On a cold, snowy morning in February (when life still felt normal), I sat over a steaming cup of tea and visited with the Operations Manager of a small local business. Our conversation eventually shifted to benefits and my acquaintance, who has been in charge of the program at her organization for many years, told me she had a few ‘dumb’ questions. She proceeded to ask me some benefits questions that were NOT dumb at all, but regardless she felt sheepish that she had never had the opportunity to learn. The reality is that we often don’t know what the gaps in our knowledge are so don’t know the questions to ask. The benefits world is rife with mystification, whether it’s the copious use of acronyms (LTD, ASO, TPA, NEM, etc.) or lack of transparency about how advisors get paid.
Here are a few common misconceptions dispelled.
Myth #1 – The insurance company holds all the cards.
I started my career at one of the top 3 insurance companies and one of the clients I took care of was a very large construction company who had unique needs when it came to offering benefits to their employees. This organization had all kinds of nonstandard work arrangements, which meant they were also looking for some nonstandard benefits options. The insurance company would not offer flexibility or accommodation on the way they offered benefits. As someone who was trying to support my client, being handcuffed in this way was very frustrating and ultimately led to my decision to become an independent benefits broker. The point of this story is that life is not black and white, nor are businesses, so neither should the programs that organizations use to compensate their employees be.
The good news is that there are more than 160 life and health insurers operating in Canada so there are many solutions available for organizations that don’t fit in the box and need an insurance company or third-party administrator who will work with them.
Businesses offering benefits plans for their employees have the power to choose but must also overcome their own barriers of inattention and inertia and educate themselves. This is particularly relevant as many businesses are struggling to survive and need to revisit how they compensate their employees. Benefit offerings may need to be changed during temporary lay-offs, reduced hours, and severe budget constraints. There are many viable options and also much untapped potential for meaningful benefits plans that enhance employees’ health. Engage with a benefits advisor who will take the time to educate you and do a deeper dive to uncover the right fit for your organization.
Myth #2 - Changes can only be made to the benefits plan at the time of renewal.
Dovetailing off the last point, the changes that workplaces have experienced during the pandemic has required organizations to revisit their benefit plans. The fallacy that the renewal date is a magical date comes up frequently in conversations I have. The truth is that changes to the plan design, changes to the insurance company and changes to the benefits advisor can all be made at any time.
As we are in the early stages of economic recovery, many organizations are looking for cost-saving measures in their benefits plan. Some of these measures are less drastic, such as introducing virtual pharmacy which can maintain the same level of coverage for a lower cost. On the other end of the spectrum, limiting dental, vision or paramedical coverage and lowering coinsurance or maximums are very effective at reducing cost. These reductions will not present catastrophic financial challenges to employees but are definitely a tougher pill for them to swallow due to the value they attach to these provisions.
Enhancements to the benefits which offer additional employee support are another change that has been common during the pandemic. This has been done by supplementing coverage to support mental health such as adding an Employee Assistance Program (EAP) or increasing coverage for psychologist visits, often by redistributing savings found through some of the changes noted above.
If circumstances require a change in benefits in order to reduce expenses or augment the coverage to address specific needs of your employees, a review and amendment can take place at any point in time.
Myth #3 – Benefit plans are set it and forget it.
In today’s economic climate, businesses are running leaner than ever before. Spending any extra time on the benefits plan has becomes a lower priority for HR professionals who have so much on their plates. In fact, according to the 2018 Sanofi Health Care survey, nearly one quarter of employers do not evaluate their benefit plan beyond what is required for renewals
Time spent on education about what’s happening in the benefits plan and a regular critical examination of the program is time well spent for a number of reasons.
· A thorough review of administration practices will identify gaps and oversights. Errors in the administration of the plan can result in significant exposure to liability for the organization, the individual who is taking care of the plan on a day to day basis, and the employees who may suffer the ultimate consequence of not having the coverage when they need it.
· Plan sponsors who are educated about how the financials of the benefits plan works are better equipped to make decisions around budget considerations. Understanding the hidden cost of running the benefits plan (such as the insurers’ admin costs, the pooling fees, the advisor’s commission) enable you to ask your benefits advisor questions that ensure you are paying the fairest price for your plan.
· An analysis of the claims data is a powerful tool to identify the main disease states in the workplace. Over half of employees surveyed in the Sanofi Health Care survey reported having at least one chronic disease or condition, which can have a significant impact on their ability to do their job. With the support of a benefits advisor, employers can mine the valuable data available through their benefits plan and use it to create targeted programs that lead to healthier and more productive workplaces.
Deconstructing these deeply rooted misconceptions about group insurance will equip you to take charge of your benefits program, make better informed decisions and ultimately positively impact your outcomes. If this article has unearthed questions for you, please don’t hesitate to reach out to me and ask.