Health Care / Flexible Benefits Committee
Flex Plan Guiding Principles
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1. General design principles
a) The flex benefit plan should be designed to permit employees to
choose among different forms of compensation, both pre-tax and
after-tax, to allow each employee to obtain the compensation mix that
provides the best value to the employee and the employee's family.
i) The flex plan should build upon a total compensation
philosophy to promote an awareness of the value of the fringe
benefits package provided as part of an employee's total
compensation.
(1) Generally, the flex plan should be budget neutral.
(2) Generally, the flex plan should be compensation neutral.
That is, all employees will retain the value of their
current total compensation. Salary plus benefits under the
flex plan should not be less than salary plus benefits under
the current compensation plan.
ii) The flex plan should promote equity in employee benefits,
with variations acceptable by logical classes of employees.
iii) The flex plan should provide the employee a wide range of
pre-tax choices to enable each employee to maximize tax savings
permitted by the income tax laws.
iv) The flex plan should establish standards that assure a
reasonable minimum level of financial protection for all
employees.
b) The Flex Benefit Plan should be designed to be simple and
understandable by the typical employee of OSU.
2. Specific design principles
a) Retirement plan principles
i) The flex plan should seek to expand the degree of retirement
plan contribution flexibility and choice.
(1) An employee should be permitted to divert a portion of
the funds currently deposited to a retirement account to other
benefits included in the flex plan.
(2) However, contributions to the employee's retirement plan
must be sufficient to fund a core retirement benefit.
ii) The flex plan should strive to provide a means for
increasing pre-tax elective deferrals to the retirement plan to
permit employees to take advantage of the income tax benefits of
such plans.
b) Sick day principles
i) The flex plan should redesign the current sick leave
structure. The revised sick leave plan should incorporate, to the
extent possible, a combination of:
(1) paid time-off features, and
(2) insured short-term disability features.
ii) Revisions in the current sick leave environment should
retain the integrity of accruals existing at the date the flex
plan is implemented, especially in relation to OTRS service credit
provisions.
c) Vacation day principles
i) The flex plan should redesign the current paid vacation plan
structure.
(1) A limitation, based on years of service, should be
placed on the number of vacation days that can be carried
forward from year to year. All employees should be required to
take some vacation days each year or lose the required days.
(a) The revised plan should permit employees to sell
unused vacation days carried over from a prior year back
to the university in exchange for other benefits provided
by the flex plan.
(b) The revised plan should permit employees to purchase
a limited number of additional vacation days through a
salary deferral process.
(2) Revisions in the current paid vacation plan should
retain the integrity of accruals existing at the date the flex
plan is implemented. That is, vacation days accrued at the
date the plan is implemented may not be sold back to the
university but would be available for use after the current
year's vacation days are used-up.
ii) The flex plan should promote equity in employee benefits,
with variations acceptable by logical classes of employees.
d) After-tax benefit principles
i) The flex plan should offer a limited selection of non-tax
sheltered options to employees to permit employees to benefit from
the group purchasing power of the employees and the university.
Such plans might include long-term disability, group
long-term care insurance plan, pre-paid legal plan,
supplemental disability income plans, supplemental life
insurance plan and others that would benefit a significant
number of employees.
ii) The flex plan should incorporate wellness initiatives
through OSU Wellness Programs.
3. Implementation principles
a) The flex plan should be fully compliant with all applicable laws
and related regulations.
b) The flex plan should not pose an undue administrative burden on
employees, the university, or third party benefit providers.
c) Employees should be provided a reasonable time to learn about the
plan and to make elections.
i) There should reasonable time period devoted to informing
employees about the flex plan.
ii) Employees should have a reasonable time period to evaluate
the options and the effect of various elections on their personal
situation before filing an election.
iii) Where permitted by law and consistent with established
guidelines, an employee should be given reasonable opportunity to
change an election during the year if there is a change in family
status, economic situation, or other specifically defined event.
d) The flex plan should be fully developed and explained to
employees before it is implemented. This has to be a plan for the
benefit of employees; one that they understand and determine to be in
their best interest. The components of this plan should not be phased
in over several years, because this would create an unnecessary period
of confusion. The fully developed plan should be implemented at one
point in time. This may require a target date, for full
implementation, to be January 1, 2001 or July 1, 2001. Spring of 2001
could be used for enrollment and elections. By then, the plan will be
published, vendors should be in place, and systems should be ready to
make the changes as painless as possible.
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