At the beginning of a new year, many of us consider a fresh start. For many business leaders, that involves thinking about where the business is going in the future. It might involve expansion plans, hiring initiatives, and even ideas to launch new products or services.
It can also involve some financial decisions, like tax planning or making changes to benefit plans. If that sounds like you, then you might be wondering when the best time to change your benefit plan actually is. Should you make changes starting January 1, or are you better to wait until another time of year?
We put together this handy guide to help you time your change perfectly.
Change with Your Fiscal Year
Many business leaders consider changes to their benefit plans in the new year because it coincides with the end of their fiscal year. That means the financial outlay associated with the revised benefits plan would go on the new fiscal year, without affecting your budget.
Many businesses use the calendar year as their fiscal year. This coincides with the personal tax year, which runs January 1 to December 31. This makes it easy to keep track of “years.”
So, you might want to start thinking about changing your benefit plan in the fall. You can do some research, shop around for a better benefits package, and then be ready to have a new plan come into effect on January 1.
Some businesses use a different fiscal year. Often, the year will run May 1 to April 30, aligned with paying year-end taxes to the CRA. If that’s the case, you’ll want to have changes to the benefit plan begin May 1.
Make Changes in January or July
Even if your fiscal year starts in May, you might still want to consider making changes to your benefit plan either in January or July. These dates represent six-month points, making them easy for employees to remember.
January is usually the best bet, since employees will know their coverage starts January 1 and runs to December 31. If you need to make changes at a later point, then July 1 is another good choice. Not only is it easy for Canadians to remember, it marks the halfway point of the year.
That may also line up with budget adjustments you make at that time of the year.
Whenever It Becomes Apparent Change Is Needed
Of course, these dates represent “ideals” for many business owners. You may undertake a benefits review or an employee survey during the spring or summer, then realize your benefit plan is costing you much more than it needs to. At this point, it’s prudent to make changes as soon as possible. You’ll get a benefits plan that better suits your employees, and you could save the business some cash.
When Should Employees Change Their Plans?
If your employees are allowed to select their plans, they may wish to change their coverage. You should encourage them to make changes to align with your fiscal year. That could mean having them make changes to their coverage in January or in May.
This makes it easy for them to keep track of how many benefits dollars they have to use, when they need to use them by, and so on.
Of course, employees may want to make changes at other times. They might realize they don’t need as much coverage as they have, or they faced changed circumstances, such as expecting a new family member or getting married.
Make the Right Changes
No matter what your benefits plan looks like, it’s likely you’ll want to adjust it at some point. Keep improving benefits with the data-powered insights of a human resources information system! Get in touch with us to discover what this technology can do for you.