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Wellness and Benefit Planning Chris Hylton Jan 22, 2015
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Transcript of Wellness and benefits planning
Wellness and Benefit Planning
Chris Hylton
Jan 22, 2015
Introduction
Chris is a benefit and HR consultant active with the public and private sector organizations for many years
Former Director of LAPP and Calgary Parking Authority
EAP network with 130 counsellors across Canada
Volunteers with many organizations including Employee Assistance Society of North America and Wellspring Calgary
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Agenda
Types of benefit plans
Advantages of joint purchasing
Next steps
Benefit trends
Happy to take your questions at any time
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Financial Arrangements
Fully Insured Plan, prospectively rated Refund AccountingClaims Fluctuation Reserves to stabilize
premiums Returns surplus to client annually
Retrospective Premium ArrangementsAdministrative Services Only, ASOCombinaton of insured plus ASO beyond
specified maximum
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Fully Insured Plan
Carrier predicts claims based on plan design, your demographics, plus history of your claims
Rates are negotiated annually, and fluctuate with usage and trend
Carrier tries to set a rate that will sustain the claims for the forthcoming year
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Fully Insured Plan
If there is a deficit at year end you can leave
Carrier is stuck with the deficit, but has a claims reserve to help off this
BUT the organization still has to live with the experience, which must be revealed to bidders on the plan
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ASO Plan
Carrier releases reserves and charges a % of claims to process claims
Risk is that the provisional rate will not be sufficient to fund the plan, but this is unlikely to happen, due to the fact that for large groups, EHC and dental claims are very consistent
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Cost Savings with ASO Plan
Administration & claims processing charges only, no profit built in
No reserves
No premium tax of 2%
What are the Risks?
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Eliminating ASO Risks
1. Stop Loss Protection “Ceiling”
2. Out of Country
Protection
Amount can be set at any level e.g. $10,000, $15,000, per year.
Designed to eliminate the risk of a very expensive drug claim
Insurance premium charged for stop loss protection
Protects the plan against an expensive out of country claim
Insurance premium charged for out of country protection
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500 Employee Example
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500
Ees
Estimated
Claims
Insured
Admin IBNR
Insured
Admin
ASO
Admin
ASO Admin
Total
Health $499,375 16.60% 5.75% 14.20%
$82,896 $28,714 $70,911
Dental $479,375 14.70% 4.60% 9.80%
$70,468 $22,051.25 $204,130 $46,979 $117,890.00
Savings: $86,239.6910
1,000 Employee Example
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1000
Ees
Estimated
Claims
Insured
Admin IBNR
Insured
Admin
ASO
Admin
ASO Admin
Total
Health $998,750 12.20% 5.75% 11.70%
$121,848 $57,428 $116,854
Dental $958,750 10.40% 4.60% 7.10%
$99,710 $44,102.50 $323,088 $68,071 $184,925.00
Savings: $138,163.1311
What to do with a Surplus
• Reduce health and dental
rates
• Enhance benefits
• Leave in account to reduce
possible future deficit
• Give employees a “premium
vacation”
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Group Purchasing –
Improved Flexibility
The larger the group size, the greater the
flexibility in offerings
For groups over 100, customization of plans is
pretty much a starting point.
Once groups hit the 250+ range, the idea of
“flex” plans starts to become a possibility. This
is where employees might be offered 1 of 3
Health/Dental options – giving ees choice .
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Flex Plans
Once groups hit the 500+ range (but really,
closer to 1,000 is more realistic), “full flex”
plans come into play.
These provide great flexibility re Life and
Disability options, extensive choice on
parameters within the health & dental
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Greater Plan Maximums
Larger clients spread risk of claim over a
greater number of lives
therefore from a Life and Disability point of
view, both the overall dollar maximum
available, as well as the non-evidence
maximum (NEM), increases with size
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FAQs
Q: Do we all have the same plan design?
A: No, you can maintain your current plan
Q: Do we have the same rates?
A: No, your rates are based on your demographics, job mix, and claim history
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Nature of Business Affiliates and SubsidiariesWaiting period for new hires, current ees Definition of part time work Disabled employees
PrognosisDURATION of Disability/Return to Work dateHas Life waiver been accepted
Cost sharing with ees Name of current carrier Years with current carrier
What info is required
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Info Required – sample
rates last 3 years
Rates Effective Rates Effective Rates Effective
Benefit Jan 1/12 Jan 1/13 Jan 1 /14
Basic Life $0.21 $0.21 $0.27
AD&D $0.05 $0.05 $0.05
Dependent Life $1.67 $1.67 $1.89
Short-Term
Disability
$0.67 $0.73 $0.79
Long-Term Disability $1.29 $1.29 $1.37
Health Benefits
Single $23.17 $35.00 $35.00
Family $42.04 $63.50 $63.50
Dental Benefits
Single $34.21 $32.00 $32.00
Family $55.07 $52.50 $52.50
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Claims History
Long Term Disability
Policy Year Paid Premiums Incurred Claims Loss Ratio
Jan 1/10-Dec 31/12 $0 $0
Jan 1/11-Dec 31/13 $0 $0
Jan 1/12-Dec 31/14 $0 $0
Extended Health Benefits
Policy Year Paid Premiums Incurred Claims Loss Ratio
Jan 1/10-Dec 31/12 $0 $0
Jan 1/11-Dec 31/13 $0 $0
Jan 1/12-Dec 31/14 $0 $0
Dental Benefit
Policy Year Paid Premiums Incurred Claims Loss Ratio
Jan 1/10-Dec 31/12 $0 $0
Jan 1/02-Dec 31/13 $0 $0
Jan 1/03-Dec 31/14 $0 $0
Info Required – claims last
3 years
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Employee Data
Name/Employee
number
Occupation Date of
Birth
Earnings Hire
Date
S/F/Waive Gender Class
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Benefit Trends
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Extended Health Care, Dental, STD, LTD and WSIB costs
The Cost of Doing
Nothing…..
