The Time for Change

The design of employee benefit plans has withstood the test of time, delivering reasonable protection to employees and their dependents.  With a future that will look significantly different than today, the status quo really doesn’t work. Employers should consider updating their employee benefit plans to meet the needs of their employees now and into the near future.

There are 5 key reasons for considering change:

  1. An employee benefit program allows an employer to manage a number of risks. These risks are getting much larger. For example, employee benefit plan designs really never took into consideration the payment of high cost prescription drugs.
  2. Employees and employers are driving a different employment deal - one that isn’t measured in decades of service but rather in months or a few years.  Benefit programs are misaligned with the transient nature of today’s workforce.
  3. We have seen impressive developments in the areas of health technology focused on behaviour modification and ultimately on the prevention of future injury/illness, yet today’s healthcare plans are still primarily focused on responding when someone is sick rather than proactive health management.
  4. Increased diversity in the workforce is driving an immensely varied perspective on what’s important in terms of a benefits program.
  5. Individuals are increasingly motivated to buy highly customized products/services that meet their own unique needs in a way that suits them.


Before making changes to your benefits plan, there is a lot to be considered.

Think big picture - when reviewing an employee benefits plan, it’s necessary to understand the organization’s short- and long-term business objectives.  This is essential for framing an approach to design, as well as for determining key messages in your communication strategy.

Find out what the competition is offering - comparative analysis tools can be used to benchmark your benefits against those offered by organizations that are competing for the same talent.  Many organizations view competitive benchmarking as a key step in the decision-making process. 

Measure employee satisfaction with benefits - once external data is collected, it’s time to move inside the organization.  The best way to know whether the benefits program is meeting workforce needs is to ask the employees.  Sophisticated online tools can help plan sponsors do the following:

  • measure the perceived value of various benefits
  • assess employee understanding and value perceptions of the overall benefits program
  • determine the benefits that are most important to employees
  • gather employee feedback regarding trade-offs

Talk - and listen - to employees - while survey data can highlight the problem, it may not indicate the solution.  You may want to consider holding employee focus groups that will allow you to hear and acknowledge the opinions of employees.  However, it is important to manage expectations in these sessions.

A Winning Benefits Plan Design

With healthcare costs continuing to increase at rates well beyond the Consumer Price Index and employees seeking benefits programs to accommodate their specific needs, how can employers meet employee expectations while operating their benefits programs within a reasonable budget?

As a 266-employee, progressive, not-for-profit health and social service organization in Waterloo Region and Wellington County, Lutherwood was ready for change.  Their employee benefit plan had not undergone a full review for a number of years, so a decision was made to undertake a comprehensive review with the following principles guiding the process:

  1. Lutherwood, as an employer, will continue to receive value for the cost of premiums - spending additional dollars on benefits isn’t an option;
  2. The Lutherwood employee benefit plan will continue to be seen as a “bright spot” by employees as a part of the overall compensation program; and
  3. The employee benefit plan will better meet the diverse needs of employees.

The comprehensive review of employee benefits included a number of steps. First, an employee survey was conducted by Cowan Insurance Group to measure employee satisfaction with the current plan and gather feedback on possible trade-offs.  Second, employee focus group meetings were held to solicit direct feedback from plan users. Finally, Cowan conducted a competitive benchmarking analysis in the marketplace, which compared Lutherwood’s plans to other similar organizations.

As a result of the review, and in an effort to meet the needs of a growing and diverse employee demographic, it was determined that adding flexibility to the plan would be beneficial. The new employee benefit plan will launch in January 2017 and includes an employer-paid core plan that introduces a Health Care Spending Account and an optional enhanced plan with the difference in premium being paid by the employee.

Flex plans give employees more than just choice; they allow the employer and the employee to communicate and share in the responsibility and cost of the selected benefits. By choosing what they value the most, employees can better understand the relationship between care and coverage costs, and become more informed healthcare consumers.

While reasonable protection and an affordable cost doesn’t immediately seem like a recipe for change, it’s absolutely necessary if you believe the future will look significantly different than today. It’s time that we say goodbye to benefit plan design, as we know it today - and open our eyes to the possibilities of tomorrow. Contact your Group Benefits Consultant to learn more.