"Perspective" in Employee Benefits: From a Professional Practitioner

By Lori Power

On the heels of Insight, an informal reference guide to communicate with employees about benefits, this guide takes a deeper look at how and why Canadian businesses should establish a customized benefit plan.

Though often referenced as if it is single entity, employee group benefits is, in fact, a group of individual insurance products that are grouped together for a group of employees linked through common employment.

Like building a home, benefits form a foundation of insurance for the average Canadian employee – and it’s sometimes their only access to life and disability coverage – not to mention reimbursement for expensive medications. In this guide, get the answers to questions such as:

Why should companies offer an employee group benefit plan?

What steps must employers take to select the right group benefit plan?

What benefits do employees and businesses receive when a group benefit plan is offered?

The author also explores why creating a total compensation package through a well-developed, custom-designed employee group benefits program might be the answer to control costly staff turnover.

Whether you’re a business considering group employee benefits or someone selling insurance who wants to be more effective, you’ll find Perspective a useful resource.

• Language: English
• Publisher: Archway Publishing
• Release date: Aug 26, 2019
• ISBN: 9781480881297

Lori Power

Lori Power is an independent group benefit consultant, specializing in designing strategic employee group benefit plans to align with the corporate, compensation, culture, and wellness policies of each organization she serves. Their diverse needs, combined with engaging with employees from all walks of life, backgrounds, cultures, provide inspiration on the moments and stories which are the tapestry of life. This ability to help and engage is the “why” she does what she does and how this book came into being. Lori Power is the author of several fiction and non-fiction books, a public presenter, educator, creator, zoom caster, blogger and so much more.

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PERSPECTIVE

IN EMPLOYEE BENEFITS

From a Professional Practitioner

LORI POWER

Copyright © 2019 Lori Power.

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the author except in the case of brief quotations embodied in critical articles and reviews.

This book is a work of non-fiction. Unless otherwise noted, the author and the publisher make no explicit guarantees as to the accuracy of the information contained in this book and in some cases, names of people and places have been altered to protect their privacy.

Archway Publishing

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Bloomington, IN 47403

www.archwaypublishing.com

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Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

Any people depicted in stock imagery provided by Getty Images are models,

and such images are being used for illustrative purposes only.

Certain stock imagery © Getty Images.

ISBN: 978-1-4808-8128-0 (sc)

ISBN: 978-1-4808-8129-7 (e)

Library of Congress Control Number: 2019911327

Archway Publishing rev. date: 8/23/2019

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CONTENTS

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APTER 1: How Did We Get Here?

CHAPTER 2: The Fundamentals

CHAPTER 3: Types of Group Plans

CHAPTER 4: Why Bother?

CHAPTER 5: Deciding on Goals

CHAPTER 6: The Scope of Benefits

CHAPTER 7: The Benefit Professional

CHAPTER 8: Benefit Plan Design

CHAPTER 9: What Underwriters Consider

CHAPTER 10: What Happens at Renewal

CHAPTER 11: Liability Issues

CHAPTER 12: The Administrator’s Checklist

CHAPTER 13: Group Life, Disability, and Critical Illness—A Bit More

CHAPTER 14: Leaves of Absence

CHAPTER 15: Travel Insurance

CHAPTER 16: The Contract Worker

CHAPTER 17: Terminating Employees

CHAPTER 18: Coordination of Benefits

CHAPTER 19: Getting to the Heart of the Matter

CHAPTER 20: Employee Registered Retirement or Pension Plans

APPENDIX A: Frequently Asked Questions

PRAISE FOR PERSPECTIVE

Industry vet gives a must read.

There are three groups of people whom I believe would benefit from reading this easy-to-digest book:

1. If you’re breaking into, or looking to break into, group benefits, this book will give you a substantial leg up.

2. If you’re in the business already, Lori’s perspectives on group benefits are clear and fresh. She doesn’t approach problems the same way as everybody else in the business. Her employer-oriented perspective is highly valuable.

3. If you’re an HR person or accidental plan administrator, this book will help you to understand what you are dealing with.

Highly recommended book from an industry vet who has seen it all!

—Jason Watt, Business Career College

An amazing read.

An insightful guide from a true professional in the space. This book is a must have for any advisor in the space!

—Aly Dhalla, CEO, Cofounder, Finaeo Inc.

A must read before implementing an employee-benefits plan.

