Few would argue that there is little, if any, real incentive within the design and delivery of most Canadian benefits plans to influence a person’s actions. Benefits plans are, in their very nature, insurance protection designed to reward a variety of financial losses. Additionally, with the existence of medicare, our benefits decisions in Canada are rarely tinged with the threat of financial ruin; in fact, most claims paid by the average health or dental plan could be considered affordable. While this reality presents a view of a well-protected population, it also challenges us when trying to use this compensation element to influence behaviour.
However, employers are demanding more from their benefits plans, such as modern ways to incorporate them into a total rewards environment that recognizes positive contributions to a person’s health, the community or the organization’s bottom line. The thinking is that introducing positive rewards into the mix may also free up funds to cover true high-risk need when it appears.
So how can you modernize your benefits plan to reward healthy choices and actions without lessening the level of protection demanded by most Canadians? And what are U.S. corporations doing to accomplish this same goal? What differences do they encounter when bringing the same philosophy to Canada?
Establish objectives
Before looking at your benefits plan, first invest some time in articulating your goals for such a project. One of the greatest weaknesses to behaviour-driven incentives is the absence of a tangible return on investment (ROI). Investing time in objectives, expected returns and their measurement is critical to success and corporate support. This also means being well educated about your internal and external capabilities: you don’t want to develop a plan that can’t be carried out by key parties or that burdens you with unwanted administration.
Second, consider your organization’s culture and most coveted behaviours. A behavioural-based program is cultural and has influence beyond the borders of a benefits plan. It’s much easier to adapt a plan within the overall requirements of such a program than to use the benefits plan as the main feature and driver.
Design architecture
One basic way to modernize your benefits plan and create an element of influence is through the plan’s overall architecture, by either modifying design elements or connecting it with other elements outside of the plan.
The most effective plan architecture to achieve interconnectivity between behaviour and reward is choice-based, creating an environment where the behavioural elements can be woven easily into the design. Members are quickly aware of the implications of their actions and coverage choices. And employers can add reward elements, generally delivered in the form of spending credits, higher reimbursement and prizes.
Using the “If you do this, you get that” approach, a choice-based plan design can offer some of the following:
- a reward for participation in specific wellness/benefits events, such as health assessments or fairs;
- a reward for electing certain options designed to control inflation or co-ordinating with spousal coverage;
- a direct connection to other forms of compensation, such as vacation, retirement savings or education leaves; or
- subsidized pricing on specific options to influence choice.
If a choice-based design is not for your organization, you must turn to more traditional design options—such as a health or dental plan designed to reward preventive behaviour or influence consumerism to engage employees. However, these options may be perceived more as penalties than as rewards, due to the packaging.
You could consider variable co-payment factors that provide higher reimbursement for wellness-based expenses or lower-cost options, drug formularies or preferred pricing. Such elements may influence members’ “expense” choices, but their effectiveness as a behavioural influence is questionable.
Introducing a simple healthcare spending account (HCSA) is another option. With an HCSA, an employer can deposit rewards and therefore connect a traditional benefits plan to a global behavioural program.