I'm Paying Too Much for My Group Benefits
The amount you pay is typically susceptible to claims by the carrier. The first place to direct the attention is to the claim detail, which will tell much of the story. Some everyday observations are as follows:
- Claims are low, but premiums are high concerning your Company being too small, and the rates are based on the carrier pool and not your own experience. If this is the case, you should consider health spending accounts.
- Claims are high, and upon obtaining more reports, it is caused by one or more high drug claimers. If this is the case, verify the carrier is excluding a portion of the claims above the significant account pooling level. Often, this is not applied correctly by the carrier.
I Have No Idea What My Employee Claims Are
At CEEB, we obtain from all carriers claims experience on a monthly or quarterly basis. Without this information, you can never assess the value of the plan. With this knowledge, we can review the plan and determine the coverage and which type of plan best suits the needs of the Company and its employees.
If we believe changes are required after this review, we do not wait until the end of the policy year. Claims review is paramount to the CEEB analysis and tailored benefit solutions and is a requirement for the carrier to provide benefits to our clients.
I'm a Low-claiming Group but Still, Spend a Lot on Premiums
Claims were $3,500, and the premiums are going from $7,800 to $8,400 for the year. Two of the three have health and dental (a single and a family) and $25,000 of life insurance, and one has life insurance only.
As per the owner, the objective of the benefits program was to give his office person (the family) coverage, and because the insurance carrier would not do a plan for one person, he added his 30-year-old daughter to the plan (single coverage) who works part-time in the business.
The insurance carrier still needed a bit more to consider this a group, so it required each to have life insurance and needed a 3rd person, so the owner went on the for life only. He didn't need "insurance" as he had a plan with his spouse's employer.
I then explained the health spending account solution to his situation.
Even the office manager was $3,000 of the $3,500 – he could give her 300 per month in a health spending account. If she spends $3,000 again, she has $3,600 to use and therefore has $600 left over for another year. If she spends less, she has more to carry over.
Given the history of claims I reviewed, if she has more, it is unlikely that she may use up most of her account, and if that is the case, that is her issue and should not be a burden to the employer. He liked this idea and thought it would work, and I said it would only work if she viewed this as a better plan, not that it got worse, and offered to speak with her and do a needs analysis.
I spoke to her, and initially, she loved the idea. She thought she would not need more and liked the carry-over provision. She then said my only issue with the insurer plan ending is her three kids may need orthodontics in a few years. I alerted her that the current plan does not cover orthodontics. With only three on the plan, they cannot include orthodontics.
Even if they had more employees, the premiums would be more than you would spend, and many plans cap the orthodontics at $1,000 per child lifetime. I went on to say you are getting $3,600 per year, and what you don't spend carries over and assuming you can manage and are now rewarding for careful spending, and you can save for the orthodontics costs. She was now sold.
Even though she didn't ask, I pointed out that the only downside was what if one day she or someone in her family needs $10,000 – $20,000 in prescription drugs, a semi-private hospital room; or needs emergency medical insurance while outside of Canada, which is not provided by one of your credit cards.
She, like many, didn't think that could happen. But I went on to say for $20 per month, you can buy that type of catastrophic coverage should that ever occur. So think of the spendable funds now as $280 per month, not $300 (In fact, the owner later agreed to give her $320, so she nets $300.). If the insurance cost is low enough, everyone should buy it just in case. Once claims are a lot more, there is more due diligence and rationalizing.
I went back to the owner and said his employee is on the side with the switch from a fully insured plan costing his $450 per month for just her to $320 per month plus a 10% admin fee, and what she doesn't use is still hers to keep. He was pleased, and so was she.
I then said what about his daughter and himself. He said, let's give the daughter $80 per month and $10 for the single insurance. He said he has full coverage elsewhere and told him not to burden the business with anything. He did not want $25,000 of life insurance but was forced to buy it.
He turned an $8,400 plus pst cost to $5,500 plus pst cost with a health spending account, and his primary employee was happier than before.
