit plan is also known as the Section 125 plan. It is helpful for companies with a diverse workforce as it offers employees the opportunity to select the benefits that best suit their needs. Cafeteria plans are also free of federal income tax and social security tax.
Employers offer several core benefits by cafeteria plan, which employees choose from, depending on their needs. Benefits employers offer under this plan include future health expenses, life insurance, long-term disability insurance, vision care, and child care assistance. They also use it to offer other employee benefits, such as adoption assistance, educational assistance, and dependent care expenses spending accounts.
A cafeteria plan has various types depending on the employers’ needs and offers.
2. Full Flex Plans
This plan allows employees to use their entire benefits budget for getting the benefit of their choice. Employers offer credit dollars to employees, which they use to get the benefits of their needs. If employees choose a plan that costs more than the flexible benefit allowance, then they pay for the rest of the plan with the pre-tax contribution. On the other hand, if employees go for a plan that costs less than the benefits budget, they then take the rest of the credit as cash.
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3. Simple Cafeteria Plans
This plan is designed for organizations with 100 or fewer employees during one of the two preceding plan years. The employees must have 1000 hours of serving in the prior year to fulfill the eligibility criteria for this benefit. The eligible employers bypass the annual non-discrimination test and its potential consequences. They also save a considerable administration cost associated with the annual nondiscrimination test by opting for this benefit.
Employees with less than one year of service and those under 21 years are not eligible for this type of cafeteria plan. Union employees are also not included in this plan.
4. Premium-Only Plans (POPs)
POPs plans save employees’ and employers’ money on payroll taxes. The employer pays for the employee’s health insurance with pretax dollars in this plan. The employees either get the total salary or use a part of the salary to pay for insurance premiums. This type of benefit is also exempt from payroll taxes.
The major advantage of this benefit is that it helps reduce employees’ taxable income. This plan enables employees to save up to 20% of their income on health insurance premiums. POPs are an excellent option for small businesses as they save a considerable amount of money on payroll taxes.
5. Flexible Spending Accounts (FSAs)
Flexible spending accounts, also known as reimbursement accounts, allow employees to set aside a certain amount of money from their salary to pay for qualified expenses, such as medical, dental, and vision care. This money is deducted from the employee’s salary on a pre-tax basis. Employees can use the funds from their flexible spending accounts to pay for their medical expenses. It helps employees to save money on taxes. These types of flexible benefits empower employees and boosts their personal and professional happiness.
If an employee does not use the entire amount of money in the flexible spending account, they can carry over $500 to the following year. Employees should check with their employers to see if this option is available. Employers can also have two and a half or more months to use the money in the FSA.
6. Employee Assistance Program (EAP)
EAP is a confidential counseling service that helps employees deal with personal and work-related problems. Employee assistance programs allow employees to cope with stress, anxiety, and other mental health issues. Such flexible benefits tend to assist employees who are struggling with substance abuse. EPA programs enable organizations to overcome violence, trauma, and other workplace issues.
Employee assistance programs (EAP) provide a wide range of services, such as legal assistance, financial counseling, and childcare resources. They also provide referrals to community resources. EAP is a confidential service that employers offer to their employees.
The EPA counselors work with administrators and managers to identify and resolve work-related problems. They offer their services via online chatting, phone calls, video conferencing, or email. Moreover, they also provide in-person counseling services.
7. Commuter Benefits
Commuter benefits help employees save money on their commute to work. This program offers a tax-free reimbursement for transportation expenses, such as public transit, vanpools, and parking. Employers offer such a flex benefits package pertaining to transportation to pay for employees’ commuting costs. It also relieves the stress of planning and paying for their commute.
In this plan, employees set aside a certain amount of money from their salary to pay for qualified expenses. These flexible benefit plans enable employees to reduce their taxable income. It also assists employers to reduce their payroll taxes.
To create an effective commute benefit plan, managers consider various factors, including the geographical area, the type of public transportation available, the cost of parking, and the need for flexibility. You must also give employees the option to use the benefit or not use it.
