Managing benefits effectively comes down to three basic considerations
Organizations need to be experts in how to run their business — whether it’s fasteners, auto parts or water purification. But they can’t be expected to be experts when it comes to managing benefit costs or plan design strategically. That’s why they need to make sure they leverage the expertise and experience of their partners, including consultants, brokers and insurance carriers.
Managing benefits effectively comes down to three simple considerations. Are the partners providing a plan that can fulfil what they want to accomplish? Are they managing the day-to-day workings of that plan the way it was designed? And, finally, are they making use of the information they learn from the plan so they can make it work better for both the organizations and employees?
Developing the best plan
Why does an organization sponsor a benefits plan? Is this something it has thought about recently or has the plan been in place for years “just because”? While it’s true organizations will have a tougher time recruiting and keeping employees if they don’t offer some level of benefits, most service partners say it’s a mistake to think about the benefits plan in isolation.
The last few years have shown that the best employers position their benefits as part of a total compensation strategy. Perhaps one employer offers top-of-the-line benefits because that’s where they invest their compensation dollars. But another may choose to offer more basic benefits because they’d rather invest in an on-site daycare centre to better meet the needs of the employee population. Still another provides only core benefits, such as life and disability insurance, and leaves it up to employees to choose what else they want to buy. In this instance, the employer would provide credits in a health or lifestyle spending account and offer a range of options, including health, dental, additional vacation, pet insurance, gym memberships and whatever else might be attractive and feasible for employees.
At this design phase, a benefits advisor can help employers clarify what they want to achieve and how best to go about doing that. The employer can articulate the corporate vision and values, while the advisor can be objective in helping them rank the priority of their business objectives. Once this is done, it very quickly becomes clear which approach is best suited to accomplish them and to identify where the current program may be missing the mark.
Ultimately, having the best plan may not be the right option for every employer because “best” is subjective and putting all the money into the benefits plan may mean creating a serious shortfall in other areas.
Properly managing the plan
But what if an organization has worked carefully with its benefits advisors over the years to make sure the plan is the best one for its business objectives and its employees? Does that mean it can rest easy and focus on other areas? Not a chance.
Even with the right plan, an organization has to make sure it’s looking after that plan and that means making sure it’s running the way it should be. The best way to do this is through periodic claims audits. An organization may decide to audit any of its benefit lines — life, disability, health or dental — and there are two important aspects to the audit process.
First, the audit needs to test the plan design agreed to is, in fact, what has been programmed into the plan administrator’s system. It’s surprising how many times the source of major complaints within a plan can be traced to a small error at the set-up and implementation stage.
A common example of this occurs in reimbursements for paramedical coverage. Health plans are typically designed with some annual limit for this coverage (for example $500). There is often also a co-insurance amount, say 80-20 employer-employee cost-sharing. Now does this annual limit refer to dollars reimbursed to the plan member, representing the 80 per cent of the total claim amount, or does the $500 limit apply to the total claims for the year? If it’s the latter, the amount paid out to members is capped at $400 annually, resulting in plan members having to pay $100 out of pocket. The difference can cause a lot of dissatisfaction among employees.
Second, the organization needs to ensure claims are being adjudicated correctly. Claims adjudication seems like it should be straightforward (and an amazing amount of it is automated) but small errors can have a big impact from both the perspectives of cost and employee satisfaction. Small legislation or plan design changes that aren’t updated in the system can mean the organization is paying for something that’s no longer on its tab, or that it hadn’t envisioned when it decided on this plan. As well, for every employee who correctly challenges what they believe is a mistake in a claims payment, there are probably six more who think the plan is cheap and who blame the employer. The employer, the insurer and the benefits advisor should all work together to ensure changes are reflected in the ongoing operation of the plan and that general industry standards and guidelines are followed.
When it comes to disability claims, audits can be a real eye-opener. Everyone knows these claims have the potential to be long-term and cost-intensive and yet audits often find that options for rehabilitation and return-to-work opportunities have not been fully explored. It’s important to remember that claims audits aren’t a blame exercise or a witch hunt. They’re a practical tool that can ensure the organization and its service partners are working together to ensure the plan is efficient and accurate.
Learning from plan history
After a concerted effort to develop the best plan for an organization’s business objectives, and ensuring the plan is working the way it’s supposed to, there is still more to do. The claims history of an organization’s plan is a treasure trove of information about the general health of the employee population and the illnesses that are prevalent throughout the organization. On a broader scale, it may even offer indications about the Canadian workforce as a whole.
