Considerations when Evaluating Health Benefits Plans for the First Time

Detailed information about what you can Expect from your Canadian Group Healthcare Benefits Program.

 

 

Comparing Different Benefits Coverage

One of the most common questions we hear, is what kind of coverage can I get with your benefits plans?

The answer: what can’t we get you covered for?

It’s more a matter of what you need, or what you want.

Or better said, what you want to accomplish (for example, retain and attract employees or peace of mind, etc.).

In this resource, we will provide you details on the most common types of benefits coverage, which employees value them the most and who should pay for it.

As an aside, finding answers to benefits related answers online, without having a sales pitch fly at you, is almost impossible… we want to change this.

If you can’t find the answer you’re looking for email us at advisor@nextgenbenefits.ca or book a meeting with us online.

No pitch, just help 😊

The Types of Benefits Coverage

WARNING: detailed descriptions of health coverage, dental coverage, and other benefits coverage, is often extremely boring. We have tried our best to insert lame dad jokes whenever possible to keep you on your toes. But we encourage you not to read this whole article at once without caffeine and/or 10+ hours of solid sleep the night before… on a similar note, if you have trouble falling asleep this resource might be your answer.

Healthcare Benefits

Health benefits include a wide range of items like accidental dental, orthotic shoes, and hearing aids, and although these types of coverage may be important to some, they are relatively standard and consistent in all benefits plans. We don’t want to bog down this resource with too much info so these types of coverage will be left out (again if you want to learn more just let us know!).

The three main healthcare benefits most employees care about are prescription drugs, paramedical services (i.e. chiropractor, massage, physio, psychologist) and vision.

Prescription Drugs

Prescription drugs will make up roughly 70%-80% of your total healthcare benefits premium. They can also have some of the biggest claim costs in your whole benefits program.

Health Benefits Drug Plans

Making up a significant portion of healthcare premium cost and major claim possibility should not be overlooked—it means you need to be extra cautious in the design you choose.

  • Too loose of plan design means higher up-front costs and potentially big increases with big out of pocket costs for employees.
  • Too tight of a plan design can reduce the coverage to a non-benefit in the employees’ eyes and paint you in a bad light.

So not too tight, not too loose (like the pair of white new balances my dad wears) is the perfect prescription drug plan design?

Yes exactly, but more importantly you’ll want to make sure you have the right sustainability tools in place to ensure your employees’ families are protected and the company doesn’t see sudden increases.

In other words, you’ll want to make sure you have the right solutions in place, so you can always keep those white new balances squeaky clean!

Our solutions here are proprietary, and we’re happy to share directly with you, but must be cautious of the competitors who are constantly reading our info to steal our secrets (caught you, Steve 😊!).

The people who care most about prescription drug coverage are generally 40+ years old. They may or may not have existing needs but are entering the stage in life where these needs become more prevalent. Prescription drug coverage can be easily customized, and it’s important that you explore all relevant options so you can find the right fit for your company and your employees.

Who should pay?

Prescription drug coverage is best paid for by the employer, as these premiums are a business expense for the employer, whereas contributions from the employee are made after-tax and government deductions, from their paycheques.

Paramedical Services

Paramedical services commonly cover 12 different professional services - chiropractor, massage, physiotherapy, naturopath, psychologist/social worker/clinical counselor, acupuncture, audiologist, dietician, osteopath, podiatrist/chiropodist, occupational therapy and speech therapist.Paramedical Benefits

(These services have sub-services, and again to spare most readers from what is already a very lengthy document we have left them out. If you want more details on these services we are happy to share them)

So, when it comes to this LONG list of coverage, what does it all mean? What do employees use? What do they care about? And how can the coverage be designed?

The top 3 paramedical services are by far: chiropractor, massage, and physiotherapy.

Some studies show providing access to this type of coverage relieves stress, improves health, and makes employees more productive at work (some studies also show that you can make a study say whatever you want it to).

The fact is, most employees care about these services… don’t believe us? Ask them and then ask their spouses!

Most people care about this coverage, that typically makes up about 15% to 20% of healthcare premiums, and to skimp on it or put in some unnecessary restrictions will do you a disservice in the long-run.

Skimping or unnecessary restrictions include unrealistically low per service maximums (i.e. $40) when the service normally costs $120 and requiring a physician referral for massage.

We are not saying by any means, that certain controls are not good and worthwhile to make sure coverage is not abused/misused and costs are not driven up, but these measures put a painful burden on employees.

Imagine this: you are an employee who has had chronic neck pain from working at a computer. You still have student loans and you are trying to save money to move out of your parent’s house. Visiting a chiropractor to relieve your chronic neck pain is a luxury you just can’t afford.