Lori Power has written a book on Canadian employee benefits, for the small business employer or layperson, where one didn’t exist before. It is written in a blog style format in short sections that makes for light, easy reading.

Although it is Alberta, Canada, focused, this is a great starter book for small employers across Canada who are looking to increase their employee-benefits knowledge. This book is a good starting point, before an employer introduces a plan for the first time, and also for brokers who are new to the business and for support staff in the insurance business.

Perspective covers many of the questions employers (and employees) ask and often references them again in different sections to ensure the reader gets the message. There is a lot of extra information useful to employers that go beyond just the benefits basics. Topics that affect the employer and employees on issues around HR, taxation, and legislation are covered, as is information of interest to any Canadian health consumer.

—Dave Patriarche

Great resource for anyone looking to take a second look at plying their trade in employee benefits as an advisor, as well, a relatable treatise for owner/managers and HR professionals in general. The contents and tone match the author, who is personable and deeply committed to the industry and the success of companies seeking to make informed decisions about their plans whilst maintaining control.

—Carter Walter

DISCLAIMER

The following information is for general reference only. It is not intended as legal or tax advice. You may or may not be affected by any or all of these issues. Changes to interpretations, conventions, legislation, or individual company policies may affect these guidelines. Please check with your insurance provider, lawyer, accounting, or human resources professional for further information.

This is not a peer-reviewed journal, a sponsored publication, or the product of editing. While the ideas and thoughts are often vital, pertinent, and relevant to the employee group benefit marketplace in Canada, specifically Alberta, the views, opinions, and experiences represented are just that—view, opinions, and experiences—and they belong solely to the author and do not represent those of people, institutions, or organizations the author may or may not be associated with in a professional or personal capacity, unless explicitly stated. The views and opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

In no particular order, all content provided is for informational purposes only. The author makes no representations as to the accuracy or completeness of any information found by following any links. The author will not be liable for any errors or omissions in this information or for the availability of this information. The author will not be liable for any losses, injuries, or damages from the display or use of this information.

This content is dynamic and subject to changes from insurers, regulators, provincial governments, and parliament. The content expressed today may in fact change over time, including the author’s views, opinions, and experiences.

The author is not responsible or liable for anything anyone says in comments. Because publishing content is global, note that this book was developed based on Canadian content unless referenced otherwise.

This book is for reference purposes only and by no means represents a legal document or counsel and should not be seen as such. Always consult legal and accounting advice.

INTRODUCTION

Cash may be king, but benefits are essential. Employee group benefits as a compensation tool are imperative to attracting and retaining top-quality staff. The tax advantage is something no employee can achieve on their own without a corporate structure. Utilizing a valued benefit plan strategically will lower employee turnover, reduce training costs, and create higher productivity and ultimate success for the business.

Many corporations believe that once a plan is in place, the work is done. Not so. Just as the business evolves and grows or changes over time, so too must the benefit plan to meet the complex needs of an ever-changing workforce. This book is designed to facilitate conversation, engage employees, improve existing coverage, and provide clarity to pricing.

As the saying goes, you can’t measure what isn’t tracked, but in benefits, often it is the case that employers don’t know what to track. Perspective will assist in clarifying the various components of a benefit plan—the options, the choice, the flexibility—combined with the necessities and wants for coverage. Through this basic understanding, it is hoped that employers, plan administrators, and human resource professionals will be better equipped to understand the underwriting and price points used by benefit providers and insurers and thereby measure the performance of the plan and be better prepared to tackle the discussion of cost.

Author Lori Power has been involved in the employee group benefit arena since 1998, first as a service and administration processional, then becoming a fully licensed practitioner in 2001, and then incorporating MP Benefits Inc. in 2004.

A former journalist, Lori is a published author, both fiction and industry, a blogger, and a public speaker who has been featured on insurance-related podcasts and accredited webinars for empowering advisors to better service their clients, for "we must work together to elevate the insurance industry."

Having worked with large corporations, franchises, associations, and block plans from one coast to the other, she loves working in the small to midsized market, directly with the owner, to create customized programs specific to their business. Knowing the ins and outs of meshing various benefit options to develop a unique plan design is a key component to her success in the benefit marketplace.

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CHAPTER 1

How Did We Get Here?

