Unfortunately Plan Administrators are rarely experts in group insurance and are likely responsible for more than just their PA duties. Plan Administrators have access to large amounts of sensitive employee data, such as dates of birth, dependant details and salaries. It is therefore important to choose the correct person for this role.
Here are a few of the items that a Plan Administrator is responsible for on a regular basis:
These are just some of the important tasks that PA’s are involved in. Most insurers will provide a handbook or guidance to help PA’s understand their duties and teach them how to use the administration system.
]]>To counteract this, insurance carriers create a buffer of premiums which are to be used to cover claims in the event a group cancels coverage. This buffer is referred to as the IBNR charge and is usually expressed as a % of premiums or as a % of paid claims. This premium is reserved at the end of the first renewal and is held to cover IBNR claims. Therefore this amount is not included in the experience rating renewal calculations. In subsequent renewals the IBNR is recalculated and the previous IBNR is released, which in effect means the customer is only paying for the difference. In this way the IBNR premium being held is always reflecting the most recent experience.
IBNR charges differ between insurance carriers and products and should be reviewed as part of an overall marketing check. Higher IBNR %’s tie up more premiums, which will increase renewal rates. With the advent of more efficient methods for submitting a claim, such as online claims portals, drug cards and smart phone apps, IBNR charges have slowly been reducing as the delay between incurring a claim and reporting it is reducing.
]]>Some of the topics that are often covered by EAP’s are:
Everything discussed with the EAP provider is strictly confidential and is free for the employees and their immediate family to use. The separation of the EAP provider and the employer is a key component of the benefit, enabling employees to talk openly about issues that they may not be comfortable discussing with their employer for fear or reprisals.
The focus of an EAP program is on employee wellness and in being proactive, resolving problems before they impact work performance. The nominal cost is potentially offset by a reduction in absenteeism and turnover, faster recovery and less burden for managers and/or HR. The key is in making employees aware of the EAP program and all that it offers through regular employee communications and information sessions. Under utilization of the EAP benefit is usually due to a lack of awareness of the services available.
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The initial point of contact with the EAP provider is via a phone call using the number provided. The employee or a member of their immediate family calls this number within the hours of operation (typically 24/7) and speaks to a phone agent that helps them determine the nature of their problem. The agent will either then proceed with the call (if it is within their area of expertise) or refer the caller to an appropriate resource that is suitably trained to handle the issue. A call back time or face to face meeting may be scheduled if no suitable resource is currently available.
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There are limited options to choose from for most EAP benefits. If there are options they typically centre around the level of EAP services provided, for example whether face to face EAP consultations are available. There may also be choices around the different categories the EAP covers, with topics such as legal advice or financial advice constituting optional extras.
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EAP is usually priced on a flat per employee basis. The rate may be bundled with other products (such as EHB or LTD) or sold separately.
]]>It is important to stress that Out of Country is not the same as trip insurance. It only covers medical emergencies and will not pay for cancelled flights, hotel stays as a result of delays or lost luggage. The definition of ‘medical emergency’ varies from carrier to carrier, but it typically means unexpected illnesses or accidental injuries. There may be pre-existing condition exclusions. It is important to review the conditions of your out of country coverage before heading overseas as resolving issues while someone is out of the country can be extremely challenging.
Unlike other group benefits, there are relatively few choices regarding Out of Country, with each carrier offering a limited selection of options. However, there are components that should be compared between each carriers OoC offering as these variables can have a significant effect on the coverage available:
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There may be a choice regarding the number of days the out of country benefit covers, but even a standard offering will cover the vast majority of trips. Between 60 and 120 days is the usual amount of days covered. Note that these are typically consecutive days (not annual limits) but there may be rules around what constitutes a continuation of the same journey. For example, returning to your home province for 24 hours but then leaving again may be considered a continuation of the previous trip.
Note that both business and personal travel is covered, and if you have family OoC coverage your eligible dependants are likely also covered under your OoC benefit.
Typically the only employees that run the risk of exceeding the number of days trip limit is business owners that are snow birds (i.e. living overseas for extended periods during the Winter). These employees should confirm that their OoC coverage will cover the duration of their time overseas or purchase additional insurance to fill any gaps in coverage.
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Extended OoC coverage may be available for students that are studying overseas, but these are typically considered on a case by case basis. Approval should be confirmed with the groups insurance carrier before the student leaves the country. Restrictions often apply, for example coverage may only apply while the student is studying and may not cover any travel they do before or after their courses. There may also be restrictions around which educational institutions and/or countries are covered. It is worth stressing again that the Out of Country benefit only covers medical emergencies.
Out of country typically operates on a lifetime maximum basis. These maximums can be extremely high (in the millions of dollars) or sometimes even unlimited. Note that there may be other restrictions or limitations regarding what is and isn’t covered, and for how much. It is worth comparing the specifics of each carriers offerings to understand which would provide the most comprehensive coverage.