You hear from your university roommate about the benefits program he has and they are hiring, you are tempted but vow to stay loyal (for now). Then, as if your employer knew you had this conversation, they start a benefits plan. You are thrilled! You can finally get your neck sorted, continue to save, and remain loyal to your employer. You go the next day to your local chiropractor.

You think you are covered 80% up to $500 of these services. The bill comes in at $90 and you present your card, only to find out in the small print you can only be reimbursed up to $40 per service! What a rip! Your employer saved maybe 0.5% by doing this but your coverage is less than great!

Now imagine this: You are a working mother of 3. You’re excited about your new job, the pay is a little better, you have more responsibility, flexible hours, and from what you can see the benefits are comparable to your former job. All is looking good!

You are slammed busy with coordinating schedules, attending all the big events, and doing your job. The tension in your back starts acting up again and you book a massage with the same registered massage therapist you’ve used for years, the only one that’s worked for you. As usual, you present your card, but when they submit the claim after the service you find out there was small print—you needed a physician’s referral!

How in the h-e- double hockey sticks are you supposed to have time to go get a physician’s referral!!! You are a working mom! You thought you had an employer who cared about his employees, your opinion has drastically changed.

With all of this said there is a portion of Canadians who don’t value these kinds of services at all—they don’t believe in them, are weirded out by someone touching them, or simply don’t have the time to go. We encourage you to understand if this is who your employees are, and if they are you may not want to include paramedical services coverage at all - just make sure you know what their spouses think. Their husband could rely on massage therapy heavily or their wife could be a real believer in a chiropractor.

There are typically 3 types of people who value these paramedical services.

  1. Active and fit people who use these services as part of a pro-active treatment and maintenance plan.
  2. People who use it to cope with stress.
  3. People who use it to address existing health challenges (both mental and physical).

Who should pay?

Like prescription drug coverage paramedical services fall under healthcare benefits and are best paid by the employee because of the tax advantages.

Vision

Few benefits can make or break an employee’s perception of a benefits plan like vision.

Vision Benefits

Some traditional brokers will often argue it isn’t worthwhile, as the employer, is virtually paying for what gets used by employees and their families

Although this can be true, you need to ask yourself:

is the purpose of the benefits plan to spend as little as possible or is it to better retain and attract the right staff through a benefits program they care about?

Now we aren’t saying spend spend spend… in fact, the NextGen approach to designing a benefits plan often results in lower costs with higher value!

Case and point vision benefits equate for roughly 5%-7% of your total plan costs but are ranked as a top 4 benefit by employees.

If done properly, meaningful vision benefit coverage can be integrated into your benefits plan by reducing costs elsewhere and heightening perceived value, instead of just tacking an extra 5%-7% to your total costs.

Unless you have a workforce with 20-20 vision (and some companies do), we highly recommend integrating meaningful vision benefits coverage within your plan.

The type of employees who care about this coverage is not surprising, it's those whose family members need glasses and or contact lenses.

Who should pay?

Again, like paramedical services and prescription drugs, it is most tax-effective if the employer pays the premium for vision benefits.

Dental Benefits

Dental benefits are so important in most employees’ eyes that it is often synonymous with benefits.

Maybe its because, unlike other benefits like prescription drugs or massage or vision, everyone needs to go to the dentist once a year.

Or maybe its because your significant other won’t let you sleep next to them anymore.
Or maybe it’s because, as my camp counselor used to say, dental health is mental health!

Who knows exactly? But the point is, employees highly value dental coverage, and only in rare circumstances does an employee benefits program include them.

So, what type of dental benefits exist, and what’s most common?

The most commonly provided dental benefits are usually referred to as “Basic & Routine Services”, which encompasses things like cleanings, oral exams, fillings, x-rays, repairs and fluoride treatments.

For roughly 75% of companies under 15 employees, this will be the extent of their dental coverage - which for most employees and their families is great coverage!

For the other 25%, they will enhance their dental benefits with "Major Dental". Unlike Basic & Routine services that are frequently covered at 80%, 90%, or 100% the highest percentage of a company under 15 employees can usually get for major dental is 50%.

Major dental includes things like dentures, root canals, and crowns.

What about braces? A.K.A. Orthodontia? Unfortunately for small to mid-sized companies it is seldom available from insurance companies, and when it is, it often isn’t worth it – the premium cost is more than the benefit!

If you want to provide something to employees for braces, you can first investigate traditional insurance coverage (you might get lucky!), and if unsuccessful a healthcare spending account on top of a full plan, or as a stand-alone may be the right solution for you.

Dental benefits are valued by almost all employees, especially those with young families. Major dental, however, is rarely of interest to younger demographics, but highly valued by 40+ employees.