$3,400
$3,600
$3,800
$4,000
$4,200
2009 2010 2011
$3,701
$3,891
$4,119
Ac
tua
l C
os
t $
Total Benefit Costs Per Employee
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How will this change with the impact of an aging population, increase in biologic drugs costs and the increase of chronic health conditions?
The Cost of Doing
Nothing…..
$3,400
$3,800
$4,200
$4,600
$5,000
2009 2010 2011 2012 2013 2014
$3,701
$3,891
$4,119
$4,345
$4,584
$4,836
Ac
tua
l C
os
ts $
Total Benefit Costs Per Employee - Projected
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Trend # 1 – Drug Costs
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25
Continued Impact of Biologic and
Specialty Drugs
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
$5,000 to $20,000 > $20,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
< $1000 $1,000 to $5,000
+ 6.1%
+ 15.8%
Source: Manulife Financial
- 0.3%
+ 1.3%
Biologic and Specialty Drug Spend1:
• Increased from 10% to 19.5%, from 2005 to 2011
• Estimated to account for 25% of drug spend by 2015
Source: 1) ESI Canada
0%
20%
40%
60%
80%
100%
< $1000 $1,000 to $5,000
2005 2007 2009 2010 2011
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Average Drug Dispensing Fee Calgary
Costco $4.48
Sobey's $10.74 - $11.85
Bridgedale Pharmacy $19.63
Wal-Mart $10.62 - $11.17
Loblaw's $9.83
DrugStore Pharmacy $9.75 - $9.99
Canada Safeway $11.19- $11.7 3
Britannia Pharmacy $13.69
Shoppers DrugMart $11.07 - $12.94
Calgary Co-op $10.45 - $11.95
Medicine Shoppe $10.22 - $12.55
Rexall $10.61 - $11.58 26
Trend #2 - Health and Wellness
Programs
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Why? Employee Productivity
Absenteeism
Presenteeism
Stress
Chronic Disease
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Common Chronic Disease Risk
Factors
High Blood Pressure
Type 2 Diabetes
High Cholesterol
COPD
Lung Cancer
Respiratory Disease Cancer of
Pancreas, Bladder, Kidney
Colon Cancer Breast
Cancer
ProstateCancer
Cancer of mouth, pharynx, larynx, esophagus, liver
Heart Disease
Mental Disorders
Overweight/ Obesity
TobaccoSmoking
Unhealthy Diet
Physical Inactivity
AlcoholConsumption
Musculoskeletal
Renal Disease
Source: Ontario Ministry of Health and Long-term Care
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Employee Health Today
Most individuals are stuck in the “pre or
contemplation” stage, High risk
individuals will change health behaviors
given the right coaching. Challenge for
Employers: Engage employees who want
to make this change
ContemplationPreparation
ActionMaintenance
Completion
Pre-contemplation
Risky Behavior
Permanent Behavior
Change
Source: Mike Humphrey and Erika Van Flein of the University of Alaska.
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Health and Wellness Initiatives
EAPs
Wellness Programs
Flexible Spending Accounts
Support Services
On line resources
Work culture
Disability Management
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Trend #3 Carrier Programs
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Paramed e claims
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Ab
Providers
E claimers
% of Total
Optical 700 57%
Chiropractic 550 48%
Physiotherapy 260 54%
Massage 700+ 13%
In 2011, 33% of Extended Health and
78% of Vision 91% of EHB, Vision,
Dental and Prescription Drug claims
submitted electronically by the
provider
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Audit many claims at once
Creates a presence in the provider community
Provides an opportunity to educate providers
Can flag a provider to review all claims
Can remove eClaim rights if necessary
May result in monetary recovery
Paramed / Dentist Audit
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Best Practices
Flexible Savings Account
Health Spending Account (non taxable)
RSP (tax neutral)
Fitness Account (taxable)
Bonus (taxable)
Easy to administer
Great employee satisfaction
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Thank you!
Chris Hylton, MA
CG Hylton Inc.
517– 7620 Elbow Dr. SW, Calgary, AB T2V 1K2
403 264-5288
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CG Hylton Inc.
Employee benefits consulting
Wellness at work
Attendance management
Workshops / lunch and learns
Chris Hylton
403 264 5288 [email protected]
37CG Hylton
Definitions
IBNR – Incurred but not reported claims
ASO – Administrative Services Only
Includes stop loss on Health ($10,000)
Savings – Year One, Year Two would not see the reserve savings, but would see the ongoing Admin savings
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