8. Expense Coverage for Remote Work
With the increasing demand for remote workers, more employers offer flexible benefit plans to their remote workers. Expense coverage for remote work is a great way to attract and retain remote workers. This flexible benefits plan helps employers save money on office space and furniture. It also allows employees to save money on their commuting costs.
When an employer offers this benefit, they reimburse the employee for the costs of their internet, phone, and other work-related expenses. Employers also provide laptops, printers, and other office equipment to their remote employees.
9. Flexible Scheduling
Daily following a fixed schedule is quite hectic, and sometimes it is not possible to do so. Employees have other commitments that they need to attend to. Flexible scheduling allows employees to have more control over their work schedules. It also helps employees to balance their work and personal life. This type of flexible benefit plan is beneficial for both employees and employers.
You can implement flexible scheduling in different ways, such as telecommuting, compressed workweeks, and flex time. They enable employees to work at times when they can work most effectively. It boosts employees’ productivity and helps them achieve a better work-life balance. It also allows employers to reduce their labor costs.
10. Professional Development
Professional development is necessary for employees to keep their skills up to date. Such flexible benefit packages also help employees learn new skills they require for their job. Employers must invest in their employees’ professional development to retain them.
Employers can offer various professional development opportunities to their employees, such as conferences, workshops, webinars, and e-learning courses. They can also provide mentorship programs and coaching sessions. These professional development opportunities help employees to enhance their skills and knowledge.
This flexible benefits program helps employees obtain licenses, certificates, or designations necessary for their job. Employers can also offer tuition reimbursement to their employees. This benefit allows employees to pay for their education and training expenses.
11. Health Reimbursement Arrangement (HRA)
Health reimbursement arrangements, also known as health reimbursement accounts, are employer-funded plans that compensate employees for their medical expenses. It is a great way to help employees pay for their out-of-pocket medical expenses.
Employees can use the money in the HRA to pay for qualified medical, dental, and vision expenses. Some HRA plans also enable employees to pay their health insurance premiums with the money in the HRA. It helps employees to save money on their taxes.
For some of these types of fringe benefits, your employees must enroll in the health plan before they start using the HRA. Employers contribute a fixed amount of money to their employees’ HRA every year. If an employee leaves a company, the unused money in the HRA is forfeited.
12. Income Protection Insurance
Income protection insurance is a type of insurance that provides financial assistance to employees who are unable to work due to illness or injury. It helps them cover their living expenses and medical bills. It is beneficial for employees who work in hazardous occupations.
This insurance policy pays a certain percentage of the employee’s salary to them when they are unable to work. The benefit period and the amount of income replacement can vary. Some income protection insurance policies provide employees with half of their salary, while others provide two-thirds of the salary.
Employees must wait to receive the benefit payments, known as the waiting period. The waiting period ranges anywhere from four weeks to two years. The benefit payments are paid monthly.
Some employers offer short-term insurance policy, which covers employees for a shorter period of up to two years. These policies are less expensive than long-term policies. Long-term income protection insurance provides employees with financial assistance for a more extended period until they return to the job.
13. Wellness Programs
Wellness programs help employees to maintain their health and well-being. These programs include fitness classes, health screenings, and smoking cessation programs. Some employers also offer wellness incentives to their employees. These incentives include gift cards, gym memberships, and cash bonuses.
Employers often offer wellness programs to their employees so they can save money on healthcare costs. It also minimizes absenteeism, which saves the company costs and expenses. Wellness programs increase employee productivity and morale.
Some employers offer on-site fitness facilities, flexible benefits allowance, and health club membership to their employees. These facilities and memberships help employees to stay fit and healthy. Smoking cessation programs can also help employees quit smoking, a major health hazard. You can also offer transit options, paramedical services, and discounts on health insurance premiums to your employees.
Organizations offer various plans based on their target goals. Each plan listed above comes with its own perks and goals. It is not mandatory to have them all, instead implement only the ones that match your organization’s needs and goals.
Understand how will these benefit you, your employees, and the overall organization. Research the downsides associated with the flexible benefits plan you are going to offer, and how you can avoid them to ensure maximum efficiency of the plan.
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