Wake Up and Smell The Benefits!
Kevin McFadden
Objective
•Share my 20 years of benefits industry
experience and teach how to properly:
•Design
•Pay For
•Communicate
Employee Benefit Plans
Where to get advice Benefits Advisors
•National Consultants
•Regional Consultants
•Brokers/Agents
•Compensation & Disclosure
Design
• Objective of the Plan
•Attract / Retain / Lead / Follow / Protect
•“Culture”
• Cost Sharing
• Protection and Reimbursement
• Leading Edge / Average / Economy
Leading Edge - Steak
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2-3x Life Insurance & Dependent Life
Short Term & Long Term Disability
Drug Card with 90-100% Reimbursement
Extended Health
Dental 90-100% Basic, 50% Restorative & Orthodontic
Vision care - $200
Healthcare Spending Account $200 - $500
EAP
Flex options
Pension – Matching up to 6%
70% -100% Employer Funded
Median - Burger
•1-2x Life Insurance & Dependent Life
•Long Term Disability
•Drug Card with 80% Reimbursement
•Extended Health
•Dental 90-80% Basic, 50% Restorative & Orthodontic
•Healthcare Spending Account $200 - $500
•EAP
•Pension – Matching up to 3%
•50 -70% Employer Funded
Economy - Beans
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1x Life Insurance and Dependent Life
Long Term Disability
Drugs 80%
Extended Health Care
Dental 80% Basic
No Pension
No EAP
50% Employer Paid
Inflation Proof Plan
• Employer pays all costs of Life and Disability
• Drug Coverage with a card
• Health Care Spending Account
• E.g.) 80% Managed Drug Card – Dispensing Fee
Deductible
• Health Spending Account for other Medical and Dental
expenses
(e.g.. $500 single - $1000 family)
Other Value Added Benefits
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Affinity Plans
Group Home and Auto
Group Mortgage Program
Payroll deductions for RRSP/RESP/TFSA
Pet Insurance
Fitness Subsidies
Employee Fitness Facilities
Employee Assistance Programs (EAP)
Best Doctors
Weight Loss Programs / Quit Smoking
2 Types of Benefits
1. Pooled
2. Reimbursement
Pooled Benefits
• Life, AD&D, Dependent Life, Long
Term Disability
• Carriers price based on estimated
risk
• Most claims are fully pooled
• Usually account for approximately
1/3 of the total cost of a benefits
plan
Reimbursement
• Drugs, Hospital, paramedical
practitioners, hospital, etc.
• Dental
• Eyeglasses
Types of Contracts
• Fully Insured
• Refund
• ASO (Administrative
Services Only)
• aka – “Self Insurance”
Fully Insured vs. Self Insured (ASO)
• Health and Dental Premiums over 3
years for Company XYZ = $300,000
• COST =$300,000
• Health and Dental Claims over 3
years for Company XYZ = $225,000
(75% of premiums)
The Math
• $225,000 claims x 10% (admin fee) = $
22,500
• $225,000 claims + $22,500 (admin)= $
• +Pooling Costs (stop loss & travel) = $
247,500
10,000
Total Cost =$
257,500
Savings
• Premiums = $ 300,000
• less (Claims + ASO Expenses) =
$(257,500)
Savings to Company XYZ = $42,500
Who Supplies ASO?
• Main Line Carriers e.g. GWL, Sun,
Manu, etc.
• Third Party Administrators
•Maximum Benefit
•RWAM
•Health Source Plus
•Sirius Benefits
Mechanics of ASO
• Set up a stand alone bank account
• Health and dental rates are set by
company
• Deposit employee premiums into
account
• Deposit employer premiums into
account
• Carrier pays claims from bank account
• Any surplus easily identified by viewing
bank balance
Eliminating the Risks
1. Stop Loss Protection
“Ceiling”
2. Out of Country
Protection
• Amount can be set at any
level
• e.g. $10,000, $7,500,
$5,000 per year.
• Designed to eliminate the
risk of a very expensive
drug claim
• Insurance premium
charged for stop loss
protection
• Protects the plan against
an expensive out of
country claim
• Insurance premium
charged for out of
country protection
• Typically 100% insured
Pros and Cons of ASO
Pros
• Pay only for what is claimed
• Administrative charges are
lower
• Admin charges on claims
not premiums
• Surpluses are kept by the
company not the carrier
Cons
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Without Stop Loss provision
exposure on large drug
claims
Without travel coverage
exposure of out of country
claims
Can be more costly in short
term
What to do with a Surplus
• Reduce health and dental
rates
• Enhance benefits
• Leave in account to reduce
possible future deficit
• Give employees a “premium
vacation”
Corporate Sponsored Retirement Plans
(Pension)
Pension
•Types – DB, DC, DPSP, RRSP
•Why important?
•How to set up?
•Investment choice
•CAP Guidelines
Pension Investing
Executive/Management Benefits
•Higher amounts of Life Insurance
•Specialty Long Term Disability
•Critical Illness Insurance
•Health Care Spending Accounts (HSA)
•Pension – 5-10% non contributory
•Medical Access Insurance
•Executive Medicals
•Best Doctors
•100% paid by employer
Critical Illness Insurance (CI)
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What is it?
What does it protect against?
Heart Attack, Stroke, Cancer
CI as an employee benefit
Taxability
Health Care Spending Accounts (HSA)
• What are they?
• How does it work?
• What expenses are covered?
• What does it cost?
Best Doctors
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What is it?
What is the purpose?
How does it work?
What does it cost?
EAP – Employee Assistance Plan
• What is it?
• What is the purpose?
• Who supplies them?
• What do they cost?
Marketing Benefits to Employees
Proven Marketing Techniques
• The Employee Meeting
• The One Page Summary
• Newsletters
• Website Content
• Surveys
• Committee
Objective
• Protection
• Value/Efficiency
• Employee Appreciation
• Market Competitive
• ROI !!
References
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www.sigurdsonmcfadden.com
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www.bestdoctors.com
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www.rwam.com
•
www.benefitsnews.com
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www.directprotect.com
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www.sunlife.ca
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www.acurehealth.com
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www.greatwestlife.com
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www.maximumbenefit.ca
•
www.benefitscanada.com
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www.lifescale.ca
•
www.wellpointhealthservices.com
For more information:
Kevin McFadden (204) 953-1602
kevin@sigurdsonmcfadden.com