A Proven Strategy for Containing Employee Benefit Plan Costs

Posted on April 20, 2023August 28, 2023 by Immix Group

A Proven Strategy for Containing Employee Benefit Plan Costs

With elevated inflation causing everyone to take a closer look at their expenses, we wanted to introduce (and remind those who are already members of the Immix Group Client Community!) the many advantages of our broker-managed pools.

Back in May 2020, we wrote about the value of benefits inside a broker managed pool, especially during times of uncertainty. With inflation hitting everything, the markets so volatile, interest rates and business expenses increasing, benefits cost containment is more crucial than ever.

Our stance then- and now- is that belonging to a broker-managed pricing pool is an extremely beneficial strategy for the majority of our clients at the Immix Group.

What does this mean? It means for most of our client’s benefit programs, the Immix Group sets the pricing at renewal, and often at the onset of the plan as well. The rates are based on predetermined administrative charges and other factors that are more competitive than a group could obtain outside of the unique strategy we have created.

This stands in contrast to groups insured on a stand-alone basis, where pricing is negotiated back and forth on individual renewals with the insurance provider.

Broker-Managed Pools through the Immix Group: Proven Results

Those in the Immix Group Client Community have greatly benefited from our strategy of broker-managed pricing pools. As we wrote about previously, a review of our block of business showed the following results for our 2022 renewal rates:

43% of our clients saw a reduction to their Extended Health Care rates
30% of our clients saw a reduction to the Dental Care rates
75% of our clients saw their pooled rates held without change

Despite the high inflation we saw in 2022, those within our broker-managed pools fared very well. This has been the case for many years; one of our pools now has an 18-year track record of providing cost containment to its member groups.

The 5 Key Advantages of the Immix Pool

The main advantages of our strategy? We’ve categorized the key benefits of our broker-managed pool strategy into 5 distinct areas:

Transparency- when it comes to the claims experience and rate calculations for your group.
Diversity – be grouped with an entire range of industries to spread the risk.
Buying Power- leverage economies of scale when it comes to plan design opportunities.
Service- we handle almost everything in-house, without TPA charges.
Reduced Administrative Charges- access to the low admin charges usually reserved for just the largest groups, rate guarantees, and customized pricing plans.

Transparency is a Key Value at Immix Group

One of the biggest misconceptions of a ‘pool’ is that you will not be able to see the details of your groups claims, and that your rate adjustments will be based on ‘the block’ perhaps leaving you in an unfair position. This is not the case with how our pools are designed; each group is experience-rated, with claims details clearly shown. In those high-claim years, you have downside protection and flexibility.

Diversity of Member Groups Means Greater Risk Management

We want to include groups of all sorts of backgrounds; construction, tech, professional services, retail and hospitality. This proved to be a great strategy during the pandemic where the strength of our pools allowed us to protect and continue coverage for those experiencing extreme disruptions to their businesses, employees and cashflow.

Power to Access Competitive Coverage for Small Groups

You may think you’re not a big enough group for disability, certain dental benefits or certain paramedical coverage levels. Inside the Immix Group pools, we have additional buying power when it comes to providing extremely competitive benefits to even very small groups.

Service by the Immix Group: An Extension of your HR Team

The Immix Group understands that for many smaller businesses, you do not have a dedicated HR team. For businesses that do, HR often prefers to focus on more essential matters than daily benefits management; our service model means we are able to handle the majority of the daily admin for your program, at no additional cost, and to provide our expertise when challenging employee situations arise.

Reduced Administrative Charges

Because the Immix Group has taken on the bulk of daily servicing and removed the requirement for the insurance carrier to create renewal documents, our clients receive much lower administrative charges than they could obtain as a stand-alone group. This translates into the ability to spend more in claims, compared to the premiums you’ve paid, than under a typical stand-alone plan. This means more of your benefits dollars go straight to paying claims for members, NOT to the insurance provider for expenses or profit. Think of it as wholesale pricing, but with the same coverage options of a custom plan, combined with the enhanced service experience the Immix Group strives to achieve on a daily basis.

As we’ve written, one size does not fit all!

A common question we get is about plan design: rest assured; you can customize your plan to meet the needs of your team. Unlike many other pools, the Immix Group does not require you to select from pre-determined plans. Immix will guide you in choosing the right plan for your team; we can survey and benchmark and determine the best fit within your budget.

How can belonging to the Immix Group’s broker-managed pool help a business to control costs?

Lastly, we wanted to share a story that illustrate how we have been able to assist clients within our broker-managed pools.

A long-time manufacturing client was hit with a series of very unexpected events that caused a significant downturn to their business. With high employee turnover occurring in connection with this, the business found itself in a terrible financial situation. Their employee benefits claims were much higher than in previous years (tied to the turnover, but also the coincidental timing of many new high cost claims), and we calculated an increase to their costs of around 35%. This cost increase was simply not feasible for the business to take on. But as a family-owned multi-generation business, the last thing they wanted to do was significantly reduce the coverage or cancel their benefits.

Because they were within the Immix Group’s pool where we ‘hold the pen’ when it comes to their rates, we were able to hold the costs for a year, and implement a 3-year plan to adjust the premiums to the levels required to properly fund the claims. This gave them time to get their financial footing, and to also address some of the causes of the high claims, with our assistance.

Ten years later, the client is still insured within our Immix Group pricing pool; they have grown and are thriving. As they achieved stability, so did their benefits costs. Over ten years, they have never had a renewal rate increase over 5%.

While this is one example, similar situations occur every year, where we are able to assist businesses to control this area of their balance sheet.

Still have questions? Interested in learning more? The benefits advisors at the Immix Group would love to help you optimize your benefits program. We love to hear from you!

“When it comes to managing employee benefit program costs, we learned a long time ago that the key to long-term cost control is to leverage the buying power of a large and diverse group of businesses. Working with- not against- our chosen insurance providers, we are able to provide sustainable, cost-effective employee benefit solutions to businesses both large and small. We created our first broker-managed pool nearly 20 years ago, and over this time the advantages for those in our Client Community have grown and grown.”

Anthony Ciccone Tweet

Key Takeaways

The Immix Group has longstanding broker-managed pools that provide lower employee benefits administration costs to small and medium-sized businesses.

Belonging to an Immix Group pool means full transparency as to your group benefits claims experience.

You can customize your plan design, while still benefiting from the advantages of belonging to a pool.

Lower administrative costs mean more of your employee benefits premiums go towards paying claims for your employees.

The Immix Group employee benefits model provides sustainable, long-term cost control, rather than the short-term reduced premiums that are available when switching insurers.

Immix Pool

Frequently
Asked Questions

How does a pool contain my employee benefits plan costs?

For many groups (typically under 100 lives, but sometimes even higher!) the administrative costs for an insurer to run your program on a stand-alone basis are higher than if your program is within a pool, where admin costs are negotiated and applied on an aggregate basis.

What do you mean by broker-managed pool?

This means that the pricing for the groups within the pool is set by the Immix Group, rather than by the insurance carrier who underwrites the benefits and pays the claims.

Does belonging to a pool mean choosing a pre-determined plan design?

No, you can completely customize your plan coverage to match the requirements of your business, within the parameters offered through the insurance carrier.

Can larger groups benefit from belonging to a broker-managed pool?

Yes, savings are typically available even for large groups, as administrative costs are often lower than stand-alone pricing. As well, because the Immix Group ‘holds the pen’ when it comes to your renewal pricing, we have flexibility to adjust the rates to a competitive level.

Top Benefits Conversations of 2022

Posted on January 4, 2023January 4, 2023 by Immix Group

It’s a wrap! As we begin the New Year with refreshed energy and excitement for what 2023 may bring, we wanted to share a recap of the key stories in benefits over 2022.

Extreme Difficulty in Hiring

The theme of our client meetings this year can be summed up in one simple sentence “Where did all the people go?” Businesses struggled to hire (and retain) qualified people. Employers told us they had candidates ‘ghosting’ interviews or simply not showing up to their first day, a trend that most had never previously experienced.

Time and again we were told by employers that they were desperately in need of staff, and that their existing team members were stretched too thin or in roles they were not hired or properly qualified to fill. The labour shortage is evident with a record-tight labour market, according Stats Canada: Labour shortage trends in Canada (statcan.gc.ca).

“Salary and benefits” continue to top the list of most important job factors for employees. Providing and more importantly communicating and highlighting a competitive benefits offering will make you stand out.

The Shift to Hybrid Work

There has been a massive shift in how we work over the past few years. Hybrid work, or working partly remote and partly in-office became the norm post-pandemic, with most employees reporting they prefer working from home.

This has had a big impact in terms of managing and hiring, measuring performance, and ensuring engagement. We wrote about hybrid work and posed the question: Is working from home an employee benefit in two parts. The basic takeaways are that remote work is here to stay, employees prefer a hybrid model, and a formalized WFH policy is a must.

The Great Resignation, or rather, the Great Retirement

The much-discussed Great Resignation did not occur in Canada like it did in the US, but what Canada experienced is actually more concerning: a record number of retirements.