Who should pay?

Like all healthcare benefits, the premium for dental benefits is best paid by the employer to be the most tax effective.

Catastrophic Coverage

The easiest way to think of catastrophic coverage, is the lightning strike and god forbid events.

Premature end of life, life-altering injury and/or illness, or a healthcare claim that occurs outside of your province/territory and/or outside Canada.

Health Benefits - Doctor

Life insurance

A few things to note, group life insurance is not meant to be an individual’s sole source of coverage, is often compulsory in the program, and is a relatively inexpensive benefit item, making up 0.5%-1% of most benefits plans for small to mid-size benefits plans.

Typical amounts range from $25,000/year up to 1x-2x annual income.

Your employees don’t care about life insurance because they already have it or they’re young and single you say? A common statement, we have a solution, but again our sneaky competitors read our info to find our solutions (caught you, Adam!).

Contact us to learn about our life insurance solution. Email advisor@nextgenbenefits.ca or book an appointment online.

Accidental Death and Dismemberment

This benefit provides payments for a variety of knock on wood/god forbid events (i.e. losing eyesight or limb, paralysis, etc.) This part of benefits usually gives people the willies so we will leave it here but can easily send you more info if you need it.

Group critical illness is not terribly common for small-mid sized companies, roughly 10%-15% have it, and the amounts usually range from $10,000--$25,000. Group critical illness provides lump-sum payments for a variety of illnesses including but not limited to cancer, heart attack, stroke, and kidney failure.

Disability coverage provides supplemental income to employees if they are unable to work due to illness or injury.

The two types of disability coverage are short-term disability (covering people for a short work absence) and long-term disability (covering people for extended work absences).

An increasing number of small to mid-sized companies are choosing to forgo short-term disability coverage and have employees rely on government programs like Employment Insurance.

When included, short-term disability can have several variances, including:

  • Fully insured
  • Advice to pay (only pay when a claim is made)
  • Varying waiting periods, exclusions, and durations of acceptable claims
  • 50%-66.67% of income replacement with no medical evidence maximums and medical evidence maximums

Long-term disability is the most common form of disability coverage for small to mid-sized companies.

It is important to note that long-term disability claims have doubled in the last 10 years, are becoming more complex (40% are mental health-related), costs for coverage continue to rise, and the wrong long-term disability plan can result in significantly higher costs.

Long-term disability variances include:

  • Varying waiting periods, exclusions, and durations of acceptable claims
  • 2-year own occupation period
  • 50%-66.67% of income replacement with no medical evidence maximums and medical evidence maximums
  • Benefit payable periods ranging from 2 years to age 65

When considering long-term disability benefits you should certainly consider your demographics and industry, but also consider that the average disability claim is 14-months and claims seldom go past two years.

As far as who values these coverages most it tends to be employees with families, those who have a close friend/family member who experienced significant loss, and/or employees 40+ years of age.

Who should pay?

Please note for both short-term and long-term disability, the premium is best paid by the employee to ensure the most tax-effective benefit if needed.

Enhanced Coverage

Disability Management Services

With the significant increase in disability claims (doubled in the last 10 years) and complexity (40% mental health-related) many insurance companies have become overwhelmed, leading to a lack of support for both the employee and the employer and improper acceptance and declines of claims.

The inefficiencies within traditional disability programs are leading to an increased duration of claims, lowered employee morale, and a less productive workplace.

By implementing disability management services, the employee will be better supported during their illness or injury and the employer will be kept better informed and prepared to hire part-time or full-time replacement and/or make appropriate worksite modifications.

The right plan has been proven to reduce claim occurrence and claim duration.

This is so effective that we are often able to reduce disability premiums to cover the cost of the service.

We recommend including disability management services in a disability program to ensure employee morale remains high and to enhance workplace productivity.

Employee and Family Assistance Program

Employee and Family Assistance Programs, sometimes called EAP or EFAP, are work and life well-being programs designed to help employees and their dependents with a variety of issues, concerns, or questions.

These programs provide confidential support and services for work, life, family, health, money, and everything in between. The program includes:

  • 24/7 access to expert consultants for work-life advice, information, and resource
  • Access to counseling
  • Referrals to a network of community resources
  • A secure desktop website full of practical wellbeing content
  • Mobile app for iPhone or Android

You can access these services 24 hours a day, seven days a week, 365 days a year, by toll-free number, online or by mobile app, for support related to:

Life: Stress/Overload, Anxiety, Depression, Grief/Loss, Community Resources
Family: Parenting, Separation/Divorce, Blended Families, Caring for Older Adults, Education
Money: Saving/Investing, Debt Management, Estate Planning/Wills, Home Buying/Renting
Work: Work Relationships, Job Stress/Burnout, Managing People
Health: Fitness/Nutrition, Sleep, Addiction/Recovery, Smoking Cessation

Virtual Healthcare

This is a confidential, online service that provides on-demand access for employees to access primary care providers by mobile phone or computer, when they need it.

