The Beneplan Co-operative

NSARG Meeting: February 18, 2016

Feb

ruar

y 2

016

Benefits Legal Update NSARG Meeting: February 18, 2016

Feb

ruar

y 2

016

Practical strategies used by Fortune 500 companies NSARG Meeting: February 18, 2016

Feb

ruar

y 2

016

Negotiating Benefits Premiums with an Insurer

Benefits in the Year 2020

Future Trends & Projections NSARG Meeting: February 18, 2016

Feb

ruar

y 2

016

About Beneplan

The Beneplan Employee Benefits Co-operative

Feb

ruar

y 1

8 2

016

All Rights Reserved

Mennonites

Feb

ruar

y 1

8 2

016

The Original Mutual Insurance Company

The Beneplan Co-operative

•  Member-owned co-operative

•  Mutual insurance society

•  Created for the purpose of leveraging volume to

obtain lower fees on group benefits premiums

•  Owners are small & medium employers

•  Recovers excess profit from insurance companies

& distributes it to members as patronage

dividends

Sec

tio

n -

01

Benefits Legal Update NSARG Meeting: February 18, 2016

Feb

ruar

y 2

016

Common Reasons for Disputes

•  Termination while sick

•  Termination without proper notice period (benefits extension)

•  Moving carriers without Life & LTD Waivers

•  Partial disability & allowing sick employees to work

•  Late applicants

•  Independent contractors

•  Allowing refusal of benefits

•  Failing to report NAAW employees

NS

AR

G F

eb 2

016

First: Think Like an Insurer

•  Understand the philosophy of underwriters.

•  They’re like bees: they’re more scared of you than you are of it.

•  Paranoia can actually guide some contracts & policies.

•  Group benefits contracts are for employees who are actively at work.

•  Why? And why do we care?

•  Anything that can go wrong, will. (LTD: Forget to increase salary; CPP

offsets (over-insured LTD), etc

NS

AR

G F

eb 2

016

First: Think Like an Insurer

•  Individual health insurance requires medical underwriting.

•  Group health insurance does not require medical underwriting!

•  You can have stage 4 cancer and still be put onto the plan.

•  The presumption is that you are actively at work.

•  If you’re well enough to work, you’re well enough for insurance w/o medical.

•  In order to allow this, they are scared of ‘antiselection’.

•  Antiselection is the practice of only buying insurance when you need it.

NS

AR

G F

eb 2

016

Feb

ruar

y 1

8 2

016

“Hello, GEICO? I’d like to buy home insurance now.”

Case Study: Brampton Employer

•  100 employees

•  60 year old, loyal, long-standing employee

•  Wanted time off but used up all vacation

•  Controller gave him an ROE on Dec 1st so that he can claim EI instead of

unpaid vacation

•  EE passed away on Dec 23rd

•  Insurer declined the claim: “Employee was not actively at work.”

•  Widow sued and was settled in pre-trail.

NS

AR

G F

eb 2

016

Takeaway

•  Notify your insurer ASAP if you have an employee who will be

not actively at work

•  Get a Letter of Agreement (LOA) on that specific time period to

indicate coverage

NS

AR

G F

eb 2

016

Independent Contractors

•  Do not add them to the plan

•  Let them buy their own coverage

•  Adding them can negate their status as independent contractors

•  You need to have 2 clients minimum to be a contractor – but

insurance companies require that you are not working anywhere else

to receive benefits.

•  Part-time, seasonal and non-permanent employees should never be

covered. Why? To prevent abuse & premium increases.

NS

AR

G F

eb 2

016

Independent Contractors

•  Surfer in Hawaii: “I lay bricks in the summer just so that I can collect

unemployment and surf all winter.”

NS

AR

G F

eb 2

016

Independent Contractors

NS

AR

G F

eb 2

016

Refusal of Benefits

•  Do not let employees refuse the ‘pooled benefits’

•  Life, LTD, STD, CI, AD&D – anything other than health & dental

•  Refusal of Benefits Forms / Waivers do not stand up in court

•  Judge: “[Employer] ought to have known that the employee did not

understand what he was doing.”

•  Case study: Hudson’s Bay Company (Dave Crisp, VP HR)

NS

AR

G F

eb 2

016

Takeaway

•  Do not let employees refuse the

‘pooled benefits’.

•  If they kick & scream, just pay the

premiums on their behalf.

•  Don’t want to set a precedent, as it’s

a slippery slope, but the alternate is

much worse.

•  Require it just as you do uniforms

or safety training. NS

AR

G F

eb 2

016

Late Applicants

•  Make the benefits enrollment as part of the new hire package.

•  Do not forget to enrol an employee.

•  Chase the employee for their forms – don’t let them sit on them.

•  Why? Medical underwriting, possible declines, possible lawsuit.

NS

AR

G F

eb 2

016

Terminations & Sick Employees

•  Never terminate an employee on sick leave.

•  Wait until they return to work or end the disability claim.

