Flexible Benefits Stay Hot in Canada

July 6, 2005 (PLANSPONSOR.com) - Canadian employers are embracing flexible benefit programs in increasing numbers, new Hewitt Associates research has shown.

A Hewitt news release said that its survey of nearly 200 employers found that more than half (52%) currently offer, or plan to offer, flexible programs in the next 24 months. Another 33% anticipate offering them at some other point in the future. Of those employers using flex plans, nearly all say they are meeting or exceeding their expectations in addressing employees’ needs. The employers also recognized improvements in employee recruitment and retention and help in containing rising benefit costs, according to the poll.

Hewitt found that medical and dental benefits were the most commonly offered under a flexible arrangement. Some 85% of employers also provide Health Spending Accounts (HSAs), in which employees can receive tax-free reimbursement for health care expenses in most Canadian provinces.

An increasing number of companies are also offering flexible benefit options to retirees (36%), more than double three years ago. “Significant cost escalation and accounting requirements for post-retirement benefits have put more pressure on employers than ever to control benefit spending,” said Sarah Beech, benefits practice leader for Hewitt Associates. “Given the success companies are having managing benefit costs with flex plans for current employees, many are now starting to do the same with retirees.”

The biggest challenges facing companies planning to go the flexible benefits route are how to administer (33%) and communicate (21%) the plans to employees. Nearly half of survey respondents are looking to third party administrators or insurance carriers to help them with tasks such as enrollment and recordkeeping and/or participant inquiries.

On the communications front, organizations are also utilizing online capabilities to help inform employees about their benefits, Hewitt found. In fact, 30% of employers currently provide online enrolment capabilities to employees while nearly 50% plan to do so in the next three years.

Additional changes employers have made or are making to their flexible benefit plans include:

  • 28% who offer sabbatical leaves, up from 12% in 2002
  • more than half who offer, or plan to offer, fitness memberships to employees
  • 21% more employers who expect to incorporate lifestyle or wellness accounts in their benefit programs over the next three years
  • 30% who plan to offer critical illness coverage for employees in the future

In the current study, 194 Canadian organizations participated representing more than 542,000 active employees and 223,000 retirees. Copies of the study are available from Hewitt by calling (416) 225-5001, or by e-mail at infocan@hewitt.com .