No to ‘flexible’ benefits plans
For some time now, unions have witnessed the emergence of a variety of ‘flexible’ plans that may well threaten the group benefits plans activists have fought hard for over the past decades. Some call them ‘cafeteria’, ‘supermarket’ or ‘à la carte’ plans. Joining such a plan could spell the demise, in the long-term, of some of the benefits included in existing benefits plans, which were designed to meet the needs of Canadian workers.
UCTE is now asking why employers would seek to implement new plans that have already been designed. In fact, the answer is quite simple. Employers think that this is a way to contain costs, but also to shift the burden of these costs onto employees. This is not true! At first glance, one might think that the motivation would be to help employees and keep costs down — but think again. There is no benefit to either the employer or employee in these plans, but rather to the consulting firms, brokers and insurers who are looking for new sources of profit, as well as more clients, to pay for the administrative systems of the flexible plans already put in place.
UCTE is not surprised by this initiative. The responsibility will then have to be borne by the employee. Indeed, this ‘à la carte’ plan will be presented in the form of a menu allowing employees to opt for the desired benefits with a certain number of ‘credits’. If such ‘credits’ are used up, employees can then either purchase additional coverage or pay directly for the services they need. This will keep management happy as it will be up to the employees to manage everything. However, having a ‘flexible’ plan requires having an administration team. If employers don’t have one, they will have to turn to benefits management companies and insurance companies, which are usually paid on a per transaction basis and include their profits in their fees, meaning more costs! So, this kind of scheme benefits no one, but only enriches the administrative systems.
Such schemes are not good for workers in Canada, which is disappointing to say the least. The battles waged by union activists are a thing of the past in the face of the emergence of these types of initiatives. ‘Flexible’ plans are just the dark side of a system seeking to generate more income and make employees and employers work harder, which makes no sense. The salesmen of these plans cite the ‘power’ they give to employees while hiding the disadvantages. In short, these ‘individual’ plans will be divisive and allow the employer and vendor to get a little richer.
If someone asks you a question about a ‘flexible’ plan, here are some arguments you can present:
- Zero savings
Employers have been sold these plans by firms and other consultants ‘touting’ their costs. However, the savings to employees and employers cannot be demonstrated. As well as trying to change the recipe, employers will make their administrative departments work harder to manage the whole thing by comparing it to a fully ‘inclusive’ scheme that would make life easier and cheaper for everyone. Having a ‘flexible’ scheme requires an administration team, but if employers don’t have one, then they will have to turn to benefits management companies and insurance companies, incurring more costs.
Having a ‘flexible’ plan with few employees will also lead to higher insurance costs in the long run as it divides the cost between employees, so smaller teams are penalized more by this type of initiative.
- New responsibilities
Whenever ‘flexible’ plans make changes, employees will be forced to revisit the plan they chose. There are several possibilities available to them with variations and options which employees will have to analyze for themselves.
- Limited choice
When choosing a group insurance plan, all coverages are included for any situation. In a ‘flexible’ plan, however, choices will have to be made according to the situation. If the unexpected happens, the employee will not be covered and will have to pay out of pocket.
Unions can negotiate the total dollar amount for flexible credits but are unlikely to negotiate increases that cover annual increases in drug costs of 17-25%, and dental costs of around 15%. Group benefit plans are designed to reduce costs for employees regardless of financial situation or health status.
The bottom line is that some situations are out of a person’s control. Life is full of surprises. This is why more social plans have been adapted in recent years, preparing for any eventuality. According to UCTE, ‘flexible’ plans have no place in today’s reality for employees and employers alike. They are an insult to the activists of the past who fought all their lives to achieve better benefits for Canadian workers. We say a resounding NO to ‘flex’ plans.