It’s true, everyone wants a benefit plan and no one wants to pay. It’s like having that fender bender and groaning when the renewal comes up. Insurance was great when it took care of the bills, not so great when the rates come due. Remembering that the purpose of insurance is to mitigate loss, the premiums, in most situations are retroactive after claims, and the increases are spread among the many, so no one company never bears the full burden of covering the entire cost to recover the claimed amount.
A the risk of a groan and to change the conversation, let view benefits from the perspective of an investment. An investment into your employee’s well being, an investment into the corporate entity and the financial security healthy employees will create.
Check out the wedge between health claims used and the expected target for claims. For every dollar paid in premium, $1.69 was returned to the plan members in the form of claims. By any investment scenario, that is an excellent return. Yes, of course the rates were increased, but they were not increased by 70%, not even half that!
Education and consultation is key in these situations. The last two years have been brutal for employers. They have undergone massive employee layoffs, whereby the employees have used every penny allowable under the benefit program prior to termination, leaving those left on the plan to pay the costs.
Moving insurance providers is an option and many have chosen this path. But in the same manner that the current carrier has the 69% return on investment, this change in providers will offer only another year’s grace before an even larger increase is faced and you stand to loose coverage, never mind more money in making the change.
Hidden cost factors include lack of comparable coverage. Is the plan truly apples to apples? And how much time (equal to money) did it take to make this change—new enrolment—new administration—new claiming parameters.
A much better approach is to face and address the issue at hand—employee usage, combined with the plan design offering. How can your broker work with you to design a plan which covers off the essentials, while trimming the fat to bring the costs back in line? A good example, is if massage therapy is the main culprit of excessive claims, how much will be saved in premium dollars by removing the coverage?
We, at MP Benefits Inc. are proud to ‘turn benefits on its edge’ and sometimes that means turning the conversation as well. We’re looking forward to our next “chat”.
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