The Beneplan Co-operative
NSARG Meeting: February 18, 2016
Feb
ruar
y 2
016
Benefits Legal Update NSARG Meeting: February 18, 2016
Feb
ruar
y 2
016
Practical strategies used by Fortune 500 companies NSARG Meeting: February 18, 2016
Feb
ruar
y 2
016
Negotiating Benefits Premiums with an Insurer
Benefits in the Year 2020
Future Trends & Projections NSARG Meeting: February 18, 2016
Feb
ruar
y 2
016
About Beneplan
The Beneplan Employee Benefits Co-operative
Feb
ruar
y 1
8 2
016
All Rights Reserved
Mennonites
Feb
ruar
y 1
8 2
016
The Original Mutual Insurance Company
The Beneplan Co-operative
• Member-owned co-operative
• Mutual insurance society
• Created for the purpose of leveraging volume to
obtain lower fees on group benefits premiums
• Owners are small & medium employers
• Recovers excess profit from insurance companies
& distributes it to members as patronage
dividends
Sec
tio
n -
01
Benefits Legal Update NSARG Meeting: February 18, 2016
Feb
ruar
y 2
016
Common Reasons for Disputes
• Termination while sick
• Termination without proper notice period (benefits extension)
• Moving carriers without Life & LTD Waivers
• Partial disability & allowing sick employees to work
• Late applicants
• Independent contractors
• Allowing refusal of benefits
• Failing to report NAAW employees
NS
AR
G F
eb 2
016
First: Think Like an Insurer
• Understand the philosophy of underwriters.
• They’re like bees: they’re more scared of you than you are of it.
• Paranoia can actually guide some contracts & policies.
• Group benefits contracts are for employees who are actively at work.
• Why? And why do we care?
• Anything that can go wrong, will. (LTD: Forget to increase salary; CPP
offsets (over-insured LTD), etc
NS
AR
G F
eb 2
016
First: Think Like an Insurer
• Individual health insurance requires medical underwriting.
• Group health insurance does not require medical underwriting!
• You can have stage 4 cancer and still be put onto the plan.
• The presumption is that you are actively at work.
• If you’re well enough to work, you’re well enough for insurance w/o medical.
• In order to allow this, they are scared of ‘antiselection’.
• Antiselection is the practice of only buying insurance when you need it.
NS
AR
G F
eb 2
016
Feb
ruar
y 1
8 2
016
“Hello, GEICO? I’d like to buy home insurance now.”
Case Study: Brampton Employer
• 100 employees
• 60 year old, loyal, long-standing employee
• Wanted time off but used up all vacation
• Controller gave him an ROE on Dec 1st so that he can claim EI instead of
unpaid vacation
• EE passed away on Dec 23rd
• Insurer declined the claim: “Employee was not actively at work.”
• Widow sued and was settled in pre-trail.
NS
AR
G F
eb 2
016
Takeaway
• Notify your insurer ASAP if you have an employee who will be
not actively at work
• Get a Letter of Agreement (LOA) on that specific time period to
indicate coverage
NS
AR
G F
eb 2
016
Independent Contractors
• Do not add them to the plan
• Let them buy their own coverage
• Adding them can negate their status as independent contractors
• You need to have 2 clients minimum to be a contractor – but
insurance companies require that you are not working anywhere else
to receive benefits.
• Part-time, seasonal and non-permanent employees should never be
covered. Why? To prevent abuse & premium increases.
NS
AR
G F
eb 2
016
Independent Contractors
• Surfer in Hawaii: “I lay bricks in the summer just so that I can collect
unemployment and surf all winter.”
NS
AR
G F
eb 2
016
Independent Contractors
NS
AR
G F
eb 2
016
Refusal of Benefits
• Do not let employees refuse the ‘pooled benefits’
• Life, LTD, STD, CI, AD&D – anything other than health & dental
• Refusal of Benefits Forms / Waivers do not stand up in court
• Judge: “[Employer] ought to have known that the employee did not
understand what he was doing.”
• Case study: Hudson’s Bay Company (Dave Crisp, VP HR)
NS
AR
G F
eb 2
016
Takeaway
• Do not let employees refuse the
‘pooled benefits’.
• If they kick & scream, just pay the
premiums on their behalf.
• Don’t want to set a precedent, as it’s
a slippery slope, but the alternate is
much worse.
• Require it just as you do uniforms
or safety training. NS
AR
G F
eb 2
016
Late Applicants
• Make the benefits enrollment as part of the new hire package.
• Do not forget to enrol an employee.
• Chase the employee for their forms – don’t let them sit on them.
• Why? Medical underwriting, possible declines, possible lawsuit.
NS
AR
G F
eb 2
016
Terminations & Sick Employees
• Never terminate an employee on sick leave.
• Wait until they return to work or end the disability claim.
• Never terminate their Life / LTD benefits while on sick leave.