Whether or not it’s important to know which privately owned company took the first step into the great divide and purchased an insured benefit plan for its employees, it is important to know why. From the first policy purchased to now, one thing remains intrinsic: the benefit plan should bridge the ever-widening gap between what our social network offers Canadians and our actual medical-care needs.

From the late nineteenth century through two world wars, the Great Depression, the baby boom, and countless recessions, Medicare in Canada has been a political hot topic.

Trade unions were the first to represent, defend, and demand better working conditions. Out of their activism emerged the Workmen’s Compensation Act passed in 1914 in Ontario. Western farmers, in the 1920s and 1930s, were the first to organize health care cooperatives to finance additional health care costs in their communities without any government involvement.

Then, in 1947, Tommy Douglas, premier of Saskatchewan, brought the first publicly funded hospital insurance plan to Canada. What followed were introductions, refinements, improvements, and expansion to the web of our now elaborate social programs offered to each and every Canadian.

However, private companies always knew fair is not equal, and equal is not fair. No government-sponsored plan would ever be able to pick up 100 percent of the bill. And so they haven’t.

Medicare, though, is considered a cornerstone of the Canadian identity, granting access to health care based solely on need. And all members of society share the cost of that care. Ideally, this public health insurance system would cover virtually all of the cost of medically necessary, in-patient hospital care, diagnostic tests, and physician services for every Canadian, regardless of age, income, or province of residence. However, universal public health insurance ends as soon as a patient is handed a prescription to fill or leaves the hospital ward or doctor’s office.

Hence the evolution of the employee group benefit program.

But has there been an evolution?

Let’s consider.

Via Section 6(1)(a) of the Income Tax Act, the federal government determined it was in the public’s best interest to encourage employers to provide certain benefits to their employees through nontaxable health and dental services (outside of Quebec), with the employer costs of the plan a business expense. And so it came to be in the 1970s and 1980s that employers offered a comprehensive benefit plan that included life insurance at typically 100 percent of salary, long-term disability coverage, pharmacy, health, and dental care. Pharmacy and health care were offered at 100 percent, while vision may be subject to $200 every twenty-four months, and basic dental services subject to $1,200–$1,500 per person annually.

Fast-forward to the current day. In many cases, life insurance has been cut to $25,000. Pharmacy is typically offered at 80 percent, with loads of restrictions and definition limitations. Vision care—if it’s even offered—remains at $200, perhaps $250, every twenty-four months. Dental, by and large, is still offered with these same maximums. Is that to say the costs of these medical services have remained the same the last four decades? Hardly.

The following are according to a Lynch national survey:

• One in ten Canadians can’t afford the medicines their doctors prescribe.

• Sixty-six percent of doctor visits result in a prescription.

• Canadians are four times more likely not to fill prescriptions if they have to pay out of pocket.

Granted, technology has enhanced the claims-processing timeline, even if the coverage itself has not changed and is often diminished. There are fresher options available, including health spending accounts (HSA) and administrative services only (ASO) for the self-insured. Employee assistance programs (EAP) and critical illness can be added to the menu of available coverage. Still, only about 30 percent of Canadian employers have customized their benefit plans while still toting the benefits as a means to attract and retain employees, all the while not recognizing the change in diversity that has eclipsed the previous workforce that the original idea of benefits catered to.

Understandably, the hesitation comes from the expenditure presumption and employers’ apprehension to take on these costs. They, like everyone else, know that private health care costs in Canada have grown dramatically over the last forty years. Diversity, population growth, and inflation have meant an increase of more than 220 percent to the bottom line. No small figure. Yet offering a flexible, customized, original plan does not have to break the bank, and often it is a means of controlling costs. And achieving this does not mean the implementation has to be complicated or time-consuming to administer.

What may be the culprit in the lack of dimension to the offering is that practitioners—professionals selling employee group benefits—are not specialized enough to recognize that the very product they are placing is, by current definition, antiquated. These people place set-it-and-forget-it plans—yes, quickly forgotten and considered lacking by the employees.

In my opinion, group insurance is an industry saturated with dabblers professing to be experts. To be an expert, this professional must illustrate special skill or knowledge in the particular field and have the recognized credentials. But many of those today claiming to be benefit experts hold employee group benefit clients at less than 30 percent of their overall professional block of business. When choosing a specialized doctor, would you pick one that only specialized in your area of concern less than 30 percent of the time?

Hardly.

Benefit premiums amount to billions of dollars collectively in any given year, according to Statistics Canada.