One of the trends in the insurance industry this year is the anticipation of rising costs of employee benefits.
Why are benefit costs increasing?
The main reason for the rising cost of employee benefits is because of the skyrocketing costs of specialty drugs. Many of these specialty drugs are new to the market in the last five years and are now starting to affect insurance premiums. Insurance companies do not want to take on the risk of expensive drugs used to treat cancer, rheumatoid arthritis, multiple sclerosis, and other complex illnesses.
Most experts believe that the increased costs of benefits will be an ongoing concern for employers. Rather than fret about how you will be able to continue offering competitive employee benefit plans, call our Edmonton employee benefits advisors at 1-780-437-5070. We will be able to offer you creative solutions for reducing the costs of employee benefits.
In this article, our Benefit Strategies advisors will discuss several solutions on how to deal with benefit cost increases.
1. Apply a cap to the drug component of your benefits plan.
Since we know that the rising costs of employee benefits are due to the rising cost of specialty drugs, many employers are placing a cap on the drug component of their employee benefits plan. Many Canadian provinces offer government plans to cover specialty drugs. For example, Alberta Health offers health benefit plans for eligible Alberta residents. In British Columbia, PharmaCare exists for eligible BC residents.
Many employee benefit plan providers are willing to help employees get access to these government programs in the case of unforeseen circumstances.
2. Check out Hybrid Health Spending Accounts.
You no longer have to settle for a defined employee benefits plan or a defined contribution plan. You can have the best of both worlds with a hybrid health spending account, a model that combines a traditional benefits plan with a health spending account. Hybrid employee benefits plans work great for small businesses who buy plans according to their specific needs while limiting employee benefits costs increases.
3. Pay what you actually use with an ASO Insurance Plan.
Many companies who plan to offer employee benefits for the long term are choosing Administrative Services Only plans or ASO Plans. ASO insurance plans are flexible, allowing the employer to fund the plan that is administered by a third party. At the end of the month or year (depending on the ASO plan), the administrator will calculate actual claims and either refund the employer (if the plan was underused) or bill the employer for any overage.
Over time, these ASO insurance plans are often more cost effective, although some businesses may be reluctant to use them because of unpredictable monthly claims.
4. Understand the reasons for your increasing benefits plan costs.
As your benefits plan broker, Benefit Strategies can help break down and explain the rising costs of your employee benefits plan. For instance, many times the benefits costs increases are occurring because of claims made by spouses and dependents. Once we identify the reasons behind the rising costs we can likely help provide several solutions to minimize any further cost increases.
5. Shop around among different insurance benefits brokers.
If you feel your benefit plan premiums have increased too much you can collect quotes from other insurance benefits brokers. Most of the time it is more beneficial to stay with your company and ask what they can do to lower your rates. At the same time, by making yourself aware of the competitive plans and pricing available on the market you are being a smart and informed consumer. Even if you don’t end up switching providers, you will have the peace of mind that you aren’t paying more than necessary.
About Benefit Strategies
Benefit Strategies Inc. has been providing employee benefits advice to businesses and corporate clients throughout Western Canada for over four decades. Let us help you find creative ways to save money and minimize the rising costs of employee benefits plans.
To learn more, please call Edmonton’s Benefit Strategies Inc. at 1-780-437-5070 or send us an email.
You might also our article entitled Budget Employee Benefits for Small Business.