Employee benefits are a critical component of employee engagement and retention, yet many business owners and HR professionals struggle to understand which employee benefits administration model fits their businesses.
In this article, we will discuss three common employee benefits administration methods: insurance, self-funded reimbursement and flexible benefits.
We’ll explore how each model works as well as its advantages and disadvantages so you can make an informed decision about which employee benefit delivery model is right for your organisation.
This method of employee benefits administration involves the employer offering a set of employee benefits, such as, medical benefits, accidental death and life insurance, employee pension plans and more, via an insurance provider.
Each medical insurance plan starts with basic inpatient coverage for hospitalisation and surgery. Additional riders can be purchased on top of this plan that could cover outpatient benefits, specialist care, dental, and so on.
The employer pays the insurance provider a specific amount every year, and employees are eligible for all the stated coverage.
Also widely referred to as self-insurance arrangement, whereby an employer may set aside sufficient funds to ensure that employees’ consultation fees can be covered, or they may simply reimburse employees as expenses come.
Employees foot the bill upfront when they have visited a company-approved clinic before submitting the receipt to HRs and wait to be reimbursed. Compared to employee medical insurance plans, the reimbursement model can cover employees’ outpatient needs without purchasing an inpatient plan.
Flexible Benefits Models allows employers to have a flexible spending account with a fixed budget for each employee every year. This amount is commonly referred to as yearly entitlement dollars. Employees are given the autonomy and flexibility to manage their personal yearly entitlement according to their needs. What this also means is that the employer can get personal and creative in terms of structuring a benefits plan with benefit categories that are truly meaningful for the employee.
Employee benefits platforms like Mednefits offer flexible benefits through an app and portal that captures all transactions and creates invoices automatically. This enables employers to have 100% transparency on their benefits usage.
When it comes to employee benefits administration methods, there are a variety of options available for companies in Singapore and Malaysia. Each model has its own advantages and disadvantages that must be weighed carefully before making any decision.
Self-funded reimbursement allows the employer full control over employee benefits and may be the method of choice due to cost constraints. However, if the trade-offs to saving cost does not outweigh the cons or is counter-intuitive to the company’s growth trajectory, another and/or a combination of approaches must be considered.
However, we know that weighing all the options can be a headache and it is tough to make a decision. That's why we recommend you to talk with our Benefits Specialists. Our team of experts is here to help you choose the employee benefits administration method that works best for your company. Get in touch today and we'll assist you in finding a solution that meets all your needs.