Tips for controlling out-of-country benefits costs

Today’s plan sponsors need to look at every cost and line item on their benefits billing statements in order to make every dollar stretch as far as possible. That means looking at seemingly minor elements of the plan design, such as out-of-country travel protection.

Even though the costs associated with out-of-country benefits are relatively minor as a percentage of an overall benefits plan, it’s a cost nonetheless. And as an insured benefit, it’s subject to increases a plan sponsor must consider and control.

Read: How health benefits plan design is changing

There are three tools plan sponsors and insurers can consider to help control the costs of providing out-of-country health coverage:

1. Pre-existing condition and stability clauses:

In most cases, an individual purchasing non-group out-of-country protection must answer a detailed medical questionnaire. The intent is to align the insurer’s risk with the right price to cover that risk, ensuring individuals don’t venture abroad when it might not be advisable. If people aren’t stable on their medication or are dealing with a pre-existing medical condition where a doctor advises against travel, they’re perhaps tempting fate if they don’t alter or postpone their plans.

Pre-existing condition and stability clauses are tools to charge people with the task of making sound decisions about whether or not they should travel.

Read: Which health benefits do employees really want?

Stability clauses define a member’s drug therapy as being consistent at a particular titrated level for a specified length of time, such as 90 days after any change to the amount prescribed. Once a patient is stable, the expectation is that their health condition is as well. Stability conditions usually apply to maintenance drugs prescribed to treat chronic conditions, including high blood pressure or high cholesterol.

But for group travel coverage, there’s no requirement for a medical questionnaire, with minimal opportunity to align risks and potential costs for individuals within the group. Plan sponsors and insurers need protection from plan members who act against the guidance of their physicians. Employers would do well to understand and support carrier requirements detailing restrictions around pre-existing medical conditions and stability clauses.

2. Shortened trip duration:

Out-of-country policies are available in almost any conceivable trip duration. Plan sponsors can choose from among 30, 60, 90, 120 and 180 days. While it may be nice to protect plan members for trips of up to 180 days, employers should be asking whether it’s really necessary to do so.

Employees travelling for business may require more specific options than a conventional out-of-country policy. While vacationers may represent the majority of the traditional Canadian travelling public, it seems reasonable for plan sponsors to ask whether they have the right kind and duration of coverage.

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Also, long-service employees may be eligible for vacation allowances of six to eight weeks per year. Is it really necessary to offer protection for as much as three times their total vacation allocation? Perhaps not. Is it even reasonable to expect that an actively working employee (except in the most unique of circumstances) would even be able to travel away from work for more than three to four weeks at any one time? Likely not.

3. Sustainable options for retirees and older workers:

Older employees and retirees often have the time to travel more and present their own risk profiles around accidents and illnesses while travelling. Those members should be separate from the overall plan and subject to more limited qualifications and rates specific to the risks they present. Insurers should also advise them to seek advice from their doctors before considering travel.

Responsible pre-existing condition and stability clauses, as well as trip duration limits, are viable cost management measures. Is it an employer’s responsibility to support a retired worker’s desire to spend the winter in Florida? That’s the plan sponsor’s call, unless a contract or collective bargaining agreement mandates a level of coverage.

But limiting exposure when it comes to that demographic would help mitigate some of the pressures on costs associated with out-of-country plans and help keep them sustainable.

Read: How can plan sponsors manage boomers’ unrealistic retirement expectations?

The way forward for plan sponsors, members and insurers is to consider a more reasonable approach to cost and encourage an end to the expectation of entitlement. As business gets tougher and benefits plans face greater cost uncertainties due to high-cost drugs, rising long-term disability claims and a greater awareness of the need to ensure members’ physical and mental wellness, plan sponsors and members will need to step up and become more intelligent and efficient purchasers of health-care benefits.