What Family Coverage is Included in Your Benefits Plan?

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Before you set up a benefits program for your small business, you may wonder how eligibility works. It’s largely up to business owners to determine eligibility parameters for their benefits program. Today, we’ll look at your options for setting up individual and family coverage for employees and why employee classification matters.

Basic eligibility: Employees only

At this level, you set up your benefits program—for example, the BeniPlus Benefit Wallet—for employees only. This means that employees can only submit claims for themselves, not their dependents.

This option may be best reserved for businesses that primarily employ young people who typically don’t have dependents—and may even still be on their parent’s benefits program.

Family eligibility: Employees and dependents

In this situation, you set up your plan to cover claims for employees and their dependents. In the world of benefits, dependent has a specific definition.

A dependent is defined as:

  • A spouse (legal or common-law).
  • Unmarried children up to 21-years-old.
  • Unmarried children who are also full-time students, up to 25-years-old.
  • Children who are incapable of supporting themselves because of a physical or mental disability.

When you make your benefits program open to eligible family members, it means your employees can submit eligible expenses for themselves and their dependents.

This is the best option for most small businesses because this flexibility allows employees to make the most out of their benefits and reduce the financial impact of family medical expenses.

In the Entrepreneur article, The Basics of Employee Benefits, Joe Lineberry, a senior vice president at Aon Consulting, says, “Give employees the benefits they value, and they’ll be more satisfied, miss fewer workdays, be less likely to quit, and have higher commitment to meeting the company’s goals. The research shows that when employees feel their benefits needs are satisfied, they’re more productive.”

That’s why family benefits make so much sense.

For example, a healthy employee with a sick child can use her benefits to pay for her child’s medical expenses instead of coming up with these funds with after-tax salary. Is this valuable to employees with children? Yes, it is!

A family benefits plan also works great for employees who are covered under their spouse’s plan. If an employee or dependent is entitled to benefits for the same expenses under another private or governmental health plan, your employee can coordinate benefits to cover the entire cost of the expense.

Benefits coordination example

You have an employee named Suzie who is married to Adit. Adit’s benefits plan only pays for 70% of their daughter’s trip to the dentist. To coordinate benefits, Suzie first submits the claim to Adit’s benefits provider. After that reimbursement, Suzie then submits the remaining claim to your benefits program, using her Benefit Wallet. Provided Suzie has benefit dollars left in her Benefit Wallet, she is reimbursed for the difference.

Determining benefits dollars: Employee classes

As the employer, you must decide two things about benefit dollars: how much you’ll allocate to employees and if all types of employees receive the same amount. If some employees will receive more benefit dollars than others, you must set up employee classes, decide how many benefit dollars are included in each class and classify each employee.

Examples of employee classes include:

  • Executive
  • Senior Manager.
  • Supervisor
  • Full-Time Employee.
  • Part-Time Employee.
  • Single
  • Family

For example, some companies provide more benefit dollars to employees with dependents than to employees without dependents. It’s also common to give executives more benefit dollars than other employees.

According to The Big Bench: 2019-2020 Toronto Region Compensation Benchmark, the average allotment for healthcare spending accounts (HSA) is $2,042 per year for executives and $965 per year for all other staff, including management.

The importance of classifying employees correctly

While you have the flexibility to create employee classes and allocate benefits to each class, you also have the responsibility to classify employees correctly. For example, if you have three customer service representatives, they should all be in equivalent classes, such as full-time employee or part-time employee. You can’t classify one of the customer service representatives as an executive because that’s getting into benefits fraud territory and we don’t recommend that. Plus, on a more practical note, if you misclassify someone as an executive (for example), you must correct the mistake and risk disappointing your employee, instead of thrilling your employee with flexible benefits.

How the Benefit Wallet lets you contain costs, even with family eligibility

With all this discussion about family benefits, you may be wondering about the costs; family benefits sound expensive, don’t they? With traditional benefits plans, family coverage is more expensive. But at BeniPlus, we put business owners in the driver’s seat when it comes to budget. Even with family coverage, you allocate benefit dollars to your employees. Your employees can spend those benefit dollars—and not more—on themselves and/or their eligible dependents. With this system, you’re always in charge of your annual benefits budget because you’ve already set the benefit dollar limit for each employee class. There’s no need to worry about unexpected rate increases or that giving benefits to employees with families will cost you more—the budget is always in your control.

Family coverage is a great way to deliver value to your employees at no extra cost to you. We’re here to help you give your employees the benefits they want at a price you can afford.

Take 10 minutes today to get a quote for our simple, flexible and affordable employee benefits program.

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