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The age at which employees are no longer covered by the OoC benefit. 75 is the standard OoC term age, but some carriers may offer a higher termination age or a choice of OoC termination ages, with higher OoC rates for older employees.
Note that as with other benefits the Termination Age is applied to the employee. Dependant spouses that exceed the termination age remain covered as long as the employee is under the termination age. This can be particularly important for OoC coverage.
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The Out of Country benefit often includes a travel assistance portion, which assists employees that are injured or sick while overseas. This assistance can include everything from locating appropriate care facilities nearby, pre-paying medical bills or helping to rearrange transport back to Canada.
It is highly recommended that employees contact the travel assistance provider as soon as possible once a claim incidence has occurred, to help ensure that the claims process is a smooth one for all parties. The number is usually found on the employees benefit card.
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As Out of Country coverage is intended to cover emergencies only (ie not a planned spend) they usually have 100% coinsurance, meaning the claimant is not expected to cover any % of the overall costs. For the same reason OoC usually has a $0 deductible.
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Out of Country rates are most commonly based on a flat amount, with certificates with single coverage paying around half as much as those with family coverage. OoC is not an experience rated benefit, it is a pooled benefit. However unlike other pooled benefits OoC is pooled from first dollar, meaning that all claim amounts are pooled and none of the cost is passed on to the policyholder.
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There are many components of Paramed coverage. The following is not intended to be an exhaustive list, rather these are the most common components:
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A choice is offered as to which paramed practitioners will be covered by the plan. There are a wide variety of paramed practitioners to choose from, although it is not as simple as just selecting the desired practitioners. Often there are additional requirements, for example practitioners may be required to be licensed, certified or registered.
Typical practitioners to choose from include:
How much of the cost of the practitioner is covered by the employer. Lower coinsurances (for example 50%) create more out of pocket expenses for employees, but may also help to reduce utilization and/or fraudulent claims.
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There are several different ways the paramed maximum can be calculated. The calculation you choose will depend on the level of cost containment desired. Here are some of the available options:
If this option is selected then insureds need to get a referral from their physician before they can make a paramed claim. This option is most often applied to massages. There is some debate as to how effective a deterrent this is.
]]>The Critical Illness benefit is designed to reduce the financial strain for employees, allowing them to focus on their recovery.
There are many components of the Critical Illness benefit. The following is not intended to be an exhaustive list, rather these are the most common components:
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The number of conditions that are covered by the Group CI benefit. The list of covered CI conditions continues to increase, with carriers regularly adding more conditions. Note that 85%+ of all CI claims will fall under a very small subset of CI conditions, stroke, heart attack, cancer and coronary artery bypass surgery. Plans covering more conditions may appear to be offering greater protection, but these may come at the cost of more stringent pre-ex requirements or lower NEM‘s.
Note that some Group CI plans will cover dependants, either spouse, children or both. It is not uncommon for the list of conditions covered to differ for children.
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The $ amount paid to the employee when they are diagnosed with a covered condition and all the other criteria are met. The lump sum payment is tax free and there are no restrictions on how it is used. It does not have to be spent on medical expenses, for example the employee could choose to spend it on a family vacation or use it to pay off existing debts.
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The age at which the Critical Illness benefits cease to be paid. 70 is a commonly used termination age for CI, although higher termination ages may be available depending on the carrier.
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Similar to the Group Life benefit, Group CI often has a reduction schedule, meaning that the amount of coverage provided decreases once an employee reaches a certain age. For example, the benefit may drop by 50% once the employee reaches age 65, meaning if the lump sum benefit is $50k, an employee over 65 that has an approved CI claim would receive $25k.
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Group CI pre-existing condition (pre-ex) guidelines are typically expressed in two numbers, separated by a /, for example 12/12. A 12/12 pre-ex means that any CI claim within 12 months of the effective date would not be paid if the employee had sought medical attention or had symptoms related to said condition at any point during the 12 months prior to the effective date. Pre-ex exists to prevent employees from seeking Group CI coverage when they know or suspect that they may have a critical illness. Longer pre-ex periods provide greater protection from anti-selection and will help lower the cost of the Group CI benefit.
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Some Critical Illness plans offer a reduced lump sum payout if an employee is diagnosed with a condition on the partial benefits list. These often include early diagnosis of cancer. Claiming a partial benefit does not typically effect your ability to make a full CI claim down the road if your are later diagnosed with a condition on the lump sum payment list.
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Some Critical Illness plans will pay for more than one CI claim. Do be aware though that restrictions apply. You can’t claim the same condition twice, for example if you had a heart attack and later had a second heart attack (although see below regarding cancer). In addition to this, conditions are usually classified into categories or groups, and it is not possible to claim multiple conditions from the same category.
