Restructuring Benefits 101
Restructuring Benefits 101

Restructuring Benefits 101

As employers continue to sort out the implications of health care reform on their businesses, organizations across the country will no doubt be thinking about restructuring employee benefits. In a recent Deloitte survey, 82% of companies said they planned to redesign some or all of their health care benefits. As benefits agreements are shifting the focus to wellness and disease management, redesigning employee benefit plans will be a major project in the months and years to come.

As benefits can be a touchy subject for employers and employees alike, restructuring must be approached with the utmost care and sensitivity. Keep these tips in mind to ensure your new benefits arrangement satisfies both sides.

Benefits restructuring: 3 tips for employers

1. Decide which plan is best

There are two common options for benefits plans:

* Defined benefit plan: an employee’s benefits are defined in the plan and the employer has an obligation to fund the promised benefits
* Defined contribution plan: the contribution the employer will pay is pre-determined, and the employer is only obligated to pay that amount per employee

Often, employers wish to change from a defined benefit plan to a defined contribution plan, which can be more cost-effective and less risky. But remember that *benefits should be tailored to fit the needs of employees*—there is not a one-size-fits-all solution. To find the right balance, see how your benefits stack up against other firms, and never stop evaluating and refining the benefits you offer.


2. Communicate and educate

Whether you choose to roll out a new benefits structure at the beginning of a new plan year or amend your current plan to change the benefits provided, communication is an absolute must. Employees care deeply about their benefits, so they may be hesitant about any changes being made.

* Be sure to communicate with them frequently and openly.
* Invite their feedback on the new plans.
* Consider setting up a live question and answer session for employees.
* Offer a grace period to respond to the benefits change and allow employees to opt out of the new benefits plan.

Your employees will be much more comfortable with the change if they feel educated, informed and involved.


3. Follow the rules

Though companies are allowed to change their benefits without employee input, they cannot violate any legal guidelines, original plan documents or government regulations. Employers must give proper notification and make sure the new benefits comply with summary plan descriptions that contain all of the benefit information that was previously agreed upon. In addition, companies typically cannot take away benefits retroactively. Make sure you are aware of all compliance issues involved in a benefit plan restructuring before you move forward.


Managing changes to employee benefits can be a complicated process, so make sure you have the right tools on hand. Paycor’s suite of HR solutions can assist you in streamlining benefits enrollment, communicating with employees about upcoming changes, educating your team on benefits plans and best practices and giving you access to call or email an HR professional with your specific questions. Learn more by getting in touch with us today.


Sources: Principal Financial Group, HCR Watch, JDSupra Law News, Deloitte’s 2012 Top Five Total Rewards Priorities Survey

More to Discover

2020 Report: The Future of HR

2020 Report: The Future of HR

The landscape of HR is shifting from everyday HR functions to strategic HR initiatives like recruiting, people & labor cost management and more. To gauge the present and future of HR, Paycor interviewed more than 500 leaders of medium and small businesses.In this trends report you’ll learn: Where the best HR & business leaders plan to invest the most money Why CFOs are losing faith in HR’s ability to work with data (and what you can do) Which 2020 compliance regulations are keeping leaders up at night and what you should do to mitigate risk Why 48% of business leaders believe many core HR functions will be automated by 2022 And more!

How to Build Irresistible Benefits Packages for Employees

How to Build Irresistible Benefits Packages for Employees

Employee Benefits Packages: Foundational to Workplace Satisfaction While a competitive salary is an essential part of attracting top talent, in today’s hot hiring market, the employee benefits package is just as important.More than ever before, employees are being offered robust and interesting job benefits as organizations strive to keep pace with the shifting culture of work today. Historically, offering health insurance and a 401k were the expected aspects of a benefits package. Today, employees are being offered benefits packages that include generous vacation policies and flexible working arrangements.In this article, we’ll share the most important aspects of an employee benefits package. You’ll learn what to offer in order to fully...

Is Unlimited PTO a Good Idea?

Is Unlimited PTO a Good Idea?

If you’re debating whether or not to offer unlimited paid time off to your workforce, there are a few pros and cons to keep in mind.For starters, it is becoming more prevalent. The number of jobs on Indeed that advertise unlimited PTO increased 178% between 2015 and 2019. But still, only 1%-2% of companies in the U.S. offer unlimited vacation and most of those companies are in the tech industry (ex. Hubspot, Netflix, Roku), according to Society for Human Resource Management. Why Do Companies Offer Unlimited PTO? Offering unlimited vacation is an innovative tactic for recruiting talent. Afterall, who hasn’t daydreamed of taking off work whenever the mood suits? In fact, the 2019 MetLife Employee Benefit Trends Survey revealed that 72% of...

2019 HR & Compliance Web Summit: Executive Summary

2019 HR & Compliance Web Summit: Executive Summary

With 20,000+ registrations, this was Paycor’s biggest and best web summit yet!Industry experts like Jennifer McClure offered actionable insights and advice on all things HR, from self-care for the HR pro to in-the-news compliance issues. If you missed the live webinars you can watch them on our on-demand webinar page.In the meantime, here’s a quick overview of each session. 5 Steps to Become a Strategic HR Leader | Speaker: Lori Kleiman In today’s business environment only 20% of HR professionals interact with the executive suite. Lori Kleiman says it’s time to stop waiting for your gold embroidered invitation and finally take your seat on the leadership team. Ready to become a strategic HR leader? Follow this 5 step plan: Engage...