A record 300K people retired in Canada in the 12 months up to July 2022 (up 30% from the same period the previous year). Early retirement, so those between age 55-65, made up almost half of the overall number of retirees. With our demographics here in Canada, it will only grow larger. With the most experienced people exiting the workforce, there is a real risk to businesses due to the lack of mentorship and transfer of knowledge for younger generations.

How does this tie into benefits? Offering those in the final stages of their career enhanced coverage and work flexibility are potential solutions to entice your most experienced people to stay a few additional years.

Continued Focus on Mental Health and Well-being

As we transitioned out of the pandemic, the focus on mental health remained at the forefront. Employers continued to ask for resources and coverage options to ensure their staff had access to the mental health support they required.

Far beyond the EAP or the dollars available for counselling visits, employers sought various ideas to support mental health including: return to work plans, 4-day work weeks, assisting employees with financial concerns through financial literacy and group savings plans and other programs designed to provide the flexibility needed to better support individuals and families and remove barriers to care.

More than one third of all 2022 Long Term Disability claims are mental health related. Claims for mental health are up 75% from 2019, and experts anticipate this will rise in 2023.

High Inflation

A key conversation in 2022 was the inflation we saw across the board; this was especially noticed with the cost of groceries. After years of low interest rates, Canada experienced eight interest rate adjustments in 2022. For many people, this directly impacted their borrowing costs, affecting both personal and business expenses and decisions.

2022 saw increases to the Dental fee guides far higher than historical averages. Unfortunately, it appears that the Dental Fee Guide increases for 2023 will once again be much higher than usual, with 8.5% for Ontario and 9.8% for Quebec already reported. With costs for practitioners and other insured expenses also rising, we anticipate larger than typical increases to claims across plans.

Federal Dental Plan

The Federal Dental Plan was rolled out the end of 2022. Employers had many questions on this program, wondering the impact to their Employer-sponsored insured dental plans. Generally speaking, there is little or no impact on existing plans, due to the qualification parameters for the new Federal plan.

The program provides coverage for children under 12 only. In order to qualify for any level of coverage, family income must be under $90K, and the children must not have access to private dental coverage (i.e. Employer plans). The government states that this is the first stage in developing a more comprehensive federal dental plan; only time will tell!

Change to EI Sickness Benefits

Effective for December 18^th, 2022, the Federal Government announced a change to EI Sickness benefits, extending the duration of pay from 15 weeks to 26 weeks. Employers had many questions about this and the impact on their insured Long Term Disability programs which typically begin at week 17, at the expiration of EI Sickness payments.

In short, Employers are not required to adjust their LTD plans. Generally speaking, it is not in the best interest of those who are insured under LTD plans to remain on EI Sickness rather than transitioning to LTD.

Flexibility in Benefits

Finishing up the list, an underlying theme to benefits conversations in 2022 was the desire for flexibility and customization. As we know, one size does not fit all when it comes to benefit plans, which these days must include elements of flexibility to ensure everyone’s needs are met. We saw employers embracing customized work arrangements including hybrid work models and four-day work weeks.

From a product standpoint, the Immix Group set up more Health & Wellness Spending Accounts than ever before as Employers sought a simple way to provide spending flexibility to their team.

As always, we are happy to discuss your program with you!

Please reach out to us to discuss how we can help with your program; we love to hear from you.

Labour Shortage Stats Can:

https://www.statcan.gc.ca/en/subjects-start/labour_/labour-shortage-trends-canada

Retirement:

https://www.theglobeandmail.com/business/commentary/article-the-great-resignation-has-arrived-in-canada/

https://thehub.ca/2022-09-20/trevor-tombe-canadas-not-so-great-resignation-its-retirements-we-should-really-be-worried-about/

https://www.benefitscanada.com/benefits/health-wellness/how-can-employers-turn-the-great-resignation-tide/

Hybrid Work:

https://www.benefitscanada.com/news/bencan/survey-finds-78-of-canadian-employees-prefer-working-from-home/

https://www.benefitscanada.com/news/bencan/61-of-canadian-employers-using-hybrid-work-model-survey/

https://immixgroup.ca/blog/index.php/2022/03/23/the-hybrid-work-model-is-working-from-home-an-employee-benefit-2022/

https://immixgroup.ca/blog/index.php/2022/04/19/part-2-the-hybrid-work-model-is-working-from-home-an-employee-benefit/

Inflation:

https://www150.statcan.gc.ca/n1/en/catalogue/62F0014M2022014

https://www.sunlife.ca/workplace/en/group-benefits/focus-updates/over-50-employees/provincial-dental-fee-increases-for-2022/

8 Reasons for Increases to your Employee Benefit Plan Premiums – Latest News from Immix Group

Mental Health:

More than a third of disability claims in 2022 due to mental-health reasons: survey | Benefits Canada.com

Mental health claims soar by 75 per cent | Canadian HR Reporter

https://www.benefitscanada.com/benefits/health-wellness/hybrid-work-four-day-workweek-shaping-employee-well-being-expert/

https://www.benefitscanada.com/benefits/health-wellness/2022-healthy-outcomes-conference-centering-employee-well-being-in-return-to-office-plans/

Flexibility in Benefits:

One size fits all? Not when it comes to employee benefits. – Latest News from Immix Group

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

Part 2: The Hybrid Work Model: Is working from home an “employee benefit?

Posted on April 19, 2022April 19, 2022 by Immix Group

In the first part of this two-part article on the hybrid work model, we discussed remote work from a productivity perspective. For the most part, the numerous studies that are coming out are stating that productivity is either unaffected or increased, and this is especially true for knowledge workers.
In addition, most employees prefer working from home, or at least having this option part of the time. We will now take a closer look from an HR perspective as to why maintaining or implementing a permanent hybrid work model may be the smartest choice for your organization. We will seek to answer:

Do my employees want to work from home? Why?
What are the benefits of a hybrid work model?
Does offering remote work help with recruiting great employees?
Do I risk losing good employees if I don’t implement remote work?
What is a reasonable balance for remote vs. workplace?
How do I implement a work-from-home policy?
How do I optimize a hybrid work model?

What do employees want? Do they prefer a Hybrid Work Model?

Yes, the stats are clear. The majority of employees want the option to work remotely, at least part of the time, and they feel very strongly about this! Some survey results show:

76% said support for flexible work post-pandemic is important to them
62% want to work from home at least 40% of the time
30% want to work remote at least 3 days per week.
27% of Canadian office workers would prefer to be fully remote

In fact, just 12% said that working entirely from the physical workplace would be most ideal. While many employees missed the social connections and other benefits of being in the workplace, the benefits of hybrid work far outweigh the in-office advantages.
As quoted in the HR Reporter:

It’s clear that the role that the physical office plays in the day-to-day work and satisfaction of employees has changed dramatically during the pandemic. We’re not going back to how things were before, and businesses need to adjust to the many operational realities that come with that,” says Nick Georgijev, country manager for Amazon Business Canada.

Why do employees prefer remote work? What does remote work offer?

Turns out that positive workplace culture is much more than ping pong tables and endless snacks, which don’t actually provide employees with key things they really want to feel valued, which include flexibility, work-life well-being and autonomy. Among other benefits, working from home at least part of the time offers:

Reduced costs in commuting; transit and vehicle maintenance
Time gains, including from lack of commute
Location flexibility, such as the ability to live in a lower cost area
Flexible working hours
Customizable office spaces and the comforts of home
Mental health benefits and general improved well-being
Increased productivity for many
Overall healthier people, according to studies on long-term hybrid workers

To expand on a few of these points, for many, the ability to work from home is a key part of improved work-life well-being. Flexibility as to where one works can be an integral piece in achieving a balance that minimizes work related stress while optimizing health and general well-being.

For example, for those with young kids, working from home instead of commuting to a physical workplace can mean many extra hours spent with young children, per day. It can mean easily integrating simple household tasks, rather than being absent from the home for eight or ten hours or more.

Many of the benefits are both financial and reduce stress: reduced or no commute, less time and money spent on office apparel and physical appearance, and the potentially most significant, housing. When it comes to housing, being able to work remotely could mean the ability to live in a lower cost region, rather than near the major city centre where the office is located. In fact, 48% of those who moved since the pandemic began, factored remote work into their decision.

How can the Hybrid Work Model be an advantage for Employers?

Many of the advantages that may be seen as beneficial to employees are equally beneficial to employers. Implementing the ability to work remotely, offers employers:

Broader talent pool, as you can hire from anywhere
More loyal, long-term employees
Reduced cost for office perks and office space
Potentially increased productivity
Increased employee morale and engagement

Notably, when employers can recruit from a wider, more diverse group of people due to location flexibility, there is the potential to attract more and better candidates, including those who desire a hybrid work model due to their unique circumstances. And of course, it works both ways: Just as a broader talent pool benefits you as an employer, employees have opportunities that are not limited or defined by geography.

Remote work also appears to increase employee retention: “72% of employers say remote work has a high impact on employee retention—employees are sticking with their employer when they have remote work options.”

How are employers viewing the movement towards hybrid or even fully remote work?

According to a BDC study, 74% of SME owners say they will offer their employees the opportunity to continue to work remotely. This varies between organizations and person to person, but generally, employers appear to be understanding the dual benefits to offering a hybrid work model.

Will offering a Hybrid Work arrangement help me in recruiting great employees?

Yes. Job seekers are asking for work location flexibility at an increasing rate and many are completely unwilling to take jobs where at least some remote work is not a possibility. Today, to be competitive, offering hybrid work is becoming more and more essential.

According to the BDC, 54% of employee say “access to remote work will be a determining factor” in both applying for or taking a job. When Arianna Huffington posted a poll to Linked In February 2022, asking ‘if you were to look for a new job, what’s most essential to you’? the results confirmed people have balance in mind. “Being able to work from home” got 34% of the vote, with 40% going to “Better life-work integration,” These two go hand-in-hand, one could argue.

Will my employees leave if I don’t allow for a Hybrid Work Model?

For many, it’s a dealmaker/ dealbreaker. When surveyed, employees indicate they would consider leaving their job if they were forced to return full time to the office.

43% are likely to look for a new job if their employer mandates a return to the office full time.
Almost 50% of Gen Z and Millennials would consider quitting if their employer didn’t offer remote work.

While it may seem extreme, the reality is that employees have many options now. With so many having been given the opportunity to experience working from home due to the pandemic, they are not willing to turn back.

“Companies that refuse to support a remote workforce risk losing their best people and turning away tomorrow’s top talent.”- Stephane Kasriel, CEO of Upwork

With more and more progressive employers embracing the mindset that ‘it doesn’t matter where or how you work, just that the job gets done,’ why wouldn’t employees seek out these roles, given the majority of our workforce is telling us they want this?

How do Employers implement a formalized Hybrid Work model?

If you’re like many employers, prior to the pandemic, you may have had few or no employees working remotely, so never required a remote work policy.

The challenge? Determining how to integrate this work model in a more formalized way. If you’re like the majority of employers, you may lack a strategy. As with any employee benefit, your approach needs to consider the values of your organization, the purpose of the benefit, in addition to the actual details of the new structure. Consider:

Roles; which roles can be done fully remotely, versus those that require a worksite presence?
Put it in writing; details your expectations and employee responsibilities and revise employment contracts where applicable.
Structure; How many days in vs out? Is it a set policy? Is it different for different people/ different roles?
Personal circumstances; what works for one employee may be different from another and considering personal circumstances show employees you value them as individuals.
Support and Supplies; What will you provide employees to support their work from home? Tech equipment, supplies? Ensuring smooth tech is key to success.
Virtual check-in’s. How many are needed, and what are the requirements? Camera on or off?
Rethink your Key Performance Indicators; what was measured in the past may shift in a hybrid work model.
Management; ensure equal time for those in-office and those working remotely, and ensure communications and decisions do not favour one employee type over the other
In-person events and meetings; occasions to bring people together in person are valuable and a great opportunity to team build and improve morale.

There are many factors to consider, and like all employer decisions, taking the time to think through all the pieces is important. The impact of decisions surrounding WFH can be significant and deserve proper attention.

Is providing the option to work from home an ‘employee benefit’?

I would argue that this falls solidly under ‘total compensation.’ The flexibility to work from home is invaluable to so many people, and could be the difference in securing amazing team members. There is value in offering workplace flexibility, and it’s no surprise this is showing up as a key feature in many job postings.

Empower your employees: the smart choice to optimize productivity

At the end of the day, if you’re hiring good people that you trust, and the job is getting done, why not empower employees to make the choice as to the best place for them to be most productive? Trust goes a long way, in fact, according to the Harvard Business Review, employees in “high-trust companies” report

74% less stress
106% more energy
50% higher productivity
13% fewer sick days
76% more engagement
29% more satisfaction with their lives
40% less burnout.

Adopting a hybrid work model shows you trust employees to get their work done effectively and on time, even when you can’t physically look over their shoulder. While it means making changes to how you manage and measure work, ultimately, it’s a work model that is here to stay and offers numerous benefits for everyone. However, like any employer decision, it’s best to formalize your expectations when it comes to working under a hybrid model.

Looking for assistance in developing your own employee benefits program and policies? We love to hear from you!

Sources:

**Courtney, Emily. The Benefits of Working From Home: Why the Pandemic isn’t the only Reason to Work Remotely. (Flex jobs). https://www.flexjobs.com/blog/post/benefits-of-remote-work/**

BDC.(June 15, 2021). Remote work is here to stay: BDC study. BDC. https://www.bdc.ca/en/about/mediaroom/news-releases/remote-work-here-stay-bdc-study

Birkinshaw, Julian, Cohen, Jordan, Stach, Pawel. (August 31 2020). Research: Knowledge Workers Are More Productive from Home. Harvard Business Review. https://hbr.org/2020/08/research-knowledge-workers-are-more-productive-from-home

Munro, Matt. (May 31, 2021). How Working from Home Increases Productivity. WBM Technologies.https://www.wbm.ca/blog/article/how-working-from-home-increases-productivity-infographic/

Kelly, Jack. (March 16^th, 2022). Hybrid Will Be The New Work Style, But 72% Of Businesses Lack A Strategy, AT&T’s ‘Future Of Work’ Study Shows. Forbes.com. https://www.forbes.com/sites/jackkelly/2022/03/16/hybrid-will-be-the-new-work-style-but-72-of-businesses-lack-a-strategy-atts-future-of-work-study-shows/?sh=1c351e083989

Staff. (April 7, 2021). 90% of Canadian remote workers say working from home hasn’t hurt productivity: survey. Benefits Canada. https://www.benefitscanada.com/news/bencan/90-of-canadian-remote-workers-say-working-from-at-home-hasnt-hurt-productivity-survey/

Staff. (2022). Key Benefits of the Hybrid Work Model for Employers and Small Businesses. Rocketlawyer.https://www.rocketlawyer.com/business-and-contracts/employers-and-hr/company-policies/legal-guide/key-benefits-of-the-hybrid-work-model-for-employers-and-small-businesses

Staff. (October 4^th, 2021). Majority of Canadians want to continue working remotely post-pandemic: survey. Benefits Canada. https://www.benefitscanada.com/news/bencan/majority-of-canadian-workers-want-to-continue-working-remotely-post-pandemic-survey/

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

The Hybrid Work Model: Is working from home an “employee benefit”?

Posted on March 23, 2022April 5, 2022 by Immix Group

At the peak of the pandemic, estimates were that over 40% over people were working from home. As we transition out of the pandemic many are now embracing remote work in a new way, even when given the option to return to the workplace.

But will it stay this way? Is remote work a good thing, for employers and employees?

Everyone is talking about the Hybrid Work Model

We continue to see a steady stream of news articles on working from home, positing whether or not this is good for business, and of course, whether this is something that will continue to be prevalent in a post-pandemic world. These articles have varied in their stance; some state employers should be ordering employees back to the workplace, with others describing the notable benefits that have come from the pandemic-induced work-from-home situation. Others have discussed the inequalities; for example, the idea that working from home would set women back in the workplace, as they are more likely to choose this situation, and that they will therefore be negatively impacted with lost opportunities compared to their in-office counterparts. On the flip side, there are an equal number of articles describing the positive benefits for women, especially mothers of young children.

Different businesses require a different approach

Of course, whether a hybrid work model is beneficial is industry specific. Not everyone who was forced to work remotely-or still finds themselves working remotely- feels this is the optimal model (teachers, for example!). And certain home situations or lack of resources may mean remote work is not ideal.

But where it’s a possibility, it’s worth exploring the pros and cons as you work to develop your own long-term plan when it comes to your group of employees.

Hybrid work: employee productivity plus recruitment and retention factors

Our two-part blog will discuss the Hybrid Work model, focusing on Employee Productivity and Recruitment & Retention factors. We will answer some key questions you may have as an employer or manager, including:

What is a hybrid work model?
Are my employees as productive at home?
Why do employees want to work remotely?
Should I let my employees work from home?
What is reasonable for remote vs. workplace balance?
Does supporting remote work help attract and retain good employees?
What are the financial implications of remote work?
How do I implement a work-from-home policy?
How do I optimize a hybrid work model?

As an employer, you may find yourself pondering the tough decision on whether to allow employees to continue to work from home, and what this might look like. In the tough hiring environment we are now in, you may even feel like the choice is not yours.

Just like your benefits plan, your approach to WFH needs to be customized to your business

Our goal is to help you make the best decision for your company. As always, we know that every business is unique and what works well for one, is not ideal for another. Hopefully, with the various pros and cons in mind, you can implement the best decision for your company.

The Hybrid Work Model is here to stay

Prior to the pandemic, about 5% of Canadians did the majority of their work from home. At the peak of lockdown, estimates are that up to 42% of workers were remote. As restrictions have eased and we’ve become vaccinated, remote workers have reduced to around 25-30%.

The expectation is that by 2025, there will be an 87% increase from the pre-pandemic levels. Studies are telling us that working from home is here to stay.

A hybrid work model (a flexible work model that combines working from the workplace and working remotely) has numerous benefits. It’s these benefits that are leading progressive employers to embrace this model of work, rather than sticking to a more traditional site-based work environment.

Of course, managers and business owners wonder if this is beneficial to the bottom line of the company.

Are my employees actually working from home? Are they being productive?

Depending on the business, productivity is measured in different ways. And of course, whether at home or the office, it’s affected by various factors. We say we want to increase productivity, but what does that even mean?

Productivity is basically the amount of work done in a unit of time, or the measure of performance or output.

These questions have crossed the minds of most business owners and managers. The short answer is that the research tells us not only are employees working, for the majority, they are more productive. Here is what some studies are telling us:

74% of employers believe working from home increased their employee productivity 20%
71-79% of workers say they focus better at home
83% of employees say they do not need an office to be productive
90%-95% of employees say they were at least as productive at home
The most highly engaged workers spend 60-80% of their time working from home.

Depending on the study, the numbers vary. But what appears consistent is that there is not a drop in productivity overall, and for certain types of workers, productivity is higher when given the opportunity to work from home.

“We think, mistakenly, that success is the result of the amount of time we put in at work, instead of the quality of time we put in.”

Arianna Huffington

A hybrid work model allows for ‘knowledge workers’ to more effectively prioritize

Everyone is different in terms of when and how we’re most productive; some of us are night owls, and some of us do our best work early in the day. Choosing when and how we get our work done has proven to increase productivity. According to the Harvard Business Review study:

“Researchers studied knowledge workers in 2013 and again during the 2020 pandemic lockdown and found significant changes in how they are working. They learned that lockdown helps people focus on the tasks that really matter …during lockdown, people viewed their work as more worthwhile. The number of tasks rated as tiresome dropped from 27% to 12%, and the number we could readily offload to others dropped from 41% to 27%.”

For knowledge workers, or those where “effectiveness is determined by the use of brainpower and their capacity to make sound judgments” a hybrid work model is especially empowering and conducive to increased productivity.

Working from home can actually mean fewer distractions

We joke that ‘this could have been an email’ when it comes to meetings, but it’s often no joke! The workplace, while offering undeniable social and collaborative benefits, also comes with distractions and time drains. Unnecessary or overly lengthy meetings and socializing take time away from work, while commuting consumes not only time but energy that could be focused on work.

But aren’t we losing the collective power of the group, when it comes to brainstorming and creative collaboration?

This is a valid concern for employers, and one of the potential negative aspects of remote working. In addition to managing people remotely and a loss of the social ties that in-person work brings, a decrease in collaboration is the biggest concern for most employers. So what’s the optimal solution? Like everything in life, balance is key. What appears to be the best model is a hybrid arrangement, whereby employees have a balance of on-site and remote work, and the ability to make the choice that works best for them as individuals, within reasonable boundaries.

While this is not the right choice for every employer, for many, particularly those with ‘knowledge workers’- supporting a hybrid work model is the smart choice.

A hybrid work model benefits both employers and employees. And, as you’ll see in Part 2 of this blog series, the majority of employees want the option to work remotely. In Part 2 we will delve into the hybrid work model from the employee perspective; why they value this arrangement so highly and the specific benefits. We will take a closer look from an HR perspective as to why it helps to recruit and keep great employees, and why maintaining or implementing a permanent hybrid work model may be the smartest choice for your organization. And lastly, we will outline several tips for employers in developing a customized hybrid work model.

As always, please feel free to reach out to us to discuss your employee benefits program. We love to hear from you!

Trichur, Rita. (September 1 2021). Hybrid work risks becoming the next ‘career killer’ for women. Globe and Mail. https://www.theglobeandmail.com/business/article-hybrid-work-risks-becoming-the-next-career-killer-for-women/

Travers, Sarah. (June 2021). How Hybrid Work Can Help Working Moms- And Your Company . Forbes. https://www.forbes.com/sites/forbesbusinesscouncil/2021/06/18/how-hybrid-work-can-help-working-moms—and-your-company/?sh=31babab25e71

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

Hybrid Traditional + Flexible Employee Benefits: A Sample Design for SMBs

Posted on July 13, 2021February 11, 2022 by Immix Group

By Howard Cheung, Account Executive, Immix Group: An Employee Benefits Company

You are a small or mid-size business. You want affordable employee benefits with costs that you partially control – while having peace of mind that you can provide for unexpected health/drug claims. Read on! This article might just be the benefits blueprint you’re looking for.

In the 2020s, many businesses are being forced to adapt how they attract, hire and retain employees. Even for small businesses, it is not uncommon to have a five-generation age gap with significantly different health and wellness (a.k.a. personal) needs. The challenge: How to satisfy everyone, while keeping a sustainable budget and maintaining the ability to evolve as you free up cash flow and grow?

In this article, I illustrate a sample design that combines the best of two types of benefits:

Traditional Insured Benefits: coverage for unexpected, catastrophic claims related to health
Combined Health and Wellness Spending Accounts (CHWSA): cater to modern workforce needs (five-gen age gap) + budget customization.

Note that this is not the only way to design benefits to meet modern needs. There is no one-size-fits-all solution, as every group’s needs, budget and demographics are different.

Matthew Wong, CGA/CPA and Co-founder of Purpose CPA, gives a great high-level overview of the different types and lines of benefits available to SMBs. Matthew helps guide SMBs to navigate the accounting and tax nuances of the different types of benefits, as well as making sure you’re ready for future growth. Read more here:Employee Benefits for Small Businesses — (purposecpa.ca)

Traditional Insured Benefits (base plan)

A Traditional Insured Benefits program provides a set schedule of coverage for a set premium. Annual renewal adjustment is based on claims experience. Insured benefits have an important role in an overall comprehensive benefits plan because they include coverage for catastrophic claims, such as high-cost drugs and out-of-country claims. Including an insured program as the base layer can offerprotection for you and your employees from unforeseen, possibly devastating, health needs. Granted, for some SMBs with limited cash flow a fully insured health and dental program may be out of reach. Additionally, a traditional insured program does not include coverage for any personal/wellness-related expenses.

So, how to implement a benefits program that provides for unforeseen health claims and satisfies a wide variety of health/dental/wellness needs – all the while with limited cash flow? One way is to implement an insured program that provides a minimal amount of coverage for life and accidental death and dismemberment (AD&D), and basic health. The gaps can then be offset with a Combined Health and Wellness Spending Account (CHWSA).

The following three steps build a solid-but-basic insured health benefits plan:

Secure the base-insured benefits program under a broker-managed pool for the most efficient use of your benefits dollar. See our article “Value of Broker-managed Benefits Pool” for a sound long-term benefits strategy.
Shift premiums around to minimize “money-in, money-out” type benefits. These are benefits that tend to have more predictable claiming patterns and, typically, a cap.
Have 80% or lower co-insurance. This helps to reduce premiums while shifting a small amount of expense to the member.

Now to add the CHWSA!

A Combined Health and Wellness Spending Account provides employees with a pre-determined dollar amount of reimbursement for a wide range of expenses outside of their insured benefits, or beyond the plan maximums.

A CHWSA offers the element of flexibility, as each employee has control over how they allocate their funds between the two accounts, that is, Health Spending and Wellness Spending. As the employer, this is where you have the ability to control the cost and empower your employees to fit the plan to their needs.

The differences between the two accounts are:

Health Spending Accounts (HSA): an increasingly popular alternative or top-up to traditional health and dental plans. Only items considered an eligible medical expense by the Canada Revenue Agency (CRA) can be claimed through an HSA. Examples of eligible expenses are medical, dental, vision, diagnostic tests, lab scans and laser eye surgery.

Wellness Spending Accounts (WSA): extend coverage beyond the traditional type of expenses. Through a WSA, items such as work-from-home expenses, gym memberships, transit passes, yoga classes and even e-bikes can be covered. Employees may even choose to allocate the CHWSA dollars to a group savings program, e.g., Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA).

This is how it works, along with a sample blueprint you can follow:

Employer decides $X amount for the CHWSA
- a) Optional: Set-up different eligible classes. For example, you may decide families get two times more the base amount. Or employees with two or more years of tenure also get two times more the base amount.
At the beginning of each year (or at time of benefits eligibility), each member allocates $X into HSA and/ or WSA. This allocation is locked in until the next renewal period.
Any health-related/CRA-eligible expenses paid out of pocket (e.g., expenses not covered under base-insured health, over-limit physio expenses, or dental or vision) may be claimed under the HSA. (See below for a sample list of CRA-eligible expenses.)
Any other expenses not under CRA-eligible expenses paid out of pocket may be claimed under the WSA. (See below for a sample list WSA expenses.)
Each time there is a claim/reimbursement, the employer will get an invoice of the claim + fee.
Once the benefit year ends, employees may again change their allocation mix. Carrying forward any unused balance is optional (employer decides).
Review your claim reports annually and see where the trends are for future tweaking and decision-making re benefits.
No renewals (the only “renewal” is the reset of the benefits amount).

What to look for in a CHWSA platform?

Work with a benefits team who can set you up with a CHWSA platform, ideally a fully online digital platform, easy to manage, to maximize efficiency in admin/claims/processing. The platform would provide:

1. Adjudication of claims to adhere to CRA guidelines and privacy of members
2. Claims processing
3. App or online claims
4. Payments and reimbursement processing
5. Live support
6. Fees that range from 8-10% of claims
7. Ideally, no setup or subscription costs or float requirements.

Eligibility guidelines

Must be an incorporated active business with at least one employee. The business cannot only be generating passive income
The benefit is available to all employees, not arbitrarily given
Employees who are also shareholders must be collecting income.

So, what’s covered under a Health Spending Account (HSA)?

What’s covered under a Wellness Spending Account (WSA)?

As you can see, there are a lot of items wellness can cover. This is a comprehensive list that can be customized to better align with your business philosophy.

Tax considerations of allocated amounts to HSA vs. WSA

It is important to note that HSA and WSA benefits are taxed differently. The benefit dollars used up in a HSA are tax-free, whereas WSA dollars are taxable benefits. That is, if you claim $1,000 worth of childcare under your WSA, that will be counted as taxable income and you will get a tax slip. This is why there’s a lot of flexibility around WSA – and why we advise that you select wellness categories that align with your philosophy. Unused dollars do not have any tax impacts.

Organization growth and the importance of insured benefits

As alluded to earlier, insured benefits play an important role in having a solid benefits program. The importance of traditional insured benefits is to cover for the unknown, unexpected and high-cost:

Sudden severe illness
Accident
Injury (rehab + drugs + loss of income)
Pandemic-triggered expenses.

An actionable step right now: Do a benefit survey!

Whether you are applying the above or a different design, it would be wise to understand your own group’s needs by doing a benefit survey. Really quantify what matters to them. Aside from knowing what benefits matter, it may help form other areas of your culture. In knowing their personal needs – anonymously, of course — you can then better understand what type of benefits would work best.

About myself and Immix

I’ve been a licensed benefits consultant and broker for businesses in the Lower Mainland for 14 years. I work with the Immix Group team toward benefits solutions for organizations of varying sizes. We would be happy to help you, no matter what your organization’s size!

Any questions, please feel welcome to reach out to me at howard@immixgroup.ca.

Disclaimer: All organizations and groups are different and applicable strategies should be reviewed with a licensed benefits advisor to review your situation.

Renewing Employee Benefits in 2021? – Here are things to know going forward to keep costs down.

Posted on April 20, 2021February 9, 2022 by Immix Group

By Howard Cheung, Account Executive, Immix Group: An Employee Benefits Company

Due to the impacts of COVID-19 in 2020, many insurers provided benefits premium subsidies, or even deferred the program renewal date. In 2021, at least in insured benefit programs, renewals could look slightly different given the unique claims patterns we had in 2020. This is due to the temporary closure of health providers, the subsequent surge in services due to pent-up demand, derived extra cost due to PPE and business logistics, as well as increasing mental health issues and different working landscapes.

Whether you are a cost controller, work in human resources or a small business owner, there are some basic concepts of the renewal process that you should understand, to best deal with rate adjustments while keeping costs under control.

Why are renewal reports so complicated?

Renewal reports can be mind-bogglingly complicated. They don’t have to be. Yes, you have a great deal of data to consider in understanding your group’s claim usage. But there’s a key factor that defines your renewal adjustment.

This factor has to do with:

target loss ratio, or TLR, and
two formulas that will help you understand where your renewal should stand.

TLR, sometimes called a break-even ratio, is a percentage that represents the expense level of the insurance carrier. This expense level directly affects how much your group can claim before the insurance carrier loses money.

For example, let’s assume your plans TLR is 80%. First we need to calculate the loss ratio, which is claims paid/premiums paid. In this case, let’s assume claims paid were $90 and premiums paid were $100:

loss ratio = total claims paid/total premium paid. Using the numbers above, this would yield a 90% loss ratio ($90/$100).
estimated adjustment = loss ratio/target loss ratio. This would yield +12.5% (90%/80%).

There is a lot more that goes into calculating a renewal adjustment. For illustration purposes, we didn’t take into account a few other factors, such as credibility (how much of your group’s own claims are taken into account), trend (inflation factor) and reserves (claims lag).

But the above, in a nutshell, is a very basic description of how renewal rates are calculated. It’s a quick and easy way for a plan administrator to do the math to get a ballpark idea as to where the group should stand.

How is the TLR determined?

You might ask: How is the TLR determined? Usually, it’s determined at the time of inception and illustrated on the initial quote. Included in the TLR calculation are the insurance company’s costs in handling servicing and claims adjudication, as well as any commission paid to the broker. As the group size grows, typically the TLR will increase and the administration cost will be lower relative to the amount of premium the insurance carrier is receiving.

So, the lower the TLR, the greater the portion of your premium going into expenses and administration and commissions. On the other hand, the higher the TLR, the smaller the portion of the premium going to expenses and admin costs.

You want to ensure that your TLR is updated accordingly and is negotiated to be as high as possible. And you can do this by working with specialized employee benefits brokers that have preferred pooling arrangements.

Would you like us to review your benefits renewal and optimize your benefits dollars? Contact us for a free consult!

If you would like to have an in-depth discussion about understanding your renewals and unique strategies, please feel welcome to contact me howard@immixgroup.ca with any questions.

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

The Best Time To Review Your Benefits Program Is Now!

Posted on January 15, 2021February 9, 2022 by Immix Group

By Lindsay Byrka | BA, BEd, CFP
Vice President, Immix Group: An Employee Benefits Company

2020 proved to be an unexpectedly tumultuous year for most people, and if you’re involved in running or making decisions for a business, you were probably taking a hard look at every aspect of your business. If reviewing your benefits program did not make the list, January is the perfect time to review your plan.

But how do you ‘review’ a benefits program?
One of things that make Immix Group stand out in contrast to other benefits consultants is our approach to reviewing an existing benefits program.

We don’t just put together a spreadsheet showing the pricing other providers would offer to gain your business. We go far deeper than that superficial approach, as we want to understand a lot more than the bottom line of a quote, and a lot more about your organization’s history, present state and anticipated future. Digging deep into your historical claims experience and pricing is key, plus we want to understand who you are, what you and your team want and need out of your benefits plan, how this compares to what you have, and what can be done to get you there! And of course, a priority is always creating the most cost-effective plan possible, without compromising on quality service, systems and coverage.

With the pandemic still very much a reality, and cost containment still a concern for most people, we wanted to revisit a blog we posted a year ago (before we knew what was coming!) which discusses the key items to consider when assessing the benefits program for your business.

Updated from January 2020

New Year, New Benefits?

By Lindsay Byrka | BA, BEd, CFP
Vice President, Immix Group: An Employee Benefits Company

At the start of a new year, we all make resolutions. After the uncertainty of 2020, you may be more motivated than ever to take a closer look at your benefits program.

When it comes to benefits, consider: Is this the year for minor benefits housekeeping or is your company due for a benefits overhaul?
Granted, every year should be the year for benefits housekeeping! That said, here is an outline of a few areas to review on an annual basis, and how to determine if your program requires more significant changes.
Hopefully, this will help you to decide just how much to address this year.

Keep things current
Before the year gets going full-steam, check that all your documents — hard copy and/or digital — are current. Ensure all forms, applications, benefits booklets and other items on file are the up-to-date versions. Toss or delete any old ones.

Personal details
Next, check that all employee data is up to date. Have your employees confirm personal details, including: their address on file, dependents, a change in single vs. family status, and their named beneficiary. Employees don’t always remember to keep you in the loop!

Access those tools
One of the silver linings of the pandemic is the speed with which our provider partners moved when it came to going digital with systems and services.

If your still employees aren’t using online and mobile applications to manage their benefits, the New Year is a logical time to send out instructions and encourage them to sign up. Some may be slightly less-than-savvy with technology; that’s understandable. But once they see the advantage of these fast, efficient tools, they’ll gladly adapt.

Pay attention to benefits lines where reductions/ terminations may apply
Check for any plan members who may be reaching the age where certain benefit lines may reduce or terminate. You will want to prepare to advise them of this, and ensure your billing accurately reflects the change when the time comes. For example, is anyone turning 65? Despite your best communication efforts, they may have missed that their long term disability coverage will likely be coming to an end.

Changes to laws or rules
Have any laws or rules changed that may impact your program? Are you compliant with any applicable collective bargaining agreements? If you’re even remotely concerned about this, drop everything and address it immediately. An experienced benefits consultant can assist you in understanding the fine print.

Employment contracts
Are your benefits accurately described in your employment contracts? Misrepresenting, omitting or including outdated items could become a problem for you in the future, such as in the event of a termination or disability situation. This is something to check every time you make a change to your program.

Plan for your benefits renewal
Lastly, when is the plan’s renewal date? Based on this date, you’ll need to find out and prepare for:

When the renewal meeting will be held
What you would like to discuss this year
When you will receive an update on the claims experience
Whether you need to pass new rates along to your payroll company; and,
What other dates are important in the year ahead from a benefits perspective?

Basic administrative housekeeping for a benefits program is essential on a routine basis. But when is it time to take a deeper look at your plan, i.e., take a strategic-perspective view? If any of the following statements ring true, that time might just be now:

Think big-picture
You aren’t sure if your benefits plan takes into account your company philosophy with regard to health and wellness. Or, you have not yet developed a company philosophy!

When it comes to the benefits plan, what is your goal as a company? Have you defined a goal? Or are you somewhere between ‘bare minimum’ and ‘comprehensive and effective health and wellness offering’? If you haven’t taken the time to really think about this, it’s a worthwhile endeavor.

Your company may not have developed a philosophy and goal. But when it does, your benefits plan, like every other aspect of your organization, should be aligned.

Is your team happy with the program?
You haven’t recently surveyed your staff to assess whether the program is meeting their needs. You’re not really sure whether people are happy with the program, or what they may want to see changed. Or worse, you know they’re not happy!

If you haven’t checked on this lately (or ever!), it’s understandable. Other priorities come up, and another year goes by, with the same plan in place. But a new year is a good time to reassess. Consider surveying staff about whether the benefits program is still meeting their needs. They’ll appreciate the chance to let you know things they’d like changed. Again, this is worthwhile. As you know, a happy team is a team that stays. You want to be the company good people come to, not the one good people leave.

Get ahead of the game
At some point in your organization’s history, someone decided an employee benefits plan should be put in place, and hopefully, they were thoughtful in considering the scope and goals of the program. The question is, how long ago was this done? Has your organization changed, while the plan stayed the same?

When it comes to your plan design, coverage, carrier, or plan structure, you may be surprised to learn your program is totally outdated in certain areas and that change is required to bring you up to speed. This might be as simple as expanding the list of covered paramedical practitioners, or more significant, such as switching carriers to take advantage of innovations that were not available when the plan was first implemented.

The pandemic has brought mental health support programs to the forefront
Another way to think about this is the fact that the world has changed, and your benefits program may need to adapt to our new realities. Unfortunately, a major impact of the pandemic has been a reported decrease in mental well being and overall stress. Employees are seeking support, and today’s benefit programs, if they are to be truly effective, need to offer mental health support services.

What else is out there, in the world of benefits?
It is important to assess whether you are taking advantage of what the market has to offer, and weigh whether the current plan still makes sense. This is especially advisable if your plan hasn’t been thoroughly reviewed for a while by a benefits specialist.

A benefits expert — for the help you need
All this may sound overwhelming. If you don’t know where to begin, a benefits consultant can help. Benefits consultants can help take care of every aspect we’ve mentioned above — and more. We want to ensure as part of our process, we’re answering key questions, such as:

The challenges
Does the program take into account the challenges of your business, such as high employee turnover or low employee engagement? What’s next for your business and industry? We raise this point because it is important to consider the plan in terms of business growth and structure. It may be time to implement/abolish different classes of benefits, change waiting periods or eligibility criteria, or expand the group saving plan.

Who are you?
What are the areas that particularly affect or matter to your employee demographic? Are there specific health concerns within your employee population? When it comes to wellness, what are you already doing and could you be doing more?

Ultimately, a benefits plan should be dynamic, and provided the proper management and attention essential to ensuring you make the most of every dollar that goes into it.

Your benefits consultant should be a true partner to your organization
At the Immix Group, we always say we consider ourselves to be an extension of your HR department. That’s because we work with you in a meaningful, in-depth and results-oriented way. As benefits consultants, we’re here to help with everything from discussing your benefits philosophy to surveying your team; from analyzing your program to making recommendations and implementing changes.

Our job isn’t to simply process instructions from our clients; it’s to collaborate, bring our expertise to the table, and ultimately, to partner with you in ensuring you make the most of your benefits dollars. With all that 2020 brought, one thing you can do to make your life a bit easier is to engage a qualified benefits consultant. We’d love to hear from you!

The experts at the Immix Group can be reached at 604-688-5559 or online at info@immixgroup.ca. Or reach out directly to Lindsay at lindsay@immigroup.ca

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

Employee benefits: What you need to know about discounted group benefits pricing

Posted on December 4, 2020February 9, 2022 by Immix Group

By Howard Cheung, Account Executive, Immix Group: An Employee Benefits Company

It’s true. Your business can indeed get discounted group health insurance rates. If you’ve ever marketed your plan with alternative carriers, it’s more than likely you were surprised to see pricing of ten, twenty or even thirty percent below your existing rates!

But is a discount a good thing, or too good to be true? In this article, I’d like to discuss the inner workings of group health insurance quotes that are often overlooked – and help you to make the best decision, with your eyes wide open, as to what is best both now and over the long term.

You decided to get quotes on your program. Now what?

This is the typical scenario: you’ve agreed to market your employee benefits program with other insurance carriers, perhaps through your existing benefits advisor, or perhaps through an advisor who is trying to obtain your business. When the results are presented, you’re surprised to see quotes that are far lower than you’ve been paying!

Questions will likely run through your head like: Have I been overpaying? Is it for a comparable plan or has something been cut or overlooked? Should I jump to quickly take advantage of the savings? Is this too good to be true?

Before you make a move, it’s important to understand how the quote is put together, and whether the pricing that is being presented is logical. Without all the proper information and an understanding of the potential trajectory of your rates, it’s impossible to make an informed decision!

What’s involved in generating an employee benefits insurance quote?

Here’s what happens behind the scenes when insurance providers generate employee benefit quotes, where the company has an existing plan and claims experience available. Once the advisor submits your company’s information, insurance providers will quote pricing based on the demographics, plan design parameters and the claims experience of the group. They typically want 2-3 years of claims experience, if this is available.

If the group presents a desirable risk, meaning there are no red flags or immediate disqualifiers (risky industries, too many high cost claims like long term disability or high cost drugs), then a quote will be prepared. Of course, the insurance carrier wants to obtain your business, and they know that to make a move, you’ll need to see some savings. With the benefits industry being a highly competitive environment, insurers need to stand out with an attractive offer.

Generally speaking, they are often willing to take a short term loss to gain the business, knowing it’s unlikely you’ll move your plan again after just a year or so with the new carrier.

But what is a “loss” to the insurer? Don’t they have deep pockets anyways?

Yes and no. They are large entities with massive revenues, but cannot let individual plans run at a loss. Based on your historical claims experience, their expectations for future claims, and the administrative costs to run the plan, the insurers know the rates they need to charge to turn a profit. However, these ‘correct’ rates may not be enough to persuade you to make a move.

What happens next is the rates are discounted, sometimes 10, 20, 30%, depending on the insurer and the specific case.

When we see highly discounted quotes, oftentimes the premiums that are proposed are equal to, or lower than the past claims! While we don’t know what the future holds and claims can certainly drop, it’s not the norm, and it’s illogical to assume this will happen.

So discounted pricing is clearly not a sustainable pricing model, as the insurer cannot continue to have a loss on the plan year over year. The result is that at your first renewal with the new carrier, the rates will be dramatically increased to the levels needed to be profitable to the insurer.

This is complex: how can you tell if the rates have been discounted?

A pricing reduction from your current rates does not necessarily mean the quote is too low to be sustainable! Of course, it’s entirely possible that you have previously been overpaying, and that another carrier is a better cost option.

Without proper care and attention over the years by your benefits advisor, insurance carriers will certainly propose rates that are above the necessary levels. A lack of proper negotiation year over year means rates that are higher than they should be. There are also incidences of advisors taking commissions that are above the typical, reasonable levels we see in the industry.

Within many benefit pools, the claims experience specific to your group is not provided. Without this, it is commonplace for groups to be paying far higher premiums that necessary to fund their program. If your benefits are inside a pool where you are not privy to your claims details, it’s especially important to get a second opinion on your pricing.

It’s the role of your benefits advisor to analyze and discuss the quotes both with you, and with the insurance carriers who have provided the pricing. An experienced advisor will understand a quote that is attempting to buy your business, versus a quote that presents sustainable pricing.

Your advisor will foresee the risk of a second-year rate jump and explain it to you. That’s their role. While we can’t predict future claims, we can certainly use claims history to help guide us in making reasonable assumptions.

What happens if you decide to make a move, and to take the discounted quote that appears unsustainable?

Be aware that you may be facing a significant rate increase once the first renewal comes around (usually 12-18 months after the onset of the new plan). This is especially true if the premiums proposed are far less than your historical claims.

It’s important to be well aware you’re getting a short-term cost break, and to budget for a potentially large first year increase. Oftentimes, small businesses or startups need to choose the lowest cost option to limit expenses, knowing that the business will be in a better position a year or two in the future.

What not to do… bounce from carrier to carrier.

When presented with an increase, understandably, alarm bells will go off in your head. You may react by requesting quotes. But- the last thing you want to do is to request a market survey, choose the provider presenting the lowest quote, and then repeat the cycle every renewal. Not only is this administratively time consuming and detrimental to your employees, the insurance providers will not provide quotes for groups year after year and will cease to engage with a company that it views as transient business.

So what is the best course of action if you’re presented a renewal with a large increase?

Discuss the details with your advisor; can they explain the math behind the rate adjustments? Do they seem fair and logical or not?
If things still do not make sense, enlist a different experienced advisor to review the plan. They may agree or disagree with the fairness of the proposed rates.
Lastly, if the proposed rates are still not logical, consider marketing the plan with other carriers, with the help of an experience advisor whom you can trust.

If you have any questions on your benefits program or are considering implementing one, feel free to reach out directly to me : howard@immixgroup.ca .

ImmixGroup is a team of group benefits specialists who help businesses to gain better clarity, transparency and cost sustainability on their employee benefits program.

What we have discussed assumes your quotes are based on having had a plan in place previously, and where your claims experience has been made available to you. But-what if you do not have any claims experience available?

Whether this is because you’re a new group, or because you’ve been insured within a pool where the advisor or provider chose to withhold this crucial information from you, you may not know the details of your claims, relative to the premiums you were paying.

Unfortunately in these instances, quotes are based mainly on demographics and the experience for similar companies. Especially for a brand new group, quotes are really just a ‘best guess.’

Establishing a plan with a carrier within a program where you are able to obtain your claims experience is essential to building the knowledge you need to make informed decisions (along with your advisor). This is crucial to ensuring your benefits plan remains competitive and relevant as the economic landscape and employees needs change over time.

The value of employee benefits inside a broker-managed benefits pool, especially during times of uncertainty

Posted on May 12, 2020May 26, 2023 by Immix Group

By Lindsay Byrka | BA, BEd, CFP
Vice President, Immix Group: An Employee Benefits Company

If you are considering ‘taking your plan to market’ we want you to consider why our current climate is the time to join a benefits pool, transparently priced by a broker, rather than marketing direct with an insurance carrier.

The COVID pandemic has altered the claiming patterns we are seeing. This is the case right now and is what we anticipate continuing in the months to come. The impact on long term disability claims is a huge unknown, but the feeling is that there will be an increase in claims related to mental health. For reimbursement benefits such as dental and paramedical practitioners, it is difficult to predict if plan members will ‘make up’ the claims for services they could not obtain during the business closure period.

What we do know as benefits consultants is that our clients will not be at the mercy of the insurance carriers when it comes to pricing of their benefit program when they reach their first post-COVID renewal.

To back up and explain a bit further, employers enlist the services of group benefits advisors to recommend and assist in managing their benefits programs. There are exceptional benefits advisors in this city and country however there are unfortunately also benefits advisors who do not place the best interests of their clients first and foremost.

As group benefits consultants, one area of frustration is seeing the negative impact plan sponsors are exposed to when they were not properly educated on the pricing they were agreeing to when selecting an insurance provider. The ‘lowest bottom line’, without an explanation as to the discount level and future impact, is a misleading sales strategy that often leads plan sponsors to angrily look to ‘shop’ their plan after the first year. Many simply believed they were getting a ‘cheaper price’ because of the carrier.

The reality is the true cost of a benefits plan is extremely similar from carrier to carrier. A meaningful, and sustainable, differentiating factor comes with the unique arrangements the group benefits advisor has organized with the insurance carrier, on behalf of their clients.

Plan sponsors can often be lured by the promise of lower premiums, but oftentimes, they lack the understanding as to the true mechanics of the pricing, and in particular to the ‘investment’ the insurance carrier is willing to provide in order to obtain business.

We wanted to solve this problem, and we did

When it comes to group benefits programs, our approach at the Immix Group is focused on implementing broker-managed and priced benefit pools. We do not ‘shop the market’ and accept the highly discounted pricing that insurance carriers will put forth in order to obtain business. These prices are, in many cases, obviously unsustainable (for example, premiums 20% below the historical claims for a group). Unless you have compelling reasons to believe your claims will drop, when the plan renews, you will find that your claims were higher than your premiums, and a rate increase is in order.

From the insurer perspective, they are willing to take an up-front loss, as they expect to recoup these losses over the next two-three years. When a plan sponsor has accepted pricing that was discounted, and therefore unsustainable, a rate hike at the first or second year renewal is a standard occurrence.

We decided as a firm to exit this game a very long time ago.

We have a deep understanding of the products and services available in the marketplace, and we have created strategic alliances with preferred carriers in order provide best-in-class benefits for our clients. The carriers we recommend are the carriers that offer the systems, services and products that best meet our clients needs. The pricing will be accurate and fair; we know this because the admin costs have been negotiated by our firm to be competitive, sustainable, and available to clients of all sizes.

Our Immix pools have been in place for over 15 years, and the strategy we have used has a proven record of sustainable and transparent pricing. This is a strategy that works for businesses of both small and medium size, and in some instances, even for larger companies.

I mention transparency because this is a key value for our firm. We strongly believe that you, as our client, have the right to see the (anonymous) claims details for your business. If you cannot measure and calculate year over year if your pricing is fair (as it relates to your health and dental benefits primarily), then how do you know if you are benefiting from the pool you are in?

One thing to beware of is that many “pools” will not provide you with the details of the claims experience for your group. How is this any better than the inaccurate/ unsustainable pricing offered from an insurer to obtain your business? How are you as a firm able to make reasonable and data-based decisions on plan design parameters if you cannot see the composition of your claims?

There are many advantages of being part of a Immix Group pool. Here are four key advantages to consider:

Buying Power. Joining one of our pools provides buying power, as you can leverage economies of scale when it comes to plan design offerings, attentive service support, and most importantly, pricing. Even if you are a group of just 3-4 employees, you can gain access to the administrative costs usually reserved for a group with hundreds or even thousands of employees. This is quite simply not attainable on your own.
Diversity. For our pools, we like to mix all sorts of industries and demographic profiles. The reason? Different types of groups have different claiming trends and are impacted in different ways from an economic standpoint. Over time, the patterns of one are offset by the patterns of another. We are not fans of industry-specific pools; from our perspective, they do not make sense. A diverse pool helps spread your risk and aids in keeping costs low.
Transparency. As we said above, this is key. Knowledge is power and knowing the details of your claims experience empowers you to make the right decisions when it comes to your benefits. It also lets you know that you are getting the best value for your pricing. A key question for consideration is: “Why don’t the other pools out there disclose the dollar amount and composition of your claims?” To us, transparency matters.
We handle everything. Service, service, service. At the Immix Group we handle everything from the initial set-up details to the daily administration that it takes to run your plan. For you, this means not using up in-house resources or using an additional party to handle the day-to-day. Plus, you have access to our knowledgeable benefits experts, who can help when unusual or problematic situations arise.

2020 has been a wild ride, but we were prepared

Given the current state of the world, if we were handling hundreds of benefits programs that were directly priced by insurers, we would be feeling very uncertain about the renewals that would be coming down the line. In contrast, we are feeling confident and exceptionally well-positioned to face the post-COVID benefit renewal. This confidence is due to our well established, healthy and successful partnerships with insurance providers.

As always, we have been monitoring our clients claims on both an aggregate and individual level. We know the administrative margins, and in short, the ‘math’ that will be applied to this data. When it comes to benefits pricing, the strategy of your broker matters. In a world of uncertainty, it just makes sense to know all the details.

If you’d like a review of your benefits plan, we’re always happy to help.

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

Employee benefits vs. a straight salary raise: One is significantly better for your business

Posted on January 14, 2020February 6, 2022 by Immix Group

By Howard Cheung, Account Executive, Immix Group / Jan 14, 2020

The old-school view would tilt toward getting a raise, on the theory that a bird – well, okay, a bunch of dollars – in the hand seems the more tangible value. But when you do the deep-dive financial analysis, offering benefits worth the same amount comes out on top.

Let’s take a closer look. A good benefits package for an employee with full family coverage is around $3,000 annually as premium. If this $3,000 were to be implemented as a salary raise, it would translate to a higher employer payroll tax. Moreover the employee would lose out because it is taxable income. So, the $3,000 annual raise wouldn’t be worth as much to either employer or employee.

By contrast, if you go with a benefits program, there are tax advantages to both of you. Employee benefits premiums paid by the employer are tax-deductible to the business and mostly a tax-free benefit to the employee (health and dental are non-taxable). The thing is, the government of Canada wants to reward companies that take care of their employees. The government understands that, for the long term, enhancing employee benefits is not only better for our economy but for overall health of our country.

From a psychological standpoint, the perceived value of receiving a benefits package is also higher. Here’s where genuine tangibility comes in (sorry, old-school types). People will real-life experience the employee benefits program by using it for dentist visits, physiotherapy appointments, at the pharmacy, and more. Employees will engage with the program repeatedly throughout the year, both for themselves and their families.

This is especially true when the business enlists a professional benefits consultant. Savvy advisors help engage the employees by taking them step by step through all aspects of the benefits program via:

education sessions
clear communications
phone-call and e-mail availability to answer questions, and
access to useful benefits tools.

Offer the best to attract the best

Last but by no means least, another reason companies provide good benefits is to increase their competitiveness. A solid benefits program helps attract top talent and retain a strong team. To maximize your company’s attractiveness to that top tier, make sure your benefits are designed to be truly valuable, not just some superficial, cookie-cutter plan.

Because one size emphatically does not fit all – and that’s where employee benefits consultants come in. They work for your company based on your unique employer and employee needs, as opposed to some slashed-rate, self-serving broker bartering whatever happens to be the benefit-market condition of the day. Don’t settle for the latter. When an employee leaves your company, it costs you time and money. Your turnover cost isn’t just in lost productivity, but replacement costs, advertising the position, time spent on interviewing and, of course, training the new individual you finally hire.

To recap, as a business owner you will appreciate – and profit by – being aware of the tax advantages employee benefits programs provide, both to employer and employee. Your business will enjoy the derived benefit of hiring and retaining an excellent team. Once you have that solid, top-tier-attractive program installed, you’ll see that employee benefits actually serve you as “HR insurance,” if you will.