•  Never terminate their Life / LTD benefits while on sick leave.

•  The threshold to prove ‘job abandonment’ is extremely high. Must

prove that the employee had a clear and explicit decision to abandon

the job or not pursue the claim.

NS

AR

G F

eb 2

016

Frustration of Contract

•  Questionable disabilities

•  Own occupation period ends

•  The employee refuses to return to work

•  The insurer refuses to continue to pay an employee who is not truly

disabled

•  What do you do?

NS

AR

G F

eb 2

016

Possible Choices

•  Wait until they return to work, then terminate on Day 1

•  Bring them back to work full time, allow them to perform or

underperform, and terminate on that basis

•  Frustration of Contract (trick – ask an employment lawyer)

NS

AR

G F

eb 2

016

What to do with health & dental?

•  There are many cases of employees on LTD for several years, or even

decades, and continue to obtain health & dental benefits.

•  Can cause significant damage to claims history and therefore,

premiums.

•  Courts found it reasonable to terminate health & dental after 12-24

months on disability.

NS

AR

G F

eb 2

016

Termination: Notice periods

•  In Ontario & Quebec, must extend benefits 1 week per year of service

(max 8 weeks) as part of the notice period.

•  Federally regulated employees have a similar requirement.

•  Common law can be greater: can be months instead of weeks.

•  Without a clear termination clause in the contract, it defaults to

common law.

•  Takeaway: Have your employment contracts reviewed by an

employment lawyer, including the termination clause.

•  Can cost as little as $500, and worth every penny. NS

AR

G F

eb 2

016

Worst case scenario

•  Termination clause silent on benefits extension during notice period.

•  Employee is terminated and given 4 weeks benefits extension per

ESA.

•  Employee diagnosed with cancer in week 5, applies for LTD and is

declined.

•  Judge finds the employer responsible for failing to extend benefits

during common law notice period of 3 months in this case.

•  Employer had to cough up the LTD money, and can be on the hook

until the employee is 65 years of age. NS

AR

G F

eb 2

016

Moving carriers without Waivers

•  What is Waiver of Premium?

•  Life & LTD Waivers – why are they relevant?

•  Do not switch carriers until you have reported all NAAW employees,

filled out waivers, and received approval for all waivers.

NS

AR

G F

eb 2

016

Partial Disability

•  Case study: Promotional materials company.

•  CTO developed MS.

•  Company needed him to keep working, and he wanted to keep

working – continued like this for 2 years.

•  MS is a progressive disease – starts slow and accelerates.

•  Partial disability vs total disability.

•  Carrier declined the claim on basis he is not totally disabled.

•  He has not lost income – remember, LTD is an income replacement

insurance, not pure sickness insurance (such as Critical Illness). NS

AR

G F

eb 2

016

Negotiating Benefits Premiums with an Insurer

Practical strategies used by Fortune 500 companies NSARG Meeting: February 18, 2016

Feb

ruar

y 2

016

Our industry is the only one where you can give a vendor $500,000, and are prevented by law by

proving to you where it went! (Privacy) Feb

ruar

y 2

016

1. Volume = Clout

1.a) Fees, Trend/Inflation, Reserves

1.b) Target Loss Ratio: Over 80%

1.c) Fair IBNR / Reserve is 5%

1.d) Fair Trend is 6% on Dental; 12% on Health

1.e) Broker Commissions: 1% to 12%!

2. Refund Accounting

2.a) Fully Insured vs ASO

2.b) Hybrid Plans

2.c) Life Insurance & LTD Refunds

2.d) RST Recovery

3.) Rebates from Big Pharma

3.) Rebates from Big Pharma

4.) Synchronize with Government Subsidy Programs

4.a) EI Premium Reduction Program

4.b) Supplementary Unemployment Benefit Programs (SUB) – ‘top-ups’.

4.c) Ontario Trillium Drug Program (Oral Chemotherapy)

5) Plan Design Customization - Trim the Fat

5.a) Dental billing codes – eliminate loopholes

5.b) Paramedical fraud – crack down

5.c) Multi-tiered drug formularies

6) Wellness Programs

Benefits in the Year 2020

Future Trends & Projections NSARG Meeting: February 18, 2016

Feb

ruar

y 2

016

Medical Marijuana

Tax-deductible As soon as a DIN is assigned, get ready to start covering medical marijuana

Truvada – Preventative HIV Treatments

Used off-label to prevent HIV infection Clients should ask carriers if drugs like these will be on prior authorization, and further, will they ask if the member has already been infected?

Paramedical Fraud Continuing

What does this mean about sustainability of benefit plans?

Prediction for 2020: Botox Claims on the Rise – Dentistry Administering Botox

“80% of my law school friends have already gotten Botox at age 30.”

Pharmacogenetics

“The right drug, at the right dose, at the right time.”

Thank you.

The Beneplan Co-operative Yafa Sakkejha 1.800.387.1670 x252 Cell 416.702.9232 Fax 416.863.5157 yafa@beneplan.ca