Flexible Benefit Plans Research Articles

Controlling the effects of adverse selection in flexible benefit plans: A pricing-based approach

Most flexible group benefit plans are currently designed and priced based on deterministic assumptions about the plan members' option selection. This can cause an adverse selection spiral—healthier insureds drop out of richer options, increasing the concentration of high-risk insureds covered in these options and thereby causing skyrocketing insurance rates. In this study, we propose and analyze a solution for the spiral based on pricing. Pricing-based strategies are infamously difficult to implement in practice as the deposit rates, the option selection, and the experience are interconnected: the pricing decisions impact selection patterns, which in turn influence the claims. We show that our pricing solution successfully controls the effects of adverse selection and keeps the flexible benefit plans sustainable and stable over time, unlike the current practice.

연령 다양성이 선택적 복리후생제도 활용에 미치는 영향: 외부인력 유입과 환경 복잡성의 조절효과

This study pays attention to the necessity for discussion of determinants in the utilization of flexible benefit plans, and examines whether age diversity increases the utilization of flexible benefit plans or not from the intra-organizational ecology perspective. In addition, this study considers the inflow of workforce from the external labor market (experienced employees) and environmental complexity as the critical moderators influencing the relationship between age diversity and the utilization of flexible benefit plans. In other words, this study predicts that these moderators will strengthen the main effect. The results of longitudinal analyses with HCCP datasets showed that age diversity increased the utilization of flexible benefit plans, as predicted. However, the moderating effect of the inflow of workforce from the external labor market was not statistically significant, and the moderating effect of environmental complexity rather demonstrated the opposite direction compared to the hypothesis. More specifically, when the degree of environmental complexity is low, the positive relationship between age diversity and the utilization of flexible benefit plans became more pronounced. In the discussion part, this study provides the possible explanations for unsupported hypotheses, and suggests the implications as well as limitations for future research.

Benefícios flexíveis: estudo de caso em uma indústria de autopeças

Companies are investing in many strategies to attract and retain talents. One of them is the implementation of a flexible benefits plan that allows the employee to choose among a number of benefits. The aim of this paper is to investigate the opinion of employees regarding the implementation of a flexible plan of benefits. The study is based on the theoretical framework of Boog and Boog (2002), Maximiano (2012), Robbins (2005), Marras (2011) and others. The methodology used is case study with exploratory, descriptive and qualitativequantitative approach. Analyzing the results of the questionnaire, it is considered feasible to implement a flexible benefits program in the company, since 72% of respondents believed that flexible benefits are important for talent retention and motivation of staff and 69% are not satisfied with the benefits offered by the company.

Association between reduction in copayment and gastric cancer patient concentration to the capital area in South Korea: NHI cohort 2003–2013

Since 2004, the South Korean government has introduced a policy that decreases copayment for cancer patients by strengthening public coverage in the National Health Insurance (NHI) system (first phase=copayment for outpatient care from 30% to 20%; second phase=copayment for total medical expenditures from 20% to 10%; third phase=copayment for total medical expenditures from 10% to 5%). We aimed to investigate the relationship between the policy introduction and patient visits to hospitals in the capital area. We used data from the NHI Cohort 2003–2013, which included all medical claims (7193 cases) filed for 2124 patients who visited the hospital due to stomach cancer, and performed a segmented Poisson regression analysis. Of all hospital visits, 40.6% of patients were from the capital area. After the introduction of the second phase of the policy, there was an increase in patient concentration in the capital area, although there were no significant effects on patient concentration during the first and third phases of the policy. In conclusion, our findings suggest that the introduction of a policy that reduces copayment for cancer patients had a substantial impact on patient concentration in the capital area. Therefore, health policymakers should consider effective alternatives including efficient allocation of medical resources or support for the more vulnerable population as flexible benefit plans to aid healthcare utilization by cancer patients.

The Impact of Flexible Benefits Plan on Organization Commitment and Intention to Quit

In the past decade, the employee benefits industry has undergone considerable change with regard to the types of benefits available at the workplace. Plan sponsors have experimented with a variety of strategies to developing creative ways to tailor their benefit plans to the varying needs of employees. One approach set up is the flexible benefits plans. Thus, the focus of this paper is to develop economic study, test the relationship between benefits plan (traditional and flexible) as independent variables and organization commitment, employees’ intention to quit as dependent variables on one side, on the other side we test these relationship according to the employees’ demographic characteristics as control variables, with data from a sample of BHP company in Algeria and in headquarters in Australia, a total of 330 respondents were randomly selected as the sample of the study, data was analyzed by (IBM SPSS statistics 20), the study is divided into two parts. In the first part, our result prove that both of traditional benefits plan and flexible benefits plan are related with organization commitment and intention to quit, but the workers under flexible benefits plan demonstrated a higher commitment and lower intention to quit than traditional plan. The second part, the results also show that the demographics characteristics can play important role in the determining of employees’ behavior, we prove that there is different in term of commitment and intention to quit among employees according to the differences in the demographic characteristics. DOI: 10.5901/mjss.2014.v5n8p136

How Flexible Should Flexible Benefits Be?

