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Cost Cutters
10 cost-cutting strategies to protect your benefits plan

Every employee benefit comes at a cost, and like every other business cost it needs to be controlled. But the task can appear more challenging every year - particularly against a backdrop of rising pharmaceutical prices, the evolving healthcare needs of aging employees, and an increasing number of services no longer covered by OHIP.

Luckily there are still some savings to be found, and they help to sustain the benefits which protect employees in their time of need.

Consider these 10 cost-cutting strategies as a few examples that can make a difference to your plan:

  1. Decline semi-private hospital coverage - OHIP pays for hospital stays in a ward setting, where there are four patients to a room. It's why many companies add semi-private coverage to their healthcare plans. The problem is that a semi-private room may not even be available when someone is admitted to hospital. To compound matters, if the only available bed is in a semi-private room, OHIP will pay for that space if you do not have the semi-private support. It is one example of a cost that is best paid out of pocket.
  2. Cap overall paramedical fees - Many benefits plans limit the amount that can be spent on paramedical services such as chiropractic adjustments and physiotherapy sessions. But these caps are often set per practitioner, allowing the overall totals to swell out of control. Rather than setting an individual limit of $500 per practitioner in a calendar year, consider establishing a $1,000 annual limit on the combined total of paramedical services claimed by an employee. Other strategies include limiting the amount paid per visit, and requiring employees to obtain a doctor's referral before beginning the service.
  3. Ask for drug cards - There is no limit to what a pharmacist can charge a cash-paying customer who submits receipts after the fact, but drug cards will set caps on the amounts paid for particular prescriptions. Your benefits consultant should also be able to provide these cards for free.
  4. Identify pre-approved pharmacies - Prescriptions usually represent the largest cost in an employee benefits plan. One way to control these costs is to approach your benefits consultant for the names of pre-screened pharmacies which feature reasonable dispensing fees, lower markups and other savings.
  5. Revisit the scaling units offered to dentists - Dental cleaning fees are based on 15-minute increments known as scaling units. The problem is that, rather than considering only what a patient needs, some dentists always seem to submit bills for the maximum amount allowed in a benefits book. Consider setting a maximum of $1,000 on such work in a given year.
  6. Take a long-term view, and invest in wellness - It seems counterintuitive to suggest that an added cost can save money, but a comprehensive wellness plan will help employees maintain their health and limit future claims linked to issues like heart disease and diabetes. Remember that a few dollars invested in healthy snacks in a lunchroom, gym memberships, and smoking cessation programs can help reduce prescription needs, workplace injuries and disability claims.
  7. Consider where your vision care is provided - On the surface, a vision plan offers little in the way of savings for family members who need glasses. The typical costs and administration fees are simply tacked onto premiums. But some benefits consultants will also identify opticians who are willing to offer real discounts, and not just a spare pair of sunglasses.
  8. Encourage employees to be cost-saving partners - Every employee plays a role in controlling costs. Those who take the time to talk to their doctors can find generic drugs or other low cost alternatives to prescriptions, while chats with pharmacists can uncover unexpected fees.
  9. Ask employees to pay a small share of costs out of pocket - I am still surprised to hear about employers who continue to cover the entire cost of healthcare benefits. Employees who pay a small percentage of costs at the cash register are more likely to follow the steps to find affordable alternatives.
  10. Monitor the costs - It's difficult to find savings unless you carefully monitor expenses. Regular reviews with a benefits provider can identify factors such as the amount spent on the top drugs, which drug stores are used, and how many employees are using specific paramedical services. Ask your benefits consultant to do the homework, dig through the results, and present the details in an understandable format.
No matter what cuts you embrace, take the time to show employees how the decisions will sustain their overall benefits in the long run. This is not about taking something away. It is an exercise which finds ways to protect valuable support.

Top Tips:

  • Ask your benefits provider for drug cards, which set caps on the amounts paid for specific prescriptions.
  • Consider paying for semi-private hospital rooms out of pocket.
  • Limit the scaling units in dental plans, and cap the amount paid to paramedical practitioners such as chiropractors and physiotherapists.

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