1.

0 Flexible Benefits: Developing a Benefit Package

1.1 Definition
This scheme, also known as cafeteria benefits, allows organizational staff to choose their own benefits from
a set range of benefits offered. With a flexible benefits budget they can buy the benefits they want. These
types of schemes are very popular because staff do not have to take benefits they dont really want and can
opt for benefits they do want. One can offer a wider range of benefits under flexible benefits schemes than
his or her employees would get from a core package in order to accommodate the diverse needs of his staff.
Flexible benefits are where the benefits are understandable, accessible and affordable. It allows employees
to choose the benefits they want or need from a package of programs offered by an employer. Every
employees may have unique sets of needs, wants, and demands. So a standardized benefits package would
unlikely to meet the needs of all employees.
According to Robbins and Judge flexible benefits is a benefits plan that allows each employee to put
together a benefits package individually tailored to his or her own needs.
Radford opined that a flexible benefits plan is one that enables employees to select certain elements of
their benefits package from a range of options. It is a revolution to change employees perception towards
the value of their benefits program.
So, the difference between Conventional and Flexible benefits can be shown in the following manner-
Conventional Flexible

Employe
e1 Employ
One Size
ee 2
Fits All

Employ
ee 3

Defined Benefits
Employer decides on benefits
Employer absorbs future cost increases Defined Contribution
Employees decide on benefit
Employee coshares increase
Figure-1: Difference between conventional and flexible benefit
In punch line, flexible benefits consistent with the expectancy theorys thesis that organization rewards
should be linked to each individual employees goals. Flexible benefits individualize rewards by allowing
each employee to choose the compensation package that best satisfies his or her current needs and situation.
These plans replace the one-benefit-plan-fits-all programs.
1.2 Various Employee Support Schemes

This scheme is ideal because employees can choose from a wide array of options to suit their individual
needs. For example, they can use their flex points or flex dollars to upgrade their insurance coverage,
claim extra maternity expenses, or pay for medical tests and immunizations or buy health supplements and
equipment. It was monitored that about 60 percent of employees use the flexible benefits to upgrade
hospitalization and surgical coverage for their dependents.
The following figure demonstrate some flexible benefits plans-
Medical
Coverage

Work Place
Flexible Work
Health
Arrangements
Programmes

Handle
Work-Life
Emergency
Facilities
Situation

Leave Benefits -
Fulfillment of
Non Statutory
Occasional Need
Leave

Figure-2: Different schemes of flexible plans

1.3 Types of Benefits Plans

The three most benefits plans are as follows-

Modular
Plans

Types of
Benefits
Plans
Core- Flexible
plus Spending
options Accounts

Figure-3: Types of flexible benefits

 Modular Plans
Modular plans are predesigned package or modules of benefits, each of which meets the needs of a specific
group of employees. A module designed for single employees with no dependents might include only
essential benefits. Another, designed for single parents, might have additional life insurance, disability
insurance, and expanded health coverage.
Core- Plus Plans
Core-plus plans consists of a core of essential benefits and a menu like selection of others from which
employees can select. Typically each employee is given benefit credits which allow the purchase of
additional benefits that uniquely meet his or her needs.
Flexible Spending Plans
It allows employees to set aside pretax dollars up to the dollar amount offered in the plan to pay for
particular benefits, such as health care and dental premiums.
Moreover, others two benefits types are typically offered by the organization, that have been demonstrated
in the cited figure-

Least flexible Most flexible

No Choice Traditional plus

Voluntary Options
Employees are
provided with a Employees are
mandatory set of provided with
benefits. mandatory set of
benefits.
The employee has
no choice on The employee can
benefits. choose to purchase
additional insurance
Simplest to coverage. The cost will
manage and be borne by
communicate employee.

Figure-4: Additional types of flexible benefits