Ian Maclean

 

There are a number of reasons that employees and employers may want to consider flex insurance plans. Because flex plans make the most of resources, they are equally useful in a number of different situations:

  1. A company seeking to expand its benefits package with new money.
  2. A company shifting from a traditional to a flex plan can rearrange its current spending and introduce new benefits at no extra cost.
  3. If the current plan is richer than employees need, they can cut back to a core plus credits approach. Core plus credits can also be used to cut back on costs if the benefits package costs too much for the company to run, and can also be used to soften the blow in times of fiscal restraint.

Flexible Credits

For convenience the employer’s funds used to contribute to a flex plan are called flexible credits. They are usually worth a dollar. Flexible credits give more bang for the buck when it comes to paying for coverage.

 

When employees buy their coverage through payroll deductions, which come off their paycheque after tax has already been paid, they may have to earn $150 in order to buy $100 of benefits.

 

Flexible credits are different. They are not taxed until after they are spent, and the way they’re taxed depends on how the employee spends them. The bottom line is that an employee can purchase $100 of coverage with $100 worth of flex credits, which they can’t do with payroll deductions.

 

The above is meant to give a brief overview of Flex Plans.  For more information please call us at 604-646-5801 or email ianm@customplanfinancial.com

Advantages for the Employer
  • Employers can better contain costs over the long term, because they can better budget and control their benefit expenditures.
  • Flex plans exploit tax efficiencies unavailable in traditional plans to the benefit of both employer and employee.
Advantages for the Employee
  • Flexible benefits allow employees to "customize" their benefits plan to better suit their individual or family needs.
  • Employees can drop coverage they don't need and bolster the coverage they do. 
Advantages for the Employer
  • Premium deductible as an expense.
  • Way to reward current employees and attract new ones.
  • Opportunity to offer a product not widely offered through group insurance plans.
Advantages for the Employee
  • Non-taxable benefit where employer plays premium for employee.
  • Should a claim be made, the benefit is not taxed.
  • If the employee charges employer, the employee can assume the policy by continuing to pay the premiums at the same cost and with no modifications to the policy.

For more information please contact us at 604-646-5801 or email ianm@customplanfinancial.com

Alternative Benefits Plans
Grouped Critical Insurance

Flex Plans

Flex benefits plans are growing in popularity in the Canadian workplace, because they offer both employers and employees a smarter and more dynamic way of addressing their insurance needs.

 

Flex insurance does more than just offer a diverse workforce greater freedom of choice in selecting benefits. With a well structured flex plan, employees can get the benefits they want and employers can still keep a handle on costs.

But the same things that make flex plans dynamic and smart can also make them more complicated. Employers and employees alike have to grapple not only with a new benefits scheme, but a whole new vocabulary. The results can be bewildering. Why use “flex credits” instead of dollars? Which level of coverage is best? What does tax efficiency mean, and how can one achieve it?

 

That’s why the right communications strategy is crucial to making a flex plan work. Employers have to make sure employees aren’t baffled or overwhelmed by the choices offered to them.

What counts is understanding what flex is and how it works.

What is a Flexible Benefits Plan?

A flexible benefits plan is just what it says it is: a plan that lets employees choose the benefits and levels of coverage they want. But different flex plans offer different degrees of flexibility: some just allow employees broader benefits choices, while others actually allow employees to choose the way their employer’s money will be spent on benefits.

Group Plans

Grouped Critical Illness insurance will allow the employer to put together a common plan whereby two or more employees are covered by individual Critical Illness policies. This is NOT a group insurance plan, as it does not consist of a single contract with several insured employees. As the employer, you are the owner of the plan and pay the premiums for the individual policies for your employees. These premiums are tax-deductible. Each employee is covered by a policy and is also the beneficiary. The premiums you pay are not taxable to the employee. The employer will determine the type of coverage and amount of the benefit received should an employee be diagnosed with one of the covered illnesses.