When does an hour bank plan make sense?
An hour bank plan allows employers to provide benefits to employees that would often not otherwise qualify through a group benefits plan. Enrolling employees that are seasonal or project-driven, when there will be periods without work, on an hour bank plan makes a lot of sense.
Employees receiving benefits through a group plan must meet participation requirements for the hours worked per week. If you have an employee that doesn’t work for a week due to the weather or a job completing they can quickly become ineligible to participate in a regular group benefits plan. An hour bank plan allows employees to “deposit” into a bank the hours that they work so that they can “withdraw” those hours for coverage when they are not working.
There is typically a minimum that must be initially “banked”, a minimum that must be maintained while working and a maximum cap on an hour bank plan. Benefits offered usually consist of health and dental, life insurance, accidental death and dismemberment, and disability insurance, but can vary with the provider and the plan.
Employers pay an hourly rate per employee for the hour bank plan when that employee is working. Each month, hours are “withdrawn” from the plan to cover the benefits. When an employee is not working, hours continue to be “drawn” from the bank each month. If the hours “withdrawn” reach the plan’s minimum, an employee can often choose to pay to continue receiving benefits, usually for up to six months.
In many cases, it makes sense to have employees that have established hours, including hourly workers, on a regular group plan and employees with fluctuating hours on an hour bank plan. The plans can work together cohesively but must be set up to accommodate the classes within that workforce.
Hour bank plans are a great tool to provide employers with flexibility within their labour force. Benefits help to protect employees and provide employers with an advantage to recruit and retain employees.
If you have questions about hour bank plans, group plans, critical illness insurance, or other benefits questions, BCCA Employee Benefits is happy to consult with you. Find us online at www.bccabenefits.ca, email us, or call (800) 665-1077 or (604) 683-7353.
This article first appeared in the Spring 2016 issue of SICA's Construction Review Magazine. To read the entire magazine click here.
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