Developing a full cafeteria benefit plan

jafs

We are considering moving from a traditional benefits package to a true cafeteria plan in which employees are provided with a specific dollar amount to buy their benefits from a benefit menu that we provide. I am interested in how other organizations have come up with that dollar figure as well as how their employees perceived the change when they first moved to such a plan.

patb

[font size="1" color="#FF0000"]LAST EDITED ON 01-23-03 AT 08:11PM (CST)[/font][p]We did it 3 years ago. We started with an employee survey to get their opinions. To be honest we included a question that said if keeping your benefits costs at their current level meant you would not get a raise this year would you be willing to pay more for your benefits? We figured we already knew the answer (we did) but wanted to get the point across that the pie was only so big. We asked what benefits they would want that we were not offering and made sure the cafeteria plan had all of them for the first year. (We subsequently have dropped the ones that had very low enrollment.)

We also marketed the change by telling them that because our work force was becoming more diverse, nuclear families, empty nesters, single moms, dual wage earners, etc. we wanted to let them choose the benefit situation that worked best for their family, that if the company was going to make the investment we wanted to be sure it was used in the way that brought them the greatest benefit. At the same time we went to the cafeteria plan we began offering a waiver allowance to all employees who were eligible for coverage through a spouse. This move had big impact on utilization and at this point about 1/3 of ee's waive off our plan. The waivers are about 65% less than it would cost us to have them take medical/Rx.

The result was that the employees felt they were in control. Instead of being upset about the increased cost, they felt that the company had shown that we were responsive to their needs, cared about them as individuals and respected their ability to make the best choices. (Ain't it grand when a strategy pays off?)

It would take about three pages to answer your other question. Determining the appropriate allowances was the hardest part. The quick answer is that we looked at the total cost of benefits, figured out how much we wanted to spend and divided it by the number of ee's. The allowance for singles taking benefits, families taking benefits and families waiving off the plan were going to be different so we made some educated guesses about what % would fall into each category and backed into the total we wanted to spend.

I spent about 4 months of my life on this project so if you want more specifics let me know and we can set up a time to chat.