There are many reasons why employers consider switching group benefits providers. Perhaps the level of service and flexibility isn’t meeting the company’s needs. Maybe the employer doesn’t like the technology, or it could be price.
Whatever the reason, it is essential to work with a carrier that meets the company’s needs and understands its philosophy when it comes to group benefits. If the carrier is falling short, it’s time to review the options on the table.
There are several steps and questions to consider:
• Fully understand the pricing. The bottom line may reflect overall savings but will the premium quoted cover the claims plus the expenses? Were marketing discounts applied to win the business that may be recovered at the end of the guarantee period?
• Once the employer is comfortable with the rates and expenses, conduct finalist meetings with the top three or four carriers and the incumbent.
• In the finalist meetings, rate the carriers based on a number of values including: financial stability, technology, products, service, price, flexibility, plan provisions, assistance with implementation, innovation, effective early intervention and disability management, and clear, concise communication materials.
• Once a vendor has been chosen, work with it to create an implementation schedule outlining all dates and steps and who is accountable.
Top 10 questions
But before a company makes a final decision, the following 10 questions should be answered.
How can the carrier guarantee the rates and expenses quoted will remain in place after the change? When a group program is first put in place, the insurance carrier should honour the rates and expenses for a period called the “guarantee period.” However, the carrier has the right to redo the quote if demographics, plan design or the funding mechanism changes, or if the quotation time period has expired.
Should the employer consider transferring claims history? Transferring pertinent claims history prevents employees and dependants from claiming again outside the proper time period. For example, vision care is covered once every 24 months and orthodontics has a lifetime maximum. Without transferring some of this history to the new carrier, employees could successfully claim for vision care earlier or claim again under orthodontics.
What protection does the employer have if the group plan incurs a large health-care claim? The program should have a stop-loss level in place under the health-care benefit, such as $10,000 for any large claims such as drugs or out-of-Canada claims. This will help in limiting exposure to large claims.
Is there a dedicated service team to contact? Ensure the carrier has a proven record of service. Where is the service person or team located? Will a dedicated claims adjudicator be assigned to the account? Is there a call centre and what are the hours of operation?
What type of user-friendly technology does the carrier offer? Some insurance companies have invested heavily in online claim and administration systems, offering online claim tracking, direct deposit of payments, health-risk assessment tools or drug identification number look-up for prescriptions — value-added features that many employees and plan administrators appreciate.
What online information and reports are available? Can the contract, booklets and claim forms be accessed online? What other tools are available to help educate employees on becoming wiser consumers and improving their overall health and well-being?
How does the carrier respond to industry trends and developments regarding legislative and administrative changes? Many carriers provide regular newsletters, wellness issues and other topical bulletins to keep employers informed.
Does the carrier outsource all or part of its technical support, administration, rehabilitation or claims services? Find out how this may impact the overall service and administration of the group program.
What quality assurance, adjudication controls and peer review processes are in place? As an employer, make sure: claims are paid accurately and on time; booklets, amendments and the contract are correct the first time; and quality assurance programs are an integral part of how it runs its business.
Ask for references. Be assured the carrier will deliver on its promises.
The cost issue
One of the most common concerns is cost. Employers are surprised to learn that, often, the largest cost is communicating the change to employees. HR should spend a great deal of time and effort organizing and implementing the communication about the change — from providing notice to employees to assisting with new enrolments and beneficiary updates to distributing welcome kits and hosting communication sessions.
There is also the time involved in reviewing the new application (sometimes 30 pages long) and the training for a new online administration system and employee portal, which all add up.
Another popular query is “When can I make a change to another carrier?” Employers can change carriers at any time unless there is a union agreement that does not allow for change without their approval. Written termination notice of 30 to 60 days typically must be provided. But remember to leave plenty of time for a proper enrolment and changeover in order to receive new pay-direct cards and booklets and to be in a claims-paying position before the effective date of the new plan.
A last word of caution — concentrating only on price may not be in the best long-term interest of the company. Group benefits programs are an important component of an overall compensation package, so make the experience a positive one.
Penny Zanussi is a principal consultant with Cowan Benefits Consulting in Cambridge, Ont. She can be reached at firstname.lastname@example.org or (800) 609-5549 ext. 51404.