With decades of group benefits experience, relationships across the sector, and as the leader of one of Canada’s most innovative group benefits risk teams, GroupHEALTH Senior Vice-President of Underwriting Gary Walters knows how to build benefit plans for the future (even the post-pandemic future). We sat down with him to get his thoughts on where benefits plans are going.
1. Can you describe some major trends you’re seeing in employee benefits?
We continue to experience a sustained increase in the use of paramedical services such as massages or physiotherapy. Not only are people using more of these services, they’re using them more frequently. We’re also seeing increases in dental service usage.
A major area of both plan exposure and opportunity is prescription drugs. The financial impact of introducing high-cost drugs is often increased when switching from an old drug to a new and more expensive drug. The reality is that new drugs may have fewer side effects than old drugs – even if that patient has not seen the side effects – and are often more expensive! This is an area of focus for GroupHEALTH: we know that unsustainable plans are the result of uncontrolled plan designs for things like prescription drugs.
One of the interesting trends of a few decades is much greater awareness of, acceptance of, and preparation for, mental illnesses. We see more people making disability claims due to mental illness, which has the effect of driving up disability coverage costs. Fortunately, there is also the opportunity and space for employees to improve their mental health often supported by their benefit plan which provides access to Employee Assistance services, psychologists and virtual healthcare services. Everyone gains from this: employers will benefit from it in the long-term by gaining healthier and more productive employees and also lower disability costs.
What innovation can we expect in the employee benefits and employee benefits plans?
I expect that we will see more benefit plans that provide employers with the means to manage their costs without reducing their coverage. This may include more options for employees to help to manage their costs by providing employees with incentives to choose more efficient or lower cost equivalents: to use their benefits wisely. GroupHEALTH is investing heavily in these solutions – another way we’re transforming the way that Canadians experience benefits.
There are some important operational changes, as well, which also benefit plan sponsors. Paper free options for claims and plan administration improve efficiency and convenience for businesses and their employees. Services like our myGroupHEALTH employee portal offer easy access and significant innovations for plan sponsors and plan members.
We are already starting to see an improved focus on prevention and wellness. This might be the ultimate cost containment strategy! Instead of using their plans to fund a treatment, employers will provide resources and health services to prevent the illness or condition in the first place, keeping employees healthy and productive.
What are the challenges employers face when setting up employee benefits plan for multi-generation workforce? How do they overcome them?
Employers always had employees in their 20s and in their 60s whose needs changed over the time. The challenges is that the costs for the employer vary depending upon the demographics of the employee base. For example, employees in their 60s generally claim more than younger employees. But there is also a difference in the expectation amongst different generations. Benefits plans should be created with the needs of all the age groups in mind.
Forty years ago, the benefits plan was set up for medical needs, mainly reacting to a disease, but this concept of the benefits plan has changed over time. These days benefits plan includes services that may not be medically necessary, strictly speaking, but is often where a younger healthier generation sees the primary value. Because different age groups will use their benefits differently, a good plan design needs to be built for flexibility and adaptability, to ensure that everybody gets what they need.
A good example is so-called flex plans, introduced about twenty years ago to let employees choose the benefits that match their needs – and wants. One of the challenges with flex plans is that employees can anticipate what they are more likely to claim, but they may pay less attention to incredibly important coverage for life insurance or disability income replacement. We need to be careful to keep such insurance in group plans, even if healthier, often younger, employees don’t see the value now. They certainly will if something unexpected occurs!
Of course, wellness and well-being are trending topics these days. If you have a young, healthy employee base that’s encouraged to live well now, it’s fair to assume that, in the aggregate, health impacts will be lower as those employees age. Wellness has such a positive long-term impact on your health, which is why GroupHEALTH continues to invest in wellness solutions, and why we encourage government incentives in this area.