For example, if an employee was diagnosed with Condition A from the chart above and received a full payout, and was later diagnosed with Condition B, they would not be eligible to receive the second payout as both conditions are in the same category. However, if they were diagnosed with Condition Z, that is in a different category and the second claim would be eligible.
Note that the number of categories and which conditions are in them can differ between insurance carriers.
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Some Critical Illness plans will pay for more than one cancer CI claim. This may be treated differently from the regular multiple payments detailed above. There are usually clear guidelines as to how and when multiple cancer claims would be eligible, for example, after 5 years treatment free.
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There are many components of the HCSA benefit. The following is not intended to be an exhaustive list, rather these are the most common components:
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The amount of money available under the Healthcare Spending Account. Note that this amount can differ by class.
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Whether or not the HCSA period is based on a benefit year (ie the 12 months from when the group benefits plan renews) or a calendar year basis (1st Jan – 31st Dec).
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How the HCSA amount is made available. This could be annually (ie the full amount right away) bi-annually (half now, the other half in six months) or even quarterly. The allocation period can help to control risk in classes with high turnover, avoiding the situation where employees with short tenure max out their HCSA allowance before they leave.
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Determine whether employees joining partway through the year get the full HCSA amount or a pro-rated amount (for example an employee joining six months into the benefit period would receive 50% of the HCSA amount for the remainder of the benefit period)
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This determines wether or not employees can carry their remaining HCSA balance from one year to the next. This is typically restricted to one year only. The carried over balance is used to cover claims first, before the new balance is used.
For example, if an employee has a $1000 annual HCSA allocation and they only use $500, the next year they will have $1500 available in their HCSA. However, if they only use $250 in the second year, they can only transfer $1000 to Year 3, even though $1250 is remaining in their HCSA. Note that the remaining $250 is forfeit, it cannot be paid out to the employee.
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The dental procedures that are covered vary greatly depending on the levels of Dental covered under the plan.
Dental is typically split into four levels:
There are many components of the Dental benefit. The following is not intended to be an exhaustive list, rather these are the most common components:
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Due to it’s relatively low risk of extremely high claims and fairly stable experience, Dental is often a strong candidate for the Administrative Services Only (ASO) funding model. ASO means that the client takes on the full risk of claims payment themselves and pays the insurance carrier a small administration fee per claim. This mitigates the risk of the policy owner overpaying for their Dental benefit, for example if Dental claims were lower than anticipated and were considerably less than the Dental premium paid. However it also means the client is fully responsible if Dental claims are higher than anticipated.
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Scaling units are a measurement of time spent scaling the teeth to remove plaque. These units are measured in 15 minute increments. When employees go to the dentist for their regularly scheduled cleanings, this is typically when scaling units are used, with multiple scaling units charged per visit (typically 2-3, depending on how long was spent scaling the teeth).
Scaling units often have their own maximum as part of the plan design, for example 12 scaling units per period. It is important for employees to know the scaling units maximum on their plan, and also how many scaling units the dentist is charging per visit, to ensure they aren’t left with an expensive out of pocket charge.
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This determines the length of time required between regularly scheduled dental visits. The most common recall period is 6 months, but 9 or 12 months are also available. Longer recall periods reduce the cost of the dental benefit.
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Coinsurance defines what % of a dental claim the insurance carrier will pay. Lower coinsurances leave the employees covering more of the cost, which reduces the dental claims experience and lowers the dental rates. Note that unlike deductibles, coinsurance continues to be paid for every dental claim, there is no annual limit on the out of pocket expenses for the employee.
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This works the same way as other insurance deductibles, it is an annual out of pocket expense that the employee must satisfy before a dental claim is paid. Deductibles are different for single and family certs, for example the single deductible may be $50 and the family deductible may be $100. Deductibles are reset every 12 months.
For groups switching carriers late in the calendar year it is often worth getting a report of which employees have satisfied their deductibles, or if such a report is not available asking the new carrier to waive deductibles for all employees for the remainder of the year. This ensures employees are not being penalized by a change in carriers.
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The maximum $ amount that will be paid out over a 12 month period. There are separate maximums for each level of dental, with options to combine level 3 dental with levels 1&2 to better control costs. Level 4 dental has a lifetime maximum as opposed to an annual max. There may also be a choice for the maximum to be calculated per certificate (ie employee and all dependants combined) or per insured (each family member gets their own maximum).
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The Dental waiting period determines the length of time a new employee must wait before their dental coverage becomes activate. Longer waiting periods can be used in high turnover classes to help reduce the risk of new employees gaining employment solely to utilize the dental benefit. Note however that longer waiting periods can make things difficult for new employees that had dental coverage at their previous employer and now find themselves without dental coverage for an extended period of time.
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The age at which the Dental benefits cease to be paid. 75 is the standard Dental term age, but several carriers will allow Dental coverage up to age 85 or even beyond.
