How Benefits Plans Discriminate Against Executives

Robert Crowder, founder and President of The Benefits Trust, has over 30 years of experience serving pension and employee benefits clients. In 1994, he founded The Benefits Trust as a Third Party Administrator serving small and mid-sized business across Canada. Through Rob Crowder's dedication and leadership, The Benefits Trust has grown into the successful benefits provider that it is today.

How Benefits Plans Discriminate Against Executives

That’s right: most off-the-shelf benefits plans on the market discriminate against executives.

It’s simple when you think about it.

Let’s say everyone in your company has the same, standard benefits plan. When you hire a new employee in an entry-level position and give them benefits, they’re getting the same benefits as everyone else in the company, even those with seniority or who are in executive leadership positions.

In relation to the new employee’s salary, their benefits plan may be as much as 10% of their compensation; however, based on the much higher salary of an executive, their benefits plan may be less than 1%.

Benefits PlansWhy Are Executives Not Receiving Benefits Compensation in Proportion to Their Role?

Unfortunately, traditional benefits plans can be limiting. They often do not allow for ‘groups within your group’, which means you cannot have a different benefits plan structure for your company’s owners, executives, key/senior employees, and so on.

You’re stuck with one standard plan for everyone.

Whether you are a small business or an international corporation, you should be able to customize your benefits plan to support your compensation philosophy. People who are assets to the company, who have the knowledge and skills your business needs to succeed, are typically paid more. Your benefits plan should be flexible enough to provide them with better benefits to match.

What’s the Solution?

A custom-designed benefits plan that allows your organization to define different benefits coverage for the groups within your group will empower you to put a stop to the imbalance for executives and senior employees.

There are two key ways to do this:

  1. Layer Executive Benefits into Your Current Benefits Plan

If you don’t want to disrupt your current benefits plan, you can add an executive benefits plan separately, which will provide extra benefits to your ownership group and key executives.

  1. Design a Completely New Customized Benefits Plan with Supplementary Coverage for Specific Groups within Your Organization

You don’t need to limit your new benefits plan structure to executives – in fact, when you design a custom benefits plan you can define the groups within your group however you’d like. You can use benefits as an incentive or a retention strategy. A custom, integrated plan will be built from the ground-up with your needs at the forefront.

With a customized benefits plan, you will have complete control over which benefits are offered to which groups of employees, based on your specific compensation philosophy.

As a bonus, you will also have more control over the budget than a standard off-the-shelf plan would allow!

Are all of your employees on the same standard benefits plan?

>> The Benefits Trust helps business owners create a better benefits plan than they can get anywhere else. Contact us about including executive benefits in your plan.

More on custom benefits plans from The Benefits Trust:

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