This can provide anytime/anywhere, 24/7 365, access to medical assistance so employees do not need to use sick days or personal time to visit the doctor.

Virtural Benefits

By secure text and video with this benefit employees can:

  • Access medical professionals through a mobile app on their phone or tablet
  • Get advice about their immediate medical concerns
  • Get a prescription or renew an existing prescription
  • Get referrals to specialists and other health care professionals
  • Assist in facilitating appropriate in-person care
  • Get medical documentation and notes

Some benefits providers provide virtual healthcare as part of their programs while others charge an additional fee.

Healthcare Spending Account—Is It The Right Affordable Health Plan for You?

When looking for information about group health benefits there is a good chance you came across the term healthcare spending account.

Here is a quick overview of what a healthcare spending account is, show how it works, list the advantages to the employees and employer, and provide answers to frequently asked questions.

As before, we are about to get into the nitty-gritty details, if you would rather us explain the difference to you, schedule an appointment with us today.

What is a Healthcare Spending Account?

In a traditional medical plan, dental plan, and/or extended healthcare plan, the employer pays a set premium each month so employees and family members can make claims up to a certain amount at a certain percentage.

In these traditional benefit plans, the employer pays the set premium regardless if employees make claims.

A Healthcare Spending Account (HSA for short), is an alternative form of group health benefits plan that can best be thought of as a benefits bank account. Costs are due to the employer only when employees and family members make claims.

Just like all group health benefits plans, a healthcare spending account is a tool. Just like any other tool, it has situations where it can be beneficial. There is no use using the wrong tool for the job.

How Does a Healthcare Spending Account Work?

As an employer, you could set a cost limit per employee (i.e. $1,000/year). Then your employees and their family members can claim any healthcare/dental products or services they choose up to the defined amount/year.

This is typically anything that can be claimed on a traditional benefits plan but visit the CRA for more information.

Once this program is set up, you will have real-time online access to see how much each employee has claimed and their remaining balance. Details of each claim are kept confidential to protect the employer-employee relationship.

Your employees and their family members on the plan will also have real-time online access to track their spending, balance, and what is eligible. They will also have ongoing support online and by phone.

Employees find it easy to file claims this way. They or their family member can fill out an online form, or submit a picture of their bill and then be reimbursed (typically within 48 hours).

Advantages to this Program

Employer

  • Only pay for what is used
  • You set the budget & no annual increases
  • Cuts out the extra insurance cost
  • Provide employees with a program they can understand and appreciate

Employee

  • Flexible, spend the money how you want
  • No deductibles or co-pays
  • Can be used to supplement spousal plans
  • More tax-effective than being reimbursed or receiving cash in lieu of benefits

Frequently Asked Questions

Frequently Asked Questions

What happens to unused amounts in the account (i.e. the employer allocated $1,000 to an employee but they only claimed $750)?

Unlike traditional medical plans, dental plans, and/or extended healthcare plans you don’t lose this money! On average 20%-30% of funds are unused and the employer has two options:

    1. Allow the money to carry over to the next year for the employee (max. 2 years)
    2. The unused funds stay with the employer

Can I give different amounts to different employees?

Yes, as long as it is objective, non-discriminatory, and consistent, for example:

    1. Roles and responsibilities
    2. Hours worked
    3. Years of service
    4. Family status

Can I increase or decrease amounts over time?

Yes, changes to amounts can be made on Jan 1 each year

What is the cancellation period?

Just like most traditional medical plans, dental plans and/or extended healthcare plans, 30-days notice with no penalty

Can I add traditional coverage or move to a fully traditional program?

Yes, as your needs change, we are here to support you and your employees

What is the cost?

10% on claims made only, so if someone claims $500, your total cost is $550

Costs are only incurred to the employer when claims are made and if no claims are made there is no cost to the employer

This is preferred to the traditional method; start-up fee & per employee fee as it is almost always lower and more manageable (if interested please let us know)

What types of employees most benefits from a healthcare spending account?

People with low healthcare needs

Active and healthy people

Young single people

Employees who have existing coverage through a spouse

A healthcare spending account can fulfill co-pays, deductibles, reimburse coverage that has been maxed (i.e. massage), and/or be used for services that aren’t covered (i.e. orthodontia).

Our Commitment

NextGen Benefits is committed to providing clients with straight-forward health benefits plans.

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