While privacy legislation prohibits the employer from accessing individual claims histories (and individually they wouldn’t be all that useful anyway), it can learn a lot about what’s happening in the organization by looking at claims on an aggregate basis. A benefits advisor could help by analyzing data such as the top 25 or top 50 prescription drugs claimed, employee assistance claims by topic or the top three paramedical claims. What this reveals is whether a workplace has high stress issues, poor ergonomic conditions or even poor ventilation. Looking at the data gives the employer another way of seeing what’s happening in the organization and thinking about its causes.
The real benefit of analyzing a claims history is that once the employer knows what is happening, it may then be able to figure out why. Once an employer knows why, it has the opportunity to work with benefits advisors and possibly others, such as workplace safety specialists, employee assistance providers or pharmaceutical companies, to develop supports and other processes that can improve the health of employees and ultimately the productivity of the organization.
Examples of this in action are quite varied. One Ontario employer decided to take aggressive action in dealing with obesity by choosing to subsidize healthy foods in the company cafeteria such as salads, fresh fruits and vegetables, but not subsidizing fries, chips and pop. In its Windsor, Ont., plant, DaimlerChrysler Canada ran a pilot program in co-operation with Pfizer Canada, the Canadian Auto Workers, the Windsor and Essex County Health Unit and Solutions in Health Inc. that focused on reducing the risk of heart disease among employees. The two-part, 12-month program produced dramatic results with participants reducing their 10-year outlook for risk of heart disease from “moderate” at the launch of the program to “low risk.” Employers can work with their service providers and other industry specialists to develop an approach that meets their situation and needs.
Over the years many corporate HR departments have gotten a lot of mileage out of the phrase “our people are our most important resource” and yet few companies really put the implications of that statement into practice. Historically, time and money have both been readily spent on increasing the durability and efficiency of equipment, and it’s time for that same philosophy to be applied to an organization’s “most important resource.” There’s an enormous amount of data, expertise and experience residing in the minds and systems of the benefits industry service providers and it’s readily available to those employers who take the initiative to use it.
Jacqueline Taggart is a principal in the communications practice of the Toronto office of Morneau Sobeco. She can be contacted at (416) 385-2119 or [email protected].
Managing benefits effectively comes down to three simple considerations. Are the partners providing a plan that can fulfil what they want to accomplish? Are they managing the day-to-day workings of that plan the way it was designed? And, finally, are they making use of the information they learn from the plan so they can make it work better for both the organizations and employees?
Developing the best plan
Why does an organization sponsor a benefits plan? Is this something it has thought about recently or has the plan been in place for years “just because”? While it’s true organizations will have a tougher time recruiting and keeping employees if they don’t offer some level of benefits, most service partners say it’s a mistake to think about the benefits plan in isolation.
The last few years have shown that the best employers position their benefits as part of a total compensation strategy. Perhaps one employer offers top-of-the-line benefits because that’s where they invest their compensation dollars. But another may choose to offer more basic benefits because they’d rather invest in an on-site daycare centre to better meet the needs of the employee population. Still another provides only core benefits, such as life and disability insurance, and leaves it up to employees to choose what else they want to buy. In this instance, the employer would provide credits in a health or lifestyle spending account and offer a range of options, including health, dental, additional vacation, pet insurance, gym memberships and whatever else might be attractive and feasible for employees.
At this design phase, a benefits advisor can help employers clarify what they want to achieve and how best to go about doing that. The employer can articulate the corporate vision and values, while the advisor can be objective in helping them rank the priority of their business objectives. Once this is done, it very quickly becomes clear which approach is best suited to accomplish them and to identify where the current program may be missing the mark.
Ultimately, having the best plan may not be the right option for every employer because “best” is subjective and putting all the money into the benefits plan may mean creating a serious shortfall in other areas.
Properly managing the plan
But what if an organization has worked carefully with its benefits advisors over the years to make sure the plan is the best one for its business objectives and its employees? Does that mean it can rest easy and focus on other areas? Not a chance.
Even with the right plan, an organization has to make sure it’s looking after that plan and that means making sure it’s running the way it should be. The best way to do this is through periodic claims audits. An organization may decide to audit any of its benefit lines — life, disability, health or dental — and there are two important aspects to the audit process.