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There are many components of the Group life benefit. The following is not intended to be an exhaustive list, rather these are the most common components:
How much the beneficiary is paid in the event of the employees death. There are two different methods for calculating the Group Life volume:
Group Life benefits often have a graded schedule, which means the volume is reduced once the employee reaches a certain age. For example, the life benefit may reduce 50% at age 70, or drop to a certain flat amount. There can be more than one reduction, for example, a reduction at age 70 and a further reduction at age 75. Employees typically require less life insurance as they get older, as expenses such as mortgages and children’s education are often paid off at this point. Having a graded schedule also helps to keep the rates down for Group Life. As Life is a pooled benefit the rates are calculated using an age volume distribution, which means having less volume on older employees helps to control the overall rate for that class.
The age at which the Group Life benefit ceases to be paid. 75 is a common Group Life term age, but there is a great deal of flexibility regarding how high the termination age goes for Group Life, particularly if there is a reduction schedule. Note that the employee still needs to meet the plans eligibility requirements, for example they still have to be working the required number of hours.
The Non-Evidence Maximum (NEM) is the amount of Group Life coverage a carrier will automatically provide to all employees that are eligible. Any Life coverage in excess of the NEM will typically need to be medically underwritten on an employee by employee basis. Higher NEMs are therefore a benefit to the client as it will reduce medical underwriting. The size of the group and the average Life amount are the two factors typically used by insurers to determine the Life NEM, with larger groups and higher average Life amounts receiving larger NEMs.
The NEM is a major advantage of Group Life insurance over Individual life insurance. Because of the NEM, employees that would be ineligible for Individual life coverage for health reasons can still get Group Life coverage up to the Non-Evidence Maximum.
The maximum amount of Life benefit that will be paid out. This number only affects employees with Life volumes above the maximum. For example, if the Life volume is 2X salary and the maximum is $100k, then someone earning $40k a year won’t be affected by the maximum, but someone earning $55k would be (they would lose $10k of Life benefit).
The maximum is commonly applied to the Basic and Optional Life amounts combined.
Rates for Group Life are expressed per $1,000 of volume. For example, if the life rate was $0.20/$1000 and an employee had a flat $50,000 life benefit, then they would pay $10 a month for their life coverage (($50,000/1000) * 0.2 = $10)
While everyone in the same class pays the same rate, the monthly amount they pay will differ if the volume is salary based.
Premiums for Group Life can be covered by either the employee or the employer.
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While technically a separate benefit, the core concept is the same, only reversed. In the event that an employees dependants pass away, a small benefit is paid to the employee. Dependant Life is always a flat benefit, with a common setup being a benefit amount for the spouse or common law partner and half as much for any children that meet the definition of dependant. For example, the spouse may be covered for $10k and the children for $5k each. It is rare to see large Dependant Life volumes, the intention is to provide assistance with costs such as funeral expenses.
Optional Life can be extended to the employees of a Group Life plan. Optional Life is purchased by the employees in addition to the Group Life coverage provided by the plan. Each employee can choose how much (if any) Optional Life to purchase. The key difference is that medical underwriting is usually required for all Optional Life, and Optional Life coverage is always paid for by the employee, not by the employer.
Optional Life may not be the best choice for employees looking to provide adequate life coverage as it is often not portable, meaning if the employee goes to work somewhere else they may not be able to bring their optional life coverage with them.
]]>A common question from employees is why am I being medically underwritten? This can be particularly concerning for employees if some members of the group are being medically underwritten and others aren’t.
There are two main scenarios that would lead to medical underwriting on a Group policy:
There are different levels of medical underwriting, depending on insurance carrier guidelines and the amount of coverage being requested:
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The simplest form of medical underwriting is the completion of a medical questionnaire. Depending on the answers provided in this form, a medical underwriting decision may be able to be made without any further tests.
Sometimes the answers on this initial form will trigger a more detailed questionnaire. For example, if an employee mentions on their medical questionnaire that they recently had knee surgery, then they may be asked to fill in a more detailed questionnaire specific to knee injuries.
It is important to be truthful on the medical questionnaire. The information provided is often validated with the employees doctor to ensure accuracy. In addition, any future claims may be deemed void if it becomes apparent that the medical questionnaire was not completed accurately.
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A medical exam may be required to complete the medical underwriting process. The usual process is that a registered examiner will contact the employee to arrange a time and place to meet and perform the assessment. This can be at the employees home or at work, or another convenient location that affords suitable privacy.
As part of the examination, the employee will answer a series of questions and their height and weight will be measured. Fluids may also be required as part of this assessment, including urine and blood. More comprehensive tests such as echocardiograms may be required, depending on the coverage being requested.
A final decision can take several days once all the required information has been received.
Here are some questions that employees may ask, and how to answer them: