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Tough Medicine
Employees will share more responsibilities and higher costs to sustain their benefits

There is no escaping the fact that the cost of benefit plans is on the rise. According to a report commissioned by the Ontario Chamber of Commerce, this province’s employers were paying an average of $4,982 per employee in 2011 -- up from $4,338 as recently as 2009. Those with smaller businesses, who are unable to spread risks over a large workforce, can face even higher costs than that.

Don’t expect the trend to end anytime soon. Prescription drugs, physiotherapy and other medical services are hardly getting any cheaper.

But employees can help to reduce the burden on benefits plans and protect these valued resources for everyone in the workplace. Employers may even be shocked to discover that plan holders are willing to shoulder more responsibilities and pay higher fees in the name of sustaining the plans.

The Sanofi Canada Healthcare Survey found that a mere 33% of employers think employees would feel obliged to help control the rising cost of health benefits. In reality, 57% of plan holders said they were actually willing to take on that role, whether it meant choosing specific pharmacies to secure lower drug costs or shouldering a larger share of the related fees.

If faced with a situation where employers couldn’t cover the higher costs for existing benefits, 37% of employees would pay higher premiums, and 31% would pay a higher share of costs when using the related services.

“Employers have to do a better job at communicating how employees can participate in controlling costs through things like managed formularies and lifestyle changes,” concluded Serafina Morgia, senior account executive – Industrial Alliance.

Of course, some cost-saving strategies are more likely to be accepted by those who feel they play a role in controlling the costs of health benefits. For example, when it comes to maintaining prescription drug coverage:

  • 62% would switch to pharmacies with lower dispensing fees, or those that are preferred by employers
  • 21% would pay more for extra drug coverage
  • 15% would pay higher premiums

But cost-sharing strategies like these can make a big difference and help to ensure a plan remains sustainable.

Surprisingly, while drugs account for about 70 to 80% of an average employer’s share of health benefits, about 38% of Ontario employers still cover the entire cost of prescription drugs. Only 5% have a multi-tier drug plan which reimburses some drug costs at a different rate than others.

An employee who has a plan which covers 100% of prescription drug costs isn’t that motivated to find a pharmacy with lower drug costs, which include dispensing fees. This changes if they are told 90% of drug costs will be covered at one pharmacy, and only 60% will be covered elsewhere.

Besides that, drug plans are among the most cherished benefits of all. When asked which health benefit they would be willing to sacrifice if their employer couldn’t pay for the coverage, a mere 2% of employees were willing to slash the drug plan. In contrast, 21% would give up semi-private hospital coverage; 16% would sacrifice paramedical practitioners (like chiropractors and physiotherapists) or paid days off for the occasional absence.

Nobody is eager to sacrifice the benefits they enjoy, and higher fees can be a bitter pill for anyone to swallow. But when they’re presented with the alternatives, employees can become partners in making their benefits plans sustainable for years to come.

Top Tips:

  • Work with your benefits provider to identify benchmarks and measure the return on investments for benefits plans.
  • Open the books and show your employees the rising costs per plan holder.
  • Don’t limit the discussions to numbers alone. Describe the difference the plan makes in human terms.
  • Suggest cost-saving options that include shared payments for prescriptions, but also share tips on how to control or reduce those payments.

The Buzz Bits
Miscellaneous links to interesting benefits information

Cost trends in health benefits: Ontario Chamber of Commerce

One patient, 20 dentists, zero consensus: CBC Marketplace

WSIB hikes insurance premiums: Benefits Canada

Simplify the case for investing in workplace health: Benefits Canada

Ignoring adherence drives up drug costs: Small Biz Advisor

Employer contributions to group sickness or accident insurance plans – such as Group Accidental Death and Dismemberment, or Group Critical Illness – will be taxable income for employees as of Jan. 1, 2013: Canada Revenue Agency

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