For more information, please feel welcome to contact me: howard@immixgroup.ca

Your employee benefits program: Five important questions to ask every year

Posted on April 13, 2018February 6, 2022 by Immix Group

By Howard Cheung, Account Executive, Immix Group / April 13, 2018

It is vital that you run a sustainable, healthy employee benefits program tailored to your organization’s needs. As your company changes and grows, be aware that one size does not fit all. Update your program to ensure you continue getting the maximum value in providing benefits.

Whether you’re the business owner, human resources manager, chief financial officer or cost controller, you want to keep your employee benefits program effective. Here’s how to do that. Every year, ask your broker the following five questions:

What is my benefits program’s expense ratio, that is, target loss ratio (TLR)?
Knowing and understanding your TLR allows you to compare the expenses of an insured plan, as opposed to comparing the rates/coverage alone. TLR indicates how much money the insurers take away from your premium dollars to run the plan. When organizations compare only the actual rates, i.e., when they “rate shop,” they get sucked into market-surveying every year, and possibly frequent carrier-switching. Don’t fall into this trap. It will lead to inefficiencies for both your organization and the insurers – and ultimately to significant financial costs.
An employee assistance program (EAP) is the number-one way to decrease: a) absenteeism and b) long-term drug costs. Does our plan include an EAP?
In Canada, anti-depressants are one of the highest-claimed classes of drugs. They could be the root cause for your group plan’s annual premium increases. Depression and other mental illnesses may stem from issues outside the workplace that nevertheless influence the workplace. So, even if there is a healthy work environment, personal issues out of your HR’s control can affect absenteeism and presenteeism. When such issues are left unattended, employees often wait too long to seek help. The best way to combat mental illness is to be proactive rather than reactive (i.e., taking drugs). An EAP is the most cost-effective way to have a confidential third-party, professional resource for your employees to access, whether it is for personal or workplace-related issues. An EAP not only eases your HR burden; it also fosters a healthier mindset in the workplace.
In case of an unfortunate life event, are my executives and I adequately covered by long-term disability (LTD) and key-person insurance?
While most group plans include group LTD, you want to ensure that the amount and the definition of coverage are adequate. A common mistake is failing to understand that, after the “two-year own occupation” clause, LTD benefits can end if the disabled employee can do any other job. Furthermore, it is important to ensure that key persons vital to the operation of your business are covered in case of any unfortunate, unforeseen circumstance. Suddenly having to hire a replacement executive would not only be costly; it would drain much of your time and resources. Key person coverage is designed to pay the business in the event of losing a key employee or owner.
A health spending account (HSA) enhances benefits flexibility. Is HSA suitable for an organization of my size?
HSAs are a great way to provide flexible benefits under a controllable financial structure for a small start-up. They’re also an excellent supplementary benefit for larger organizations with an existing traditional benefits program. Members get a set annual amount that can be used for anything Canada Revenue Agency deems eligible as a medical expense. Furthermore, a related type of account, a lifestyle spending account, may even be used for wellness-type expenses, such as yoga classes, supplements and gym memberships (i.e., non-CRA eligible). As of March 2018, setting up HSAs is also one way to provide coverage for medical marijuana.
At what point should I look into shifting benefits money into Administrative Services Only (ASO) funding in order to minimize insurance administration costs to run the benefits program?
ASO is indeed a way to reduce the administrative costs in running your benefits program. It shifts the risk from the insurer to your organization. Based on the plan design, you pay the provider to administer and manage claims for you. Why do this? Because you optimize the reach of your healthcare dollars. Note: This is only appropriate for larger groups. Once your organization comprises more than 100 people, claims volatility is typically low enough for a group to take on the risk. This is especially applicable if you consider ASO for just dental, where there is typically a cap in usage. ASO can immediately save 5-15% of your benefits costs, provided your group has low enough claims volatility.

By asking the above questions, you will have a much better understanding of how your benefit program should run for maximum optimization. If you would like further clarifications, please feel welcome to contact me: howard@immixgroup.ca. I will be more than happy to answer your inquiries in detail!

Am I already covered for travel insurance if I have employee benefits?

Posted on August 12, 2017February 6, 2022 by Immix Group

By Howard Cheung, Account Executive, Immix Group / Aug 12, 2018

99% of the time the answer is YES, you are covered for travel MEDICAL insurance.

Most, if not all, group employee benefit plans have some kind of out of country coverage for unexpected medical emergencies. For example, if you slip and break your leg in Mexico, get food poisoning in Asia, or simply visit a local clinic for a fever, all such instances would be covered.

However, things like trip cancellation or lost luggage insurance are NOT covered under the majority of plans.

Unlike individual travel insurance policies, you do not have to inform the insurance company of your travel dates, as you are covered right away when you leave Canada. Unless there is an active travel advisory or special circumstances deeming a place to be dangerous, travel to most countries is covered.

Most plans provide coverage for at least 60 days continuous travel, but the duration resets when you return to Canada. Most plans cover up to $5M per insured person, which should be sufficient, but review your policy to make sure it fits your needs.

If you would like to find out more, feel free to contact us at Immix Group, where we specialize in employee benefits!

Latest News from Immix Group

A Proven Strategy for Containing Employee Benefit Plan Costs

Table of Contents

Broker-Managed Pools through the Immix Group: Proven Results

The 5 Key Advantages of the Immix Pool

Transparency is a Key Value at Immix Group

Diversity of Member Groups Means Greater Risk Management

Power to Access Competitive Coverage for Small Groups

Service by the Immix Group: An Extension of your HR Team

Reduced Administrative Charges

How can belonging to the Immix Group’s broker-managed pool help a business to control costs?

Key Takeaways

Frequently Asked Questions

Further Reading

Lindsay Byrka BA, BEd, CFP

Extreme Difficulty in Hiring

The Shift to Hybrid Work

The Great Resignation, or rather, the Great Retirement

Continued Focus on Mental Health and Well-being

High Inflation

Federal Dental Plan

Change to EI Sickness Benefits

Flexibility in Benefits

Read more:

Lindsay Byrka BA, BEd, CFP

What do employees want? Do they prefer a Hybrid Work Model?

Why do employees prefer remote work? What does remote work offer?

How can the Hybrid Work Model be an advantage for Employers?

How are employers viewing the movement towards hybrid or even fully remote work?

Will offering a Hybrid Work arrangement help me in recruiting great employees?

Will my employees leave if I don’t allow for a Hybrid Work Model?

How do Employers implement a formalized Hybrid Work model?

Is providing the option to work from home an ‘employee benefit’?

Empower your employees: the smart choice to optimize productivity

Sources:

Courtney, Emily. The Benefits of Working From Home: Why the Pandemic isn’t the only Reason to Work Remotely. (Flex jobs). https://www.flexjobs.com/blog/post/benefits-of-remote-work/

Lindsay Byrka BA, BEd, CFP

Everyone is talking about the Hybrid Work Model

Different businesses require a different approach

Hybrid work: employee productivity plus recruitment and retention factors

Just like your benefits plan, your approach to WFH needs to be customized to your business

The Hybrid Work Model is here to stay

Are my employees actually working from home? Are they being productive?

A hybrid work model allows for ‘knowledge workers’ to more effectively prioritize

Working from home can actually mean fewer distractions

But aren’t we losing the collective power of the group, when it comes to brainstorming and creative collaboration?

While this is not the right choice for every employer, for many, particularly those with ‘knowledge workers’- supporting a hybrid work model is the smart choice.

Lindsay Byrka BA, BEd, CFP

Traditional Insured Benefits (base plan)

Now to add the CHWSA!

What to look for in a CHWSA platform?

So, what’s covered under a Health Spending Account (HSA)?

What’s covered under a Wellness Spending Account (WSA)?

Tax considerations of allocated amounts to HSA vs. WSA

Organization growth and the importance of insured benefits

An actionable step right now: Do a benefit survey!

About myself and Immix

Why are renewal reports so complicated?

How is the TLR determined?

Would you like us to review your benefits renewal and optimize your benefits dollars? Contact us for a free consult!

Lindsay Byrka BA, BEd, CFP

Lindsay Byrka BA, BEd, CFP

You decided to get quotes on your program. Now what?

What’s involved in generating an employee benefits insurance quote?

But what is a “loss” to the insurer? Don’t they have deep pockets anyways?

What happens next is the rates are discounted, sometimes 10, 20, 30%, depending on the insurer and the specific case.

This is complex: how can you tell if the rates have been discounted?

What happens if you decide to make a move, and to take the discounted quote that appears unsustainable?

What not to do… bounce from carrier to carrier.

So what is the best course of action if you’re presented a renewal with a large increase?

What we do know as benefits consultants is that our clients will not be at the mercy of the insurance carriers when it comes to pricing of their benefit program when they reach their first post-COVID renewal.

We wanted to solve this problem, and we did

We decided as a firm to exit this game a very long time ago.

There are many advantages of being part of a Immix Group pool. Here are four key advantages to consider:

2020 has been a wild ride, but we were prepared

Lindsay Byrka BA, BEd, CFP

Offer the best to attract the best

Affordable and innovatively structured employee benefit programs

Frequently
Asked Questions

**Courtney, Emily. The Benefits of Working From Home: Why the Pandemic isn’t the only Reason to Work Remotely. (Flex jobs). https://www.flexjobs.com/blog/post/benefits-of-remote-work/**