Posted in Finance, Accounting and Economics Terms, Total Reads: 1113
Definition: Core-Plus Plans
Core-plus is a type of employee benefit offered by organizations as a part of flexible benefits. Under this scheme employees are provided with core or mandatory benefits such as legally required benefits, basic life insurance or retirement funds.
In addition to that, they are given a list of options of other benefits from which employees could choose to add to their personal benefits plan. For instance, a young employee with a family would prefer to choose a dependents health coverage benefit whereas an older employee may want to save for retirement. Employees are given “benefit credits” with which they choose the most optimal plans to fit their personal needs.
An advantage of the core-plus plans is that employees are allowed to tailor their benefits to fulfill their personal needs hence satisfying their expectations in terms of rewards. Furthermore it motivates the employee to stay loyal to the organization. In the organization’s perspective a core-plus plan is cost effective to implement.
However one drawback is that each employee will be provided with an account for the benefit they chose. Once the account is empty, the employees do not have the option of opting for another benefit plan. Furthermore in comparison to other benefits plans, the core plus plan is more difficult to administer. Each employee has a different set of benefits; therefore separate records must be maintained for each of them. Each employee must be informed about any changes, the coverage or the balance of their plans on an individual basis hence complicating the administration.