First, the audit needs to test the plan design agreed to is, in fact, what has been programmed into the plan administrator’s system. It’s surprising how many times the source of major complaints within a plan can be traced to a small error at the set-up and implementation stage.
A common example of this occurs in reimbursements for paramedical coverage. Health plans are typically designed with some annual limit for this coverage (for example $500). There is often also a co-insurance amount, say 80-20 employer-employee cost-sharing. Now does this annual limit refer to dollars reimbursed to the plan member, representing the 80 per cent of the total claim amount, or does the $500 limit apply to the total claims for the year? If it’s the latter, the amount paid out to members is capped at $400 annually, resulting in plan members having to pay $100 out of pocket. The difference can cause a lot of dissatisfaction among employees.
Second, the organization needs to ensure claims are being adjudicated correctly. Claims adjudication seems like it should be straightforward (and an amazing amount of it is automated) but small errors can have a big impact from both the perspectives of cost and employee satisfaction. Small legislation or plan design changes that aren’t updated in the system can mean the organization is paying for something that’s no longer on its tab, or that it hadn’t envisioned when it decided on this plan. As well, for every employee who correctly challenges what they believe is a mistake in a claims payment, there are probably six more who think the plan is cheap and who blame the employer. The employer, the insurer and the benefits advisor should all work together to ensure changes are reflected in the ongoing operation of the plan and that general industry standards and guidelines are followed.
When it comes to disability claims, audits can be a real eye-opener. Everyone knows these claims have the potential to be long-term and cost-intensive and yet audits often find that options for rehabilitation and return-to-work opportunities have not been fully explored. It’s important to remember that claims audits aren’t a blame exercise or a witch hunt. They’re a practical tool that can ensure the organization and its service partners are working together to ensure the plan is efficient and accurate.
Learning from plan history
After a concerted effort to develop the best plan for an organization’s business objectives, and ensuring the plan is working the way it’s supposed to, there is still more to do. The claims history of an organization’s plan is a treasure trove of information about the general health of the employee population and the illnesses that are prevalent throughout the organization. On a broader scale, it may even offer indications about the Canadian workforce as a whole.
While privacy legislation prohibits the employer from accessing individual claims histories (and individually they wouldn’t be all that useful anyway), it can learn a lot about what’s happening in the organization by looking at claims on an aggregate basis. A benefits advisor could help by analyzing data such as the top 25 or top 50 prescription drugs claimed, employee assistance claims by topic or the top three paramedical claims. What this reveals is whether a workplace has high stress issues, poor ergonomic conditions or even poor ventilation. Looking at the data gives the employer another way of seeing what’s happening in the organization and thinking about its causes.
The real benefit of analyzing a claims history is that once the employer knows what is happening, it may then be able to figure out why. Once an employer knows why, it has the opportunity to work with benefits advisors and possibly others, such as workplace safety specialists, employee assistance providers or pharmaceutical companies, to develop supports and other processes that can improve the health of employees and ultimately the productivity of the organization.
Examples of this in action are quite varied. One Ontario employer decided to take aggressive action in dealing with obesity by choosing to subsidize healthy foods in the company cafeteria such as salads, fresh fruits and vegetables, but not subsidizing fries, chips and pop. In its Windsor, Ont., plant, DaimlerChrysler Canada ran a pilot program in co-operation with Pfizer Canada, the Canadian Auto Workers, the Windsor and Essex County Health Unit and Solutions in Health Inc. that focused on reducing the risk of heart disease among employees. The two-part, 12-month program produced dramatic results with participants reducing their 10-year outlook for risk of heart disease from “moderate” at the launch of the program to “low risk.” Employers can work with their service providers and other industry specialists to develop an approach that meets their situation and needs.
Over the years many corporate HR departments have gotten a lot of mileage out of the phrase “our people are our most important resource” and yet few companies really put the implications of that statement into practice. Historically, time and money have both been readily spent on increasing the durability and efficiency of equipment, and it’s time for that same philosophy to be applied to an organization’s “most important resource.” There’s an enormous amount of data, expertise and experience residing in the minds and systems of the benefits industry service providers and it’s readily available to those employers who take the initiative to use it.
Jacqueline Taggart is a principal in the communications practice of the Toronto office of Morneau Sobeco. She can be contacted at (416) 385-2119 or [email protected].
