Retiree Health - Transportation Logistics - 2000
A transportation logistics company with 40 employees and 2 retirees wanted to change the plan design by replace deductibles with cost containment features and replacing an awkward manual administration system to an on-line billing administration system.
The benefit goals could easily be met for the employees but not for retirees. The retiree coverage could not be changed because it was provided without any provision to modify or terminate the coverage. Attempts to negotiate a plan design change with retirees have failed.
Even though the employer was not satisfied with the administration systems or service from the incumbent supplier, no change could be made while retires were alive.
Clearly communicating the employer’s right to modify or terminate benefits is critical. It is important to fully understanding the liability of providing benefits to retired employees.
Internet Service Provider - 1996
A 3-year-old internet service provider decided it was time to introduce employee benefits for their staff of six. Growth had been on-target and they needed to attract and retain competent staff is a tight labour market.
Medical & Dental Benefits
The cost and benefits of an insured health benefits was compared to a health spending account. The staff chose a health spending account in order to accommodate the unique needs of each employee. The initial contribution level was 2% of the average monthly salary, costing the employer $75 per employee. The contribution level was modified to 2% of the individual's prior year's earnings in 1998.
Long-term Disability Benefits
The staff purchased the best quality long-term disability insurance available. The policy included residual benefits and a conversion feature. The age banded payroll deductions ranged from 0.6% to 2.2% and averaged 1.1% of insurable payroll. Staff who terminate often become self-employed consultants and take advantage of continuing their disability insurance coverage.
Employee continue to appreciate the plan design and the cost of benefits as a percentage of salary has not changed in over 15 years.