Anecdotal evidence claims that flexible benefit plans increase employees’ satisfaction with benefits, however the underlying assumption has never been tested. This paper aims to test the underlying...

Flexible Rewards From a Strategic Rewards Perspective

Flexible reward arrangements (e.g., flexible benefit plans) have been around for a rather important period of time. Although some authors have examined the antecedents and consequences of adopting such plans from a theoretical perspective, empirical studies are rather scarce. Furthermore, there is a need to apply a strategic rewards perspective to flexible reward plans in order to help firms to move from “best practice” toward “best fit.” This article interprets the results of a survey held in Belgium and the Netherlands regarding the prevalence and perceived outcomes of adopting flexible reward plans within a model of strategic alignment of reward management.

Antecedents and consequences of the introduction of flexible benefit plans in China

The present study had two aims. The first was to explore the extent of flexible benefit plans (flex plans) within China and to make predictions about future trends. The second aim was to examine the relationships between the use of flex plans and two measures of labour market performance: the ability to attract essential employees and the level of labour turnover. The results from a survey of 324 firms in China reflecting a response rate of 32.4% showed that although there are presently a limited number of firms that adopt flex plans, the number is likely to increase in the next few years. Second, the probability of the adoption of flex plans was not found to vary with the mode of ownership and firm location. Third, flex plans were found to be adopted by firms for several practical reasons including their perceived role in cost containment, improved recruitment and retention, enhancement of job satisfaction and labour productivity. The take-up of such plans, however, was found to be inhibited by perceived administrative burdens and costs, and the limited number of staff qualified in benefit provision. Finally, the adoption of flex plans was significantly related to labour turnover and improved recruitment capacity.

The development and implications of China's employee benefit systems

The present study aimed to evaluate the development of benefit schemes in China since the commencement of economic reforms in 1978 and to examine whether the current provision of employee benefits was associated with organizational outcomes. Based on the results of interviews with 16 HR managers/directors from different firms across China’s industries, this study concluded that the present benefit types in China have become more varied and more attractive to employees compared to those in the planned economy period. The reasons were identified (e.g. employee stock ownership plans (ESOPs)), profit sharing, travel incentive and flexible benefit plans being adopted). In addition, this study found that provision of employee benefits was generally perceived to have an impact on organizational outcomes.

Offering choice in benefits: a new Dutch HRM arrangement

PurposeThe purpose of this study is to examine what kinds of Dutch organisations offer their employees a choice in the composition of their benefits with the aid of a theoretical model that incorporates insights from rational choice theory, the theory of institutional pressures and the bundles of human resource management (HRM) theory.Design/methodology/approachTo test the theoretical model data were collected from nearly 600 Dutch organisations in the market sector. Multivariate binary logistic regression analyses were used to analyse these data.FindingsThe research showed that flexible benefit plans (FBPs) are widespread and show a considerable degree of consistency in the options they offer. FBPs are most likely to be offered by organisations that have freedom to manoeuvre in their benefits, that witness other organisations around them offering such arrangements, and that offer HRM policies and practices that are strongly focussed on the combination of work and family, and on flexibility in working arrangements.Research limitations/implicationsAttention to HRM policies in addition to a combination of rational choice and institutional theory proved valuable in explaining the uptake of a new arrangement, and this merits further exploration.Practical implicationsFPBs offer Dutch organisations the opportunity to give their employees more choice in the way they are paid, and to adjust this pay to their personal situation. Offering this choice fits in with a family‐friendly HRM structure and increases flexibility for both parties.Originality/valueThe paper provides useful information on FBPs.

