Every day, according to Statistics Canada, 14.5 million people go to work at a small or medium-size place of employment. It is no wonder these employers are often—and accurately—referred to as the backbone of the Canadian economy.
A key to the success of these employers is the quality and contributions of their employees and their ability to attract and retain the right talent. One important tool for recruiting and retaining key hires is the employee group benefits plan. Three-quarters of companies with between 20 and 99 employees offer some type of health benefits program, and that number rises to 93% for employers that have between 100 and 499 employees.
Making group benefits available to employees can be seen as a challenging task for small and medium-size companies that do not have the resources or economies of scale that larger organizations do. That is why insurance carriers, third-party administrators and advisors have developed products, services and administration tools that can be tailored to the employer’s unique needs—no matter the size—and can help it offer competitive group benefits.
The importance of meeting the health needs of employees of these not-so-large organizations in a cost-effective way becomes even more important as the Canadian workforce diversifies and ages with so many baby boomers nearing retirement age.
As with any important business decision facing employers, the provision and selection of group benefits should be approached with sound business practices and reasoning. Through understanding and identifying employee needs, asking the right questions, developing a group benefits strategy and forming and maintaining the right partnerships, small and medium-size employers can successfully meet the challenge of balancing the requirements and expectations of employees with the overall cost of providing benefits, while still meeting organizational needs and budgets.
Understanding and identifying employee needs
Small and medium-size employers would never launch a new product or expand their business without first understanding the marketplace and current business environment. Similarly, employers need to understand what their employees are looking for before making any decisions about a benefits plan. As with general market research, there are several simple steps employers can take to determine what type of benefits might be best for them and their employees. (These steps are something an advisor or insurance carrier can help with.)
- Conduct a benchmarking exercise to determine what benefits other employers in your sector are offering. General information is often available from chambers of commerce and the Conference Board of Canada.
- Conduct an employee survey to determine the health needs, preferences and expectations of your workforce.
- Review the demographic profile of employees and previous claims experience (if available) to identify the needs of your workforce and to determine options that will meet the requirements and expectations of the largest number of employees.
Asking the right questions
After establishing a benchmark for employee expectations, employers need to understand the role and cost of providing benefits or changing the coverage they have. Answering a few basic questions can help.
- What is the reason the employer offers (or plans to offer) a benefits plan?
- What will the program’s primary goal be? (competitiveness, retention/recruitment, increased productivity, protection to employees)
- Does the coverage meet the needs of the current workforce?
- Will the coverage meet the emerging and changing needs of future employees? (demographics, health needs, age, diversity, expectations)
- What should the annual budget be for providing coverage?
- Will employees understand their benefits and what is being offered to them?
- How often should plan design and cost be reviewed to ensure that they meet the needs of a changing workforce and rising healthcare costs?
While some of the answers to these questions may require the assistance of an advisor, working through these questions will allow employers to start developing a group benefits strategy.
Developing a strategy
Once they have asked themselves the right questions and understand what role the group benefits plan will play within the organization, small and medium-size employers can develop a strategy for establishing their group benefits plans. This process will reinforce that it is their view of what benefits should be and not their size that will dictate their strategy and what they can offer to employees.
According to the Metropolitan Life Insurance Company’s book The Benefits Edge, there are four overall ways that employers view the provisions of group benefits.
1. The Traditional View: Employers that fit into this segment usually see group benefits as fulfilling the “time-honoured legacy of employee benefits.” Plans usually provide generous coverage for life and health events, and plan designs are usually very traditional and do not change much from year to year.
2. The Standard View: Employers here focus on “providing the basics.” These plans are often selected for competitive reasons to offer employees benefits that are “either on par with or not as robust as those offered by competitors.”
3. The Flexible View: Employers within this category tend to offer coverage augmented with flexibility and employee self-serve options. These plans are often offered by employers “within moderately constrained budget limits” and “strive to match the choices in their benefits programs to the diversity of their workforce.”
4. The Progressive View: Employers that take a progressive approach to group benefits “view the richness and diversity of their benefits platform as providing a competitive edge.” These types of employers generally augment coverage with products and services that encourage their employees to take a more active role in managing their health and in being present and productive at work.
Although this research is based on U.S. employers and their attitudes toward benefits, these overall views can be a very useful starting point for Canadian employers as they begin to develop their own group benefits strategies.
Once Canadian employers have developed their strategies, there are a number of solutions, services and tools that insurance carriers can provide to turn a strategy into a comprehensive and cost-effective group benefits plan that meets the needs of the employer. For example, consider the following strategies and tools.
Healthcare Spending Accounts: These “health accounts” allow an employer to meet the diverse needs of the workplace by allowing employees to have more control in how they spend their health benefits coverage.
Cost containment: Insurers can provide plan design features to keep costs under control, including cost-sharing with employees through deductibles and co-payments.
Education: Insurers can provide information and resources for employees on the cost of the plan and how they can help alleviate costs through co-ordination of benefits and by becoming a smart consumer regarding expenses such as pharmacy dispensing fees. Insurers can often host on-site sessions that can help employees understand their benefits and the costs associated with them.
Self-service: Insurers may offer a call centre and/or employee self-serve Website that can reduce the employer costs and administration efforts of the group benefits plan.
Employee Assistance Programs: Insurers may be able to include this type of program in a group benefits plan to allow employees of diverse backgrounds and age to seek assistance before their daily issues become problems that can impact their ability to be present and productive at work.
Health and Wellness Resources: Insurers may offer health and wellness resources online or in other accessible formats. This support and information can help employees to make more informed health and life choices.
Health-specific Service and Support: Insurers may offer services such as second medical opinions for specific health issues (including mental health), which may be added to a plan for groups of employees for whom these situations may be of particular concern.
Forming the right partnerships
A key component to offering the right benefits plan is developing or maintaining a relationship with an advisor. It is the role of the advisor to find the right insurance carrier that can provide the right coverage that will work within the employer’s overall group benefits strategy.
An advisor can also help employers by making them aware of legislative changes and how they may impact the benefits plan, new technology, products or services that would benefit the employer and employee, and opportunities to effectively manage the cost of the group benefits plan.
Employers should consult with their advisors to review the plan design regularly to make sure it continues to meet the expectations of employees and fits in with any change to the overall group benefits strategy.
Advisors can be found through references (particularly within a related sector), in the Yellow Pages or through various government or financial agencies. But remember, is always important to secure credible references before starting a relationship with a particular advisor.
A key to developing or maintaining a productive partnership with an advisor is to ask questions that will ensure that the advisor is able to meet specific needs.
- What services does the advisor provide?
- Based on benefits goals and annual budget, what plan design does the advisor recommend?
- What are the most effective ways to communicate the plan to employees?
- How can the advisor help to ensure that the benefits plan continues to meet goals, given the changing demographics of the workplace and the ever-growing competitiveness of the market?
- How can the advisor assist in ensuring that a benefits plan remains competitive in a specific industry and, at the same time, help effectively manage the rising costs of benefits plans?
By understanding and identifying their employee needs, asking questions, developing a group benefits strategy and maintaining a strong partnership, small and medium-size employers can ensure that they offer the right group benefits plan that is competitive—and that also attracts and retains talent.
Jacqueline Robertson is assistant vice-president, group underwriting, with Equitable Life of Canada. Mike Waechter is director of group marketing with Equitable Life of Canada. jrobertson@equitable.ca; mwaechter@equitable.ca
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