Ways a Defined Benefits Plan Keeps Costs Contained
An employee benefits plan is like a balance scale – with benefits on one side and employees on the other. If employees use too much of a benefits plan, the scale tips unfavourably. If employees don’t have enough benefits coverage, you’ll see them suffer to keep themselves healthy and well. As an employer, what can you do to keep the scale balanced?
There are several ways to carve out benefit spending through Schueler Group Benefits Corp, such as a defined health care spending account where the employer can set up a spending account specifically for a category (and even a subcategory) of benefits.
Case #1: Controlling Massage Spending
The Issue: A large Extended Health Care (EHC) spending problem was driving up this company’s benefit plan rates. Upon further investigation, the culprit was identified as employees spending too much on massages.
Traditional benefit plans are built on a flat-rate based on employee demographics (age, occupation etc.) and can generally be quite costly. Rates are often subject to go up, especially if a group has a lot of claiming activity. For this company, the overall cost increase to their benefits plan meant that the company was entertaining terminating their benefit coverage entirely.
There’s been a lot of discussion around whether or not massage therapy is a worthwhile benefit to include in a benefits plan. This employer felt it was important and wanted an easy way to carve out their organization’s health care plan to be used solely for massages.
The Results: This company chose to set up a Defined spending account for massage claim submissions only. The company offered their employees $500 per year with a co-pay option of 80%. This means that the employer covered 80% of each claim and the employee covered a fixed 20%.
Not only did this lower the number of claims that were coming through for massages, it also helped employees become increasingly aware of how much they were spending.
Case #2: Providing Coverage for Orthodontics
The Issue: A company offered a very comprehensive orthodontics plan to its employees. They wanted to ensure their employees (or families) who required orthodontic work would have the means to cover it.
Traditional benefit plans have a minimum number of employees required in order to keep a current plan design. In order to sustain their current plan design, this company needed a minimum of 10 employees. Unfortunately, this organization did not have enough employees to keep enrolled in their current plan and would, therefore, lose their orthodontic coverage.
The Results: This company chose to set up a spending account solely for orthodontic claims. Since the plans have no minimum life requirements, this organization had the flexibility to provide this coverage to their employees.
The organization’s new plan does not cost the employees anything extra and it gives the employees the flexibility to make a claim if an orthodontic event does occur.
Case #3: Setting Spending for Medical Cannabis
The Issue: Medical Cannabis has become a hot topic in the benefits world. Organizations are putting drug and alcohol policies in place for their workplace to protect themselves and ensure the safety of their employees at work.
Medical cannabis has been prescribed to treat ailments ranging from critical illnesses to managing chronic pain. A considerable number of insurance carriers do not cover medical cannabis through traditional benefit plans. This organization wanted to ensure that their employees could access medical cannabis if it was prescribed by their physician.
The Results: This company chose to set up a spending account for medical cannabis purchases and further defined the spending account to only include medical cannabis purchased from a licensed carrier.
Since all plans offer cost certainty, if no charges are put through a spending account, the employer can use those same funds in the following years.
Get in Touch with us!
These are just a few of the exciting ways that a defined plan can work, but the opportunities are endless.
To find out more, contact Randy Schueler and his team at Schueler Group Benefits.