• The threshold to prove ‘job abandonment’ is extremely high. Must
prove that the employee had a clear and explicit decision to abandon
the job or not pursue the claim.
NS
AR
G F
eb 2
016
Frustration of Contract
• Questionable disabilities
• Own occupation period ends
• The employee refuses to return to work
• The insurer refuses to continue to pay an employee who is not truly
disabled
• What do you do?
NS
AR
G F
eb 2
016
Possible Choices
• Wait until they return to work, then terminate on Day 1
• Bring them back to work full time, allow them to perform or
underperform, and terminate on that basis
• Frustration of Contract (trick – ask an employment lawyer)
NS
AR
G F
eb 2
016
What to do with health & dental?
• There are many cases of employees on LTD for several years, or even
decades, and continue to obtain health & dental benefits.
• Can cause significant damage to claims history and therefore,
premiums.
• Courts found it reasonable to terminate health & dental after 12-24
months on disability.
NS
AR
G F
eb 2
016
Termination: Notice periods
• In Ontario & Quebec, must extend benefits 1 week per year of service
(max 8 weeks) as part of the notice period.
• Federally regulated employees have a similar requirement.
• Common law can be greater: can be months instead of weeks.
• Without a clear termination clause in the contract, it defaults to
common law.
• Takeaway: Have your employment contracts reviewed by an
employment lawyer, including the termination clause.
• Can cost as little as $500, and worth every penny. NS
AR
G F
eb 2
016
Worst case scenario
• Termination clause silent on benefits extension during notice period.
• Employee is terminated and given 4 weeks benefits extension per
ESA.
• Employee diagnosed with cancer in week 5, applies for LTD and is
declined.
• Judge finds the employer responsible for failing to extend benefits
during common law notice period of 3 months in this case.
• Employer had to cough up the LTD money, and can be on the hook
until the employee is 65 years of age. NS
AR
G F
eb 2
016
Moving carriers without Waivers
• What is Waiver of Premium?
• Life & LTD Waivers – why are they relevant?
• Do not switch carriers until you have reported all NAAW employees,
filled out waivers, and received approval for all waivers.
NS
AR
G F
eb 2
016
Partial Disability
• Case study: Promotional materials company.
• CTO developed MS.
• Company needed him to keep working, and he wanted to keep
working – continued like this for 2 years.
• MS is a progressive disease – starts slow and accelerates.
• Partial disability vs total disability.
• Carrier declined the claim on basis he is not totally disabled.
• He has not lost income – remember, LTD is an income replacement
insurance, not pure sickness insurance (such as Critical Illness). NS
AR
G F
eb 2
016
Negotiating Benefits Premiums with an Insurer
Practical strategies used by Fortune 500 companies NSARG Meeting: February 18, 2016
Feb
ruar
y 2
016
Our industry is the only one where you can give a vendor $500,000, and are prevented by law by
proving to you where it went! (Privacy) Feb
ruar
y 2
016
1. Volume = Clout
1.a) Fees, Trend/Inflation, Reserves
1.b) Target Loss Ratio: Over 80%
1.c) Fair IBNR / Reserve is 5%
1.d) Fair Trend is 6% on Dental; 12% on Health
1.e) Broker Commissions: 1% to 12%!
2. Refund Accounting
2.a) Fully Insured vs ASO
2.b) Hybrid Plans
2.c) Life Insurance & LTD Refunds
2.d) RST Recovery
3.) Rebates from Big Pharma
3.) Rebates from Big Pharma
4.) Synchronize with Government Subsidy Programs
4.a) EI Premium Reduction Program
4.b) Supplementary Unemployment Benefit Programs (SUB) – ‘top-ups’.
4.c) Ontario Trillium Drug Program (Oral Chemotherapy)
5) Plan Design Customization - Trim the Fat
5.a) Dental billing codes – eliminate loopholes
5.b) Paramedical fraud – crack down
5.c) Multi-tiered drug formularies
6) Wellness Programs
Benefits in the Year 2020
Future Trends & Projections NSARG Meeting: February 18, 2016
Feb
ruar
y 2
016
Medical Marijuana
Tax-deductible As soon as a DIN is assigned, get ready to start covering medical marijuana
Truvada – Preventative HIV Treatments
Used off-label to prevent HIV infection Clients should ask carriers if drugs like these will be on prior authorization, and further, will they ask if the member has already been infected?
Paramedical Fraud Continuing
What does this mean about sustainability of benefit plans?
Prediction for 2020: Botox Claims on the Rise – Dentistry Administering Botox
“80% of my law school friends have already gotten Botox at age 30.”
Pharmacogenetics
“The right drug, at the right dose, at the right time.”
Thank you.
The Beneplan Co-operative Yafa Sakkejha 1.800.387.1670 x252 Cell 416.702.9232 Fax 416.863.5157 [email protected]
Top Related