Key Issues in Benefit Planning, Design, and Administration

Determining benefit coverage seems straightforward, but differences in employment status complicate it, with part-time workers historically receiving fewer benefits. Traditional benefit packages offer little flexibility, while cafeteria-style plans allow employees to choose benefits that best suit their needs within a set budget. High deductible plans encourage employees to seek lower-cost providers, reducing employer expenses, but may lead to employees delaying necessary care due to cost concerns. The third administrative issue in benefits planning is financing, which can be noncontributory (employer pays all), contributory (costs shared), or employee-financed (employee pays, except for legally mandated employer-covered benefits). Organizations prefer contributory benefits to ensure employees value them and help control costs, especially as benefit expenses rise faster than other goods and services. Finally, benefits have to comply with hundreds of sections of the tax code and other regulations.