The oil bust effect on benefits plans is a real cause for concern for employers. The decline of oil prices over these past few years has not only negatively impacted the Alberta economy but it has also had a detrimental impact on employee benefits according to Benefits Canada. This decline has made it difficult for HR departments since they now have less competitive benefits programs to offer in attracting talent.
What Is Driving Up Costs?
Instead of reducing the cost of employee benefits to the employer, this economic downturn can have the opposite effect. If one spouse or the other is laid off, the benefits plan of the employed spouse then becomes the sole plan.
Employees also tend to increase their usage of a benefits plan if they’re concerned that they might be laid off. They tend to want to purchase that new set of glasses, or get that dental work done before they are forced to live without the benefits.The oil bust effect on benefits is immediate.
Even apprehension about the potential of a layoff can increase the number of visits to psychologists, massage therapists, and acupuncturists. Companies may find themselves in a position of having to increase cost sharing by employees or reducing employee benefits coverage altogether.
Long Term Relief
Long-term relief is only likely to occur when oil prices rebound, and who knows how long that might take. Also, once spouses re-enter the workforce and begin using their own benefits programs again, per capita costs are likely to decrease.
While new benefits proposals from other carriers might offer some immediate relief, you must be aware that benefits rates could very well boomerang back once the economy starts to move again and your first renewal is due.
Do you still have questions about the oil bust effect on benefits? To help you navigate through Alberta’s interim economic crunch and explore better options for reducing employee benefits cost to you, the employer, please contact us online or call our Benefit Strategies advisors at 1-780-437-5070!