Chris Hylton, a benefits and HR consultant, gave a presentation on wellness and benefit planning. He discussed types of benefit plans like fully insured, ASO, and flex plans. Joint purchasing allows for more flexibility and customization of benefits. Benefit trends include rising drug costs, especially for biologics, and a focus on health and wellness programs to address chronic diseases and improve employee productivity. Carrier programs use electronic claims submission and audits to reduce costs. Flexible spending accounts and wellness initiatives were recommended.
2. 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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3. 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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4. Financial Arrangements
Fully Insured Plan, prospectively rated
Refund Accounting
Claims Fluctuation Reserves to stabilize
premiums
Returns surplus to client annually
Retrospective Premium Arrangements
Administrative Services Only, ASO
Combinaton of insured plus ASO beyond
specified maximum
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5. 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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6. 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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7. 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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8. 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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9. 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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10. 500 Employee Example
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500
Ees
Estimated
Claims
Insured
Admin IBNR
Insured
Admin
ASO
Admin
ASOAdmin
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: $86,239.69
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11. 1,000 Employee Example
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1000
Ees
Estimated
Claims
Insured
Admin IBNR
Insured
Admin
ASO
Admin
ASOAdmin
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: $138,163.13
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12. 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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13. 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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14. 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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15. 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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16. 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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17. Nature of Business
Affiliates and Subsidiaries
Waiting period for new hires, current ees
Definition of part time work
Disabled employees
Prognosis
DURATION of Disability/Return to Work date
Has Life waiver been accepted
Cost sharing with ees
Name of current carrier
Years with current carrier
What info is required
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18. 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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19. 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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22. 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
$4,119
ActualCost$
Total Benefit Costs Per Employee
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23. 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
$4,836
ActualCosts$
Total Benefit Costs Per Employee - Projected
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29. 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
Prostate
Cancer
Cancer of mouth,
pharynx, larynx,
esophagus, liver
Heart
Disease
Mental
Disorders
Overweight/
Obesity
Tobacco
Smoking
Unhealthy
Diet
Physical
Inactivity
Alcohol
Consumption
Musculoskeletal
Renal
Disease
Source: Ontario Ministry of Health and Long-term Care
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30. 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
Contemplation
Preparation
Action
Maintenance
Completion
Pre-contemplation
Risky Behavior
Permanent Behavior
Change
Source: Mike Humphrey and Erika Van Flein of the University of Alaska.
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31. Health and Wellness Initiatives
EAPs
Wellness Programs
Flexible Spending Accounts
Support Services
On line resources
Work culture
Disability Management
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33. 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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34. 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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35. 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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36. Thank you!
Chris Hylton, MA
CG Hylton Inc.
517– 7620 Elbow Dr. SW, Calgary, AB T2V 1K2
403 264-5288
chris@hylton.ca
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37. CG Hylton Inc.
Employee benefits consulting
Wellness at work
Attendance management
Workshops / lunch and learns
Chris Hylton
403 264 5288 chris@hylton.ca
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38. 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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