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Debbie McNamara

Plan Design & Coverage Options: Why Your Employees Can’t Choose Their Own Coverage

Whether you currently offer a benefits package to your employees or are in the market for one, a question that we get asked commonly is ‘why can’t my employees choose their own coverage?’ In this post we’ll cover off how plan designs for a traditionally funded program are selected, why employees can’t personalize their coverage on an individual basis and how you can tailor your plan to various employment classifications within your organization.


Do All Employees Get The Same Coverage?

The short answer is yes. With a traditionally insured plan, the focus is on equal rights for employees.  Essentially this means that if a group of employees has the same role or classification they must be treated equally.  By offering benefits to one employee and not the other could result in labour law infractions.


Differing Coverage Based On Employee Classification

As mentioned above, employees who fall into the same classification will receive the same benefits package, however, you can offer different coverage based on different classifications. For example, owners can have one level of coverage, mangers can have their own classification and employees can be in a separate classification with differing coverage. You could even differ coverage based on whether the employee was full-time or part-time. Each classification should fit neatly into a box that applies to each person within that designation and it should be clear as to what differentiates one class from another.


How Are Traditionally Funded Plan Designs Selected?

Plan designs selected by a business are decided upon by a number of factors including what is the corporate culture, what is the benefits plan intended to do for the employees and/or business, what is your budget, how much risk is the business willing to take on? These will all help your benefits specialist to put together a plan that fits the best interests of both your business and your employees.


Why Can’t Employees Choose Their Own Coverage?

As learned above, we know that employees in the same classification get the same coverage, but why can’t they choose their own? Traditionally funded plan designs are carefully selected for you based on your needs, your corporate culture and most importantly, to fit your budget. The plan designs are also formulated in such a way that is fair to all staff and protects you from high premiums. We know that when employees are asking for more coverage there is likely a health issue that they are trying to have covered which means that the claims from the sick people will increase and there would not be enough premiums by the healthy people to sustain the plan which would result in a high premium increase upon renewal. 


With that being said, this article and the scenario above really focuses on the more traditional benefit offerings on the market. If flexibility and individual customizations rank high on your list, don’t feel as though you are left out in the cold. There are products on the market that support those criteria as well.

Debbie McNamara

Debbie is the perfect fit for business owners and employers, providing a great resource to those looking to retain and engage employees. Employee Benefits Consultant is her official title, but what she really offers is a business administration education, an LLQP certification, 20 years of professional experience in upper management, and an understanding of the needs and challenges facing both employers and employees. Off the clock, Debbie takes great pride in giving back to her community as an active member on a number of volunteer boards. With whatever extra time is left over, she can be found fulfilling a lifetime commitment to health and fitness by participating in individual sports such as running and CrossFit, as well as a variety of team sports including softball, indoor soccer, and volleyball.
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