'It's going to take affirmative action to keep costs down'
Employers should be mindful of how much they are putting into their group benefits plans for employers for 2024, according to insurance advisors.
Overall, 56 per cent of advisors say that balancing costs and enhancements to their benefits plans should be the top priority for employers, reports The Empire Life Insurance Company.
That number is up 10 per cent from January 2023.
Also, 36 per cent rank cost containment as the top priority – a 17 per cent increase compared to January 2023.
Drug costs are straining benefits plans, and more than 30,000 customers in fully insured plans have annual drug plan costs over $10,000, says Stephen Frank, president and CEO, Canadian Life and Health Insurance Association.
‘Crisis’ situation for benefits
The current situation is a "crisis,” says Mark Sylvia, President and CEO of Empire Life.
"It's going to take affirmative action on it to keep costs down, and it's going to be a complicated battle that's going to involve a lot of different layers of government and employers, insurers and drug companies to make sure we deal with this."
In 2023, the life and health insurance industry provided coverage for over 29 million (or 74 per cent of) Canadians. It paid out $114 billion in claims, equivalent to $2 billion a week, which is an increase of 10 per cent over 2019.
It also paid $650 million for mental health supports, up 10 per cent from 2021 and nearly double the amount paid in 2019.
Employers expect a sharp increase of 5.2% in the average per-employee cost of employer-sponsored health insurance in 2024, according to a previous Mercer report. Diabetes (12.9 per cent) was the largest drug claims category by eligible amount in 2022, according to a previous TELUS Health report.
Psychological services, virtual care and more
For this year, 16 per cent of companies are also increasing coverage for psychological services.
This indicates “an increased emphasis on making sure employees can come to work feeling better, feeling healthy, feeling connected," says Susan Black, president and CEO, The Conference Board of Canada.
She notes that 72 per cent of businesses surveyed have a specific strategy to support mental health and 30 per cent are adopting the National Standard for Psychological Health and Safety.
Health-care system changes and innovation increases are coming in the next decade, notes Frank, and employers must assess carefully what to include in their plans.
"In the next 10 years, there's going to be a huge number of new opportunities, including advances in virtual care, genetic testing, pharmacogenetics, and more. Business owners need to decide whether and how to incorporate these opportunities, and the role of the advisor is just going to get more important going forward."
The majority of employers plan to increase their investment in virtual care over the next three years, according to a previous report.