No one has a crystal ball to accurately predict what the world of business will look like after this time, but when it comes to insured employee group benefits, we can use past experiences to make a strategic plan for the future.
Lessons learned from COVID-19 to date:
- The importance of Out-of-Country emergency travel medical for more than just claims, but also for evacuation, extension of coverage times and trip durations
- Hour requirement for benefit eligibility
- Extending disability during a temporary layoff
- The importance of having short term disability over a reliance on Employment Insurance (EI) Sickness Benefits
- The absolute necessity for benefits to coordinate with employment standards
- Financial challenges for premiums and benefit continuance, and tax issues
- The ability to defer renewal adjustments (any increased premium missed will not be recovered by insurers)
- Ability to amend the benefit plan as needed
- Virtual care for paramedical and psychological services
- Having an Employee Assistance Plan in place for the traumatic events
What this means for cost preparation moving forward:
Trends on claims will need to be monitored over the long term to truly assess the impact to price, but here is where we see the price points being focused.
- Like nothing else, pandemics shine a bright light on mortality and show us that death does not come with any plan, nor does it segment by race, age, or region. Life Insurance on a group plan is part of “pooled” pricing which means the death of a plan member within a specific organization will not conversely impact pricing; instead, the cost impact will be determined based on the loss of life on a national level.
- Short Term Disability during COVID-19 has been an essential component of protection for employees who were either medically quarantined or contracted the virus. Rather than having to wait for the lag time with EI, employees were covered from the first day of impact, through to recovery, based on their own salary, on a non-taxable basis (provided the employee paid their portion of the premium for this benefit).In light of the immediate need of this coverage, rates, based on usage, can be expected to increase for those plans offering the benefit. The extent of usage is yet to be determined as we move through the crisis.
- Long Term Disability, like Life Insurance, is a pooled benefit and is reliant upon national claims experience. However, aside from actual claims, there are other factors to consider when pricing long term disability:
- As interest rates drop, premiums must be increased to make sure an insurance carrier’s long-term financial commitments are properly funded.
- Without a doubt, claims duration will be negatively impacted by COVID-19 – people simply can’t get to the medical community the way they need to for medical treatment, support and documentation.
- With Service Canada’s doors being closed to the public and a high volume of employment insurance claims, getting CPP/QPP offsets approved will delay the application of offsets to LTD claim payments.
- The return-to-work plans are challenged in a work from home environment or where there are no other options to work—temporary layoff—business restricting after COVID-19, etc.
- How long Canadian deal with pandemic of COVID-19 will be a significant indicator to the impact on Extended Health Care Certainly, there has been an immediate decline in the non-pharmaceutical claims, while drug claims remain consistent. BUT this trend is likely to change rapidly with virtual tools for paramedical procedures, combined with the re-opening of clinics and provider services. Clinics may choose to extend hours to make up for lost time and this could create a potential spike in claim submissions
- Dental offices are obviously dramatically impacted by COVID-19 as they only remained open for emergency services. Of course, the longer the pandemic, the more significant dental emergencies will become. Additionally, once dental offices re-open there will be a flood of participants to get in and this will increase utilization on the benefit plan.
As always, each renewal will be treated on a case by case basis and negotiated based upon its own merits.
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