Group benefits are a must to attract and retain top employees. However, employers can be put off by what may seem like ever-increasing premiums. There are five major factors which make group benefit premiums rise, some of which are entirely under your control, and some of which are not.
1.Fraud
Fraud is the #1 reason that employee benefits plan premiums rise by a long shot. Benefit fraud is conducted at the rate of $1.2 billion per year in Canada alone. And it is endemic. Employees from the Toronto Transit Commission, St. Michael’s Hospital in Toronto, and more recently Baycrest Hospital have been laid off from their jobs and, in some cases, charged with benefits fraud.
Benefits fraud has many facets, but the two most common are employees submitting invoices for services they never received and unscrupulous providers offering free merchandise to employees who purchase medical or other devices, and then pocketing the cash value of the merchandise as part of the cost of the device that insurance is covering. Benefits fraud is not a victimless crime, as it makes insurance premiums go up.
Many businesses and nonprofits run on tight margins and cannot afford a sharp increase in the cost of benefits. The insurance company may be making the initial payout, but it often has little to no recourse in recovering money stolen through benefits fraud. This means that raising premiums is the only way it can recover these funds. Insurance companies, including Sunlife Financial, are delisting service providers that enable fraud, and there is even sophisticated AI in place to detect fraudulent claims.
The Chamber Plan addresses fraud in many ways, including sending around lists of delisted service providers in your area so that you can warn employees not to use them.
2.Rising Drug Costs
Canadians spent an average of $1,043 per capita on drugs in 2018. This puts us only behind the United States and Switzerland in terms of how much we spend on drugs. While the Canadian government is trying to take steps to lower drug costs, these efforts are being consistently lobbied by pharmaceutical companies are unlikely to make a large dent in what Canadians spend on drugs.
The people who ultimately pay the increased price for drugs are Canadians and employers through benefit plans. With expensive drugs such as biologics for psoriasis and eczema being in higher demand, and Canada’s aging population, the number of Canadians on higher-cost medications will continue to rise. The Chambers Plan will always give you control over how much can be covered on your plan, and requires substitutions for generic drugs where generic drugs are the same as a brand-name drug, saving you money.
3.Paramedical costs can get out of control easily
Paramedical costs such as physiotherapy, osteopathy, orthotics and chiropractic can get out of control very easily if even a couple of employees spend the maximum. The best way to cap this is by having a set dollar amount for each employee, which the Chambers Plan will allow you to do. Other benefit plans will have different tiers, but being able to specify the costs in advance will allow you to control future plan increases.
4.Dental Work
Having dental coverage is one of the main attractions of a health plan for most employees – especially those with families. As a result, it is typically the most used. You can count on your employees and dependants having a couple of cleanings a year and one checkup each, and these costs are very predictable. The only thing to keep in mind is that most insurance plans cover the current fee guide for dentists, which the Ontario Dental Association lobbies to have raised once every 1-2 years. This means your plan estimates may be based on an older fee guide, and the costs may go up in the current or following year.
5. Aging of Employees
Naturally, as your employees and their families age, there are more medical expenses and expenses related to medical conditions. This also affects long-term disability and life insurance rates.
You can help to protect your business against rate increases by ensuring that any bulletins from your plan administrator about delisted service providers are circulated to your employees. Setting appropriate limits on specific services with your plan administrator can limit use to what you are comfortable with and can afford. Additionally, there is the option to share the premium costs with the employee either through a monthly charge or having them pay deductibles on certain items, although this is typically not standard practice. If it means the difference between having and not having a group benefits plan, however, it is more likely to be acceptable to your employees.
The Chamber Plan is a pooled group benefits program, which means that all money from plan members goes into one pot. A large insurance company needs to make profits for its shareholders, where the Chamber Plan is entirely there for the benefit of members. The extra money that is left in the Plan from year to year guards our members – many of which are small businesses with thin margins – from rate increases. This gives you some extra insulation if some of your employees need to make larger claims.
If you would like to enroll in the Chamber Plan to enjoy the protection it offers against significant rate increases, contact Kennedy Insurance today. Each group benefits plan can be customized to the specific needs of your business, both in affordability and flexibility.