This article is a guest post shared by our partners at Informa Financial Services.
In early 2023, a study showed that half of Canadian employees planned on changing jobs with 39% of that group stating better benefits and perks as the reason. Gen Z’ers have been vocal about their needs, asking for increased access to mental health support, whilst the overall workforce, via baby boomers, continues to age, with a correlated rise in chronic diseases. It’s imperative that if exploring a benefits plan or looking at a second opinion of a current plan, you align yourself with a broker that can address the needs of today, not five years ago.
What do you and your staff want to get out of a plan?
It’s safe to assume your staff looks to things like massage, physio, psychologists, vision care, dental coverage, etc. The “user benefits.” That said, emphasis should also be placed on inclusive benefits like fertility drugs (IVF accessibility program announced for 2025) , telemedicine, drug compatibility tests, etc.
Tools like an employee pulse survey can be valuable to help gauge your employees’ thoughts towards this piece of their compensation. An experienced broker should be able to assist in designing a customized pulse survey for your staff. You can’t appease everyone, but a survey can paint a high-level picture without greatly altering expectations given a well-worded questionnaire. Your plan helps form part of your total compensation offering, and the setup should, at some level, reflect your organizational identity.
EMPLOYER TIP: There are some powerful plan benchmarking tools--accessible through specific brokers-- to ensure your plan is industry-competitive.
How does an employer gauge a broker’s service?
It shouldn’t come as a shock when I say service is key. Whether you have an existing plan, or it’s your first foray into benefits, you should consider:
- Flexibility in a broker's offering (i.e. pooled plans, exclusive contracts, flex plans, payroll integrations, etc.)
- Do they truly have a pulse on benefits? Many brokers set up a mere handful of plans per year. Ensure that they in fact specialize in benefit plans vs say spending the majority of their time engaged in financial planning. It’s more nuanced than you think.
- Get specific: ask about the concepts of a ‘late entrant’, Fair PharmaCare, inflationary factors, and plan participation requirements. Can they adequately explain these topics over a phone call?
- Value-adds: Access to corporate partners for your business, periodic lunch and learns, etc.
How do I source a traditional insured plan?
An employer can directly approach an insurance company like Pacific Blue Cross, Manulife or Sun Life, but they will simply redirect you to a broker that operates within their channels. At the end of the day, brokers all have access to the same rates, and for the most part, can source the same insurance companies.
Line up discussions with a few agents and decide which one you would like to work with prior to obtaining proposals. If you have multiple brokers going to market, you won’t be comparing apples to apples as they will all come back with variations of what they think is best. It’s analogous to approaching three accountants to do your tax return.
Experience-rated or pooled insured plans?
The vast majority of insurance carriers are non-pooled or experience-rated plans wherein your company is liable for its claims. Thus, plan usage dictates future rates. The advantage of an experience-rated plan, generally, is that they are more cost effective and can perhaps offer a greater level of flexibility in plan design.
On the contrary, a pooled plan, which may have a higher monthly premium, combines your claims with a larger group (i.e. your firm is not 100% liable for its plan usage). Thus, if you’re a group with high claims history, a pooled plan provides valuable rate stability going forward. One such example is the Chambers Plan which is a not-for-profit, pooled plan that insures over 33,000 businesses across the nation. In other words, if you are insured through an experience-rated carrier like Sun Life or Manulife, you can only switch to another experience-rated carrier by sharing your claims history. And, if they trend high, switching carriers, due to your risk, is no guarantee.
Working with a broker who has access to all major carriers, in addition to exclusive access to pooled plans (e.g. Chambers Plan, ICBA, etc.), will maximize your long-term flexibility from a planning perspective.
What is a flex plan?
Early-stage companies looking to roll out their first benefits offering will often take the route of a Health-Spending Account (HSA) and/or Lifestyle Spending Account (LSA), which I will call a flex account. As these structures are simply an allocation of corporate dollars, they guarantee a level of budgetary stability, unlike traditional insured plans, which renew each year at new rates and contain annual caps for things like dental, practitioners, etc. HSA’s offer a great deal of flexibility as they allow for an employee to utilize non-taxable dollars on any CRA eligible medical expense credit (e.g. extended health, dental, vision care). And, when in tandem with an LSA, which are conversely taxable dollars, the structure offers employees the ability to spend their allotment on things like public transportation, gym memberships, child and pet care expenses, etc. If you deem wellness an important consideration, this is one way to address it.
Naturally, you may be curious to ask: what is the downside of a flex account? They don’t address potential catastrophic events, such as would life insurance, long- term disability, and/or critical illness coverage. Hypothetically, if you allocated $1,000 per year for each employee through an HSA, their family could burn through said allocation in a matter of months given a specific medical or dental need.
What’s my opinion? A flex account best acts as a top-up to an insured plan vs on a standalone basis. You could also consider carving out the extended health and dental portion of a traditional plan in a place for a flex plan. This way, you can address your disability and life insurance needs while eliminating the concern for potentially significant year to year rate fluctuations.
EMPLOYER TIP: From an ownership perspective, unlike a raise, an HSA does not attract payroll or employer health taxes.
Canadian benefit plan trends and considerations in 2024?
- Employee mental health: Employee Assistance Programs (EAP) can offer free, confidential counselling for employees to help cope with things like, traditionally, depression and marital problems, to more recently finance, fitness, sleep, legal support and career coaching. It’s all about removing barriers to entry for staff, and a competent broker should help with this.
- Benefit & payroll integrations: Minimize your time administering plans. Products like TANDEM offer a live data integration between Payworks payroll and Chambers Plan benefits.
- Prescription drugs: The move from biologic to biosimilar drugs has helped counteract the cost of rising diagnoses of chronic diseases like diabetes and depression. Look to Pharmacogenetic testing to better contain plan costs.
- AI and benefits: The biggest impediment to adoption is accuracy and confidentiality. Application will likely be seen for fraud detection and data analytics.
- Canadian Dental Care Plan (CDCP): Only available to those, whether through an insured and/or flex plan, who do not have access to an existing dental benefit AND have a family net income below $90,000. It will serve a limited cohort.
- Rate cap’s and guarantees: Rate caps and guarantees are more prevalent than ever. Select providers are offering extended guarantees at inception and rate caps at renewal. These CAN contain caveats so it’s important to read the fine print.
Informa Financial & Insurance Services
Informa Financial is an independent brokerage that has been servicing the Canadian marketplace for over 25 years. Informa’s specialties range from employee benefits, group retirement, individual insurance planning (e.g. life insurance, disability, critical illness) to corporate key person coverage.
