design and philosophy of benefit plan

[Guest wex4]

about 9 months ago we were asked by a

new venture/spinoff to design/implement a benefit plan which would attract and be competitive for the best people in their industry. One of their parameters turned out to be a health and dental plan which required no contribution on the part of the employee (100% paid by employer). At the present time the employees are asking for a vision plan. The employer is considering making the vision plan optional and 100% paid for by the employee through the section 125. My thoughts are that eventually all benefit plans should be contributory and therefore the vision benefit should be added to the health plan paid for by the employer and at the same time requiring the employee to make a contribution to the total plan. The employer thinks that the medical costs being paid should be frozen at the current dollar amount and future increases passed on to the employee therefore makeing the plan contributory. So, the real question is what is the easiest method to change a 100% paid by employer plan to one which requires contributions by the employees. Of course what fundamentally underlies this question is the philosophy of employee benefit design. Any ideas would be helpful. I can be contacted here or directly at wex4@slip.net Thanks and regards.

[Guest ezollars]

I think the real issue here is going to be the employee expectations and the reaction to the plan. I suspect the employees requesting a vision plan expect the plan to be paid for by the employer. The theory of only having the vision plan be contributory will likely generate the least employee heat.

While I agree that employee benefits are an expensive proposition, in a tight labor market doing any sort of "pull back" may have repurcussions far beyond the cost of the employee benefit plans. Since it's only been 9 months since you first offered these employees an "all expenses paid" medical and dental plan to entice them to come over, I'd think you'd have trouble converting to a jointly paid plan at this point isn't going back on your word.

And, at that point, you have to balance the cost savings in the employee benefit plan vs. the costs of employee turnover. I raise this because it appears that not that long ago the key problem was getting people to do the work. If you aren't careful, you'll be right back in the same position, but this time with the reputation that your promises can't be believed.