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My Child is Going to School Outside of Canada
Emergency medical and travel coverage plans are perfect for post-secondary students studying away from home, within Canada, or abroad. Even if you have coverage within your home jurisdiction, you may want to consider this out-of-jurisdiction plan so that treatment can be facilitated in the school area and the school term is not affected.
My Relatives Are Visiting From Another Country and Need Insurance
Emergency medical insurance for new arrivals or visitors to Canada is available through various carriers. Depending on your age, length of stay, and required coverage levels, your CEEB advisor can recommend and provide the appropriate policy.
I Need Out-of-canada Travel Insurance
Protect yourself from the unexpected with smart insurance solutions. Many individuals have insurance through their employer.
This group plan may have trip duration limitations. It is essential to know if you are covered. The cost of just one medical emergency while traveling can be overwhelming, and the trip cancellations and delays can cause further strain.
Buying travel insurance is the best way to safeguard your finances when something unexpected happens during your travels. CEEB suggests individual travel insurance coverage meets a variety of needs.
Whether you're a Snowbird, a family on vacation, a cross-border shopper, or away on business, you can travel care-free with emergency medical, trip and baggage.
I Am Incurring a Lot of Healthcare and Not Covered by My Insurance Plan
Most insurance plans do not cover tuition for my child with a learning disability or orthodontics for children (and if they do, only at 50% or to a $1,000-lifetime limit). No matter the shortfall, you can set up a Health care spending account through your Company. You can contribute the amount of this shortfall plus an administration fee into an HSA and make the contributions tax-deductible to the Company and tax-free to the recipient. In other words, you have turned an after-tax event into a pre-tax event, potentially saving up to 30% on the cost.
My Company is Too Small or Just Me, and I Don't Qualify for Group Insurance
Like many Canadians, you are self-employed or have a small business that may be too small for group benefits. And if your size qualifies for group benefits, you are afraid to enter that field due to the unknown costs. You may know the charges today, but if you have a high claimer in your small group, your future costs could be very high. At that point, it is often hard to change the plan.
The easiest solution is to do nothing, and you and your staff pay for health care with after-tax dollars. Or purchase an individual plan with high premiums and limited coverage.
There is a better way. You can have 100% budget certainty with a health care spending account. You set the amount to contribute into the account for each employee, including yourself, and the amount could be different per employee class. An HSA works like a bank account established exclusively for healthcare funds. In this bank account, the employee can be reimbursed for their healthcare spending and purchase if they decide on a drug and catastrophic health insurance plan to protect against the unexpected and disastrous. The minimum size is one employee.
I'm Buying a House and Need Insurance Because I Now Have a Mortgage
The financial institution will often attempt to sell you insurance, which will always be more inflexible and expensive than term insurance from an insurance company. Another disadvantage of buying insurance from a financial institution is the coverage decreases as the mortgage gets paid down, yet the cost remains level. The mortgage is going down, yet you are paying the same premium.
I Have a Traditional Insurance Plan but Have Heard of ASO. Can That Help Me Reduce Costs?
One of the most significant fears of the business owner/CFO of the Company is what the plan would cost in the future. If claims increase exponentially, the premium could increase in relative forms. How can you build budget certainty in the plan? Your options include the following:
- Use a health spending account instead of a more familiar group plan. Unlike your standard group plan, which is sensitive to unknown claims usage. The health spending account is 100% budget certain, and you decide the amount to contribute, which is guaranteed to be your cost.
- Like #1 above, you still have a group plan with only basic limited coverage and a health spending account for greater coverage.
- Most commonly, exponential claims could only be caused by drug claims, as all other coverage areas have inherent plan limits. Therefore drug management is paramount to controlling future costs.
There are many ideas concerning drug management. They would include:
Mandatory Generic
Co-pay – a portion paid by the employee.
Dispensing fee deductible – this is not only to reduce the claims by the dispensing fee but could change buying behavior. It could also be the result of a co-pay.
Drug Maximum
As low a significant account pooling level as possible – most often, this is predicated on your company size—the larger the Company, the more significant ceiling.
A lower stop loss ceiling under an administrative only (ASO) model. Some carriers have a lower ceiling, so the carrier and not your company bear higher claims. The premiums are higher for this protection, but you are increasing budget certainty.
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