Cafeteria Plan Design

[Guest benefitsnerd]

Looking for direction - Law firm with 115 employees. Would like to implement a cafeteria style program where employees are given x-amount of $ to spend on their various plans. Group currently offers stand-alone POS for medical, PPO dental, VSP vision, AFLAC.

Questions:

1. For a group this size wouldn't we need to include an HMO for the med and DHMO for dent and any other buy-up programs to maximumize cost savings and benefits offering?

2. Wouldn't plan need to require employees to pick core ploans (i.e., med, dent, Vis) with left over $ to spend on voluntary lines or for FSA?

Any other thoughts???

[Guest joey tax]

Looking for direction - Law firm with 115 employees. Would like to implement a cafeteria style program where employees are given x-amount of $ to spend on their various plans. Group currently offers stand-alone POS for medical, PPO dental, VSP vision, AFLAC.

Questions:

1. For a group this size wouldn't we need to include an HMO for the med and DHMO for dent and any other buy-up programs to maximumize cost savings and benefits offering?

2. Wouldn't plan need to require employees to pick core ploans (i.e., med, dent, Vis) with left over $ to spend on voluntary lines or for FSA?

Any other thoughts???

Questions:

1. For a group this size wouldn't we need to include an HMO for the med and DHMO for dent and any other buy-up programs to maximumize cost savings and benefits offering?

Good idea, but not required per se. What you suggest would strip out the frills and use the base plans as the default options, letting employees buy up or take the cash, presumably.

2. Wouldn't plan need to require employees to pick core ploans (i.e., med, dent, Vis) with left over $ to spend on voluntary lines or for FSA?

You could do that, but don't have to. What you suggest is a typical approach. But what if they opt out of medical (because they have spouse's coverage, perhaps). Employees could make the opt out their "core" choice and then use the credits however they're permitted.

[Guest benefitsnerd]

I guess what I am not 100% sure of is this - when a group that currently offers a rich POS plan is looking to save $ by implementing a cafateria model, isn't it the sum of the "base plans" (i.e., HMO or any other inexpensive plan) where the group will find cost savings. With the only twist being that employees can use the left-over dollars (dollars not spent to buy-up to richer medical and dental plans) to spend on ancillary coverages as they wish?

[mroberts]

Not necessarily. Perhaps this group is looking down the road and found that cafeteria plans will be easier to deal with from a financial perspective. For example, if the company provides each employee with $4000, it's a lot easier to budget assuming a 5% increase to that dollar figure then waiting to see what the dreaded medical renewal is going to look like. I would agree that if you're going to have a cafeteria plan, however, you may as well have at least two medical options and a high/low dental plan.