Oversight, accountability and monitoring essential when using benefits providers
Canada Life is facing financial sanctions from the federal government, in response to months of complaints from Canadian public servants and their families living abroad after the insurance provider took charge of their health benefits.
Government workers have been “fighting” for their medical claims to be covered by the company, while complaining of delays and errors, according to reports by CBC.
"It's the responsibility of the employer, and it's time they find a way to fulfil it," a representative of foreign service officers told CBC. "We haven't ruled out any legal options at this point. Everything is on the table."
The complaints against Canada Life began almost immediately after the federal government took it on as benefits provider in July 2023. By December, representatives of Canada Life appeared before the standing committee on government operations and estimates to apologize for providing poor service.
More oversight needed when investing in group benefit plans
A common mistake that employers make when investing in group benefit plans and premiums is lack of oversight, says Michael Wolpert, pension and benefits lawyer at Fasken in Calgary.
“Employers spend a lot of time on governance of their pension plans, which is always sort of front and centre, and their legislative requirements and so on, and it's very highly publicized,” he says.
“But considering what they spend financially on group benefit plans, in terms of premiums and so on, and the importance to [employee] attraction and retention, I think they spend relatively little time on oversight of group benefit plans, at least in the same way that they do on pension plans.”
Monitoring, accountability and reporting are basic principles of oversight that flow from contractual arrangements, Wolpert says, stressing the need for employers to pay close attention to those arrangements and ensure there are appropriate service level agreements in place.
It’s common for insurers to contract services to third parties, making it equally important for plan sponsors and employers to be aware of the nature of relationships between the insurer and those parties, he says, in terms of “how those services will be monitored by the insurance company, and what they will do if things go wrong – how quickly they'll respond, how quickly they'll inform the employer.”
Slow response to employee complaints damages employment relationship
The slow response, which the government said was due to prioritizing collaboration over enforcing financial sanctions, should never have gone on that long, says David Hannah, professor of management and organization studies at the Beedie School of Business in Vancouver.
Repairing employee trust by immediately addressing complaints should be the priority when service fails, he says.
“As an employee, you want to know that your employer is on your side in this situation, and that if you bring forward a reasonable concern to someone, your employer is going to listen and take the appropriate action,” Hannah says.
“If you don't even know who to bring the concern to, that's a problem; if you know who you're supposed to bring the concern to, but you don't feel psychologically safe doing it, that's another problem.”
Our members have been living a nightmare. Take Kari who continues to face mental and financial issues ever since the transition to Canada Life Insurance. Our members deserve to be compensated for the damages caused by this transition. https://t.co/jjfb364dCt pic.twitter.com/AI7rXHSoZv
— PSAC-AFPC (@psac_afpc) April 25, 2024
Ideally, health insurance plans shouldn’t become a human resources issue, Wolpert says, but when there isn’t clarity around who is accountable for levels of service when third parties are involved, and who will monitor service and take steps to solve problems, it will come back to the employer to deal with the fallout.
“Even if it's not the insurance company itself that was having issues, it's still going to reflect badly on the employer,” he says.
“Benefits shouldn't become a big HR issue, really … they're designed to enhance the employment relationship and to help with attraction and retention, so when things go wrong, there's that HR risk, and potentially financial risk, for a sponsor, so the more they can do up front to anticipate what might go wrong and do whatever they can contractually to minimize those risks is helpful.”
Open communication, employee feedback crucial for benefit plans
Canada Life had a six-month transition period after the federal government switched to its services from Sun Life; after that time elapsed, the government could assess the level of service against the $514-million contract.
Until the sanctions were imposed, members of the plan continued to complain of poor to no service, including denied claims without explanation and long waits for refunds which often did not arrive, or came in incorrect amounts.
Finding this lack of response to employee complaints “a bit puzzling,” Hannah says that such failures can be damaging to employee trust.
Taking proactive approaches such as focus groups, feedback and opening other lines of communication between employees and employers is integral to preventing problems from blowing up into large-scale and even public crises, says Hannah.
It also includes gauging whether employees feel psychologically safe enough to bring their concerns forward in the first place – especially if they are not members of a union or otherwise represented.
“You should be listening to your employees. And if they tell you there's a problem, look into the problem,” he says.
“It’s [about] listening to your employees, being responsive to their concerns, and then being transparent about what has happened and what you're doing about it.”