Wage and Benefit Changes in Response to Rising Health Insurance

Many companies have defined-contribution benefit plans requiring employees to pay the full cost (before taxes) of more generous health insurance choices. Research has shown that employee decisions are quite responsive to these arrangements. What is less clear is how the total compensation package changes when health insurance premiums rise. This paper examines employee compensation decisions during a three-year period when health insurance premiums were rising rapidly. The data come from a single large firm with a flexible benefits plan wherein employees explicitly choose how to allocate compensation between cash wages and other benefits. Under such an arrangement, higher health insurance premiums must induce changes in the composition of total compensation–either in lower after-tax wages or in decreased contributions to other benefits. The results suggest that about two-thirds of the premium increase is financed out of cash wages and the remaining one-thirds is financed by a reduction in benefits.

Perceptions of distributive and procedural justice in employee benefits: flexible versus traditional benefit plans

The self‐interest and relational models of organizational justice were tested to explain the relationship between benefit plan type and organizational justice. Benefit plan types considered were flexible and traditional plans. In support of the self‐interest model employees in flexible benefit plans had significantly higher perceptions of procedural justice than employees in traditional benefit plans. There were no significant differences in perceptions of distributive justice between the plan types.

A Study of the Determinants and of the Impact of Flexibility on Employee Benefit Satisfaction

The purpose of this study was to examine the influence of individual characteristics and organizational justice on employee benefit satisfaction, and to explore the role of flexible benefit plans. Employees from three Canadian organizations were surveyed. A total of 285 usuable questionnaires were returned, for a response rate of 42%. The variables in the model accounted for more than 40% of the variance in benefit satisfaction. The findings showed that while distributive and procedural justice were useful in predicting benefit satisfaction, the concept of process justice had the greatest effect on satisfaction. Among the variables, communication had the greatest impact. The effect of flexibility, although significant, was ambiguous. Sociodemographic factors had a very limited effect when perceptual variables were introduced into the equation. The paper also sets out the limitations of the study and its practical implications, and makes some suggestions for future research.

A Theoretical Exploration of the Adoption and Design of Flexible Benefit Plans: A Case of Human Resource Innovation

In this article we explore theoretical explanations of managers' decisions about flexible benefit plans. First, we examine the adoption and design of flexible benefit plans through four theoretic lenses: (1) institutional, (2) resource dependence, (3) agency, and (4) transaction cost. We then integrate the relevant insights gained from these theories into a more complete model and derive propositions for future research. Finally, we generalize the insights gained from exploring a specific innovation to broader questions surrounding decisions about other human resource innovations.

A Theoretical Exploration of the Adoption and Design of Flexible Benefit Plans: A Case of Human Resource Innovation

This article explores theoretical explanations of managers' decisions about flexible benefit plans. We (1) examine the adoption and design of flexible benefit plans through four theoretic lenses: institutional, resource dependence, agency, and transaction costs; (2) integrate the relevant insights gained from these theories into a more complete model and derive propositions for future research; and (3) generalize the insights gained from exploring a specific innovation to broader questions surrounding decisions about other human resource innovations. loring a specific innovation to broader questions surrounding decisions about other human resource innovations.

Employee health insurance decisions in a flexible benefits environment

This study investigates the factors which influence employees' choices among different health insurance options under a flexible benefits plan. Employee-specific selection and demographic data provided by the former National Cash Register (NCR), were used to analyze the effects of employee and plan characteristics on choice of health care plan. Results suggest that employees' health plan choices are influenced by premium, deductible, and coinsurance amounts, and by employees' age, gender, salary, and marital status. The results are considered within an expected utility maximization model. Implications for the design of flex plans as well as future research and theory are discussed. © 1996 by John Wiley & Sons, Inc.

Employee health insurance decisions in a flexible benefits environment

This study investigates the factors which influence employees' choices among different health insurance options under a flexible benefits plan. Employee-specific selection and demographic data provided by the former National Cash Register (NCR), were used to analyze the effects of employee and plan characteristics on choice of health care plan. Results suggest that employees' health plan choices are influenced by premium, deductible, and coinsurance amounts, and by employees' age, gender, salary, and marital status. The results are considered within an expected utility maximization model. Implications for the design of flex plans as well as future research and theory are discussed. © 1996 by John Wiley & Sons, Inc.

O sistema de recompensa na empresa do futuro

Changes in the domestic and foreign environment call for the transformation of traditional systems which no longer respond well to the environment.The worker of the future will demand greater autonomy, involvement and participation; companies, on the other hand, will be more flexible, and more cost and quality-oriented. Consequently, compensation systems will have tobe braader in scope and more sophisticated. Salaries based on skills and team performance, profitsharing and participation in decisions on compensation, more flexible benefit plans, and total compensation are some of the concepts presented here.