Benefit Plan Costs – Having it Your Way – Part 1
I’m attending the 2011 Benefits Canada/IFEBP Benefits & Pensions Summit in Toronto. The presentations are a reminder that as far as the reality of benefits costs go “it is what it is”. And what is that?
Double digit inflationary cost trends continue. They’re driven in part by:
- aging workforce (and what that means in terms of incidence of disability, prescription drug utilization, etc.)
- government cost shifting
- new prescription drugs – which while effective are also expensive.
Presenters are talking about what’s working, and how doing more of the same is not working.
What works? How about we start a dialogue about that – here and now.
Part 1 – Face the Reality.
Doing a survey of group insurers is not going to change the facts. What are the facts for most employer/employee groups?
Drug plan utilization is going up – and therefore costs, will continue to escalate – in a big way. Translation: double-digit.
Dental costs are rising faster than CPI by a wide margin. Dentists are also effective at marketing to clients who have dental coverage. Good business for them. Your plan costs rise.
Disability costs are greater than most of us realize:
- CMHA says that 1 in 5 people will suffer from a mental illness and that the resultant Short Term Disability claim cost will be $18,000
- A major Canadian insurer assesses the average cost of a Long Term Disability claim at $150,000
- Manulife provides group insurance to 2.9 Million Canadians and processes 102,000 disability claims per year. Do the math – that’s a lot of claim cheques and a lot of dollars.
Summary: Benefit plan claims drive benefit plan costs. Period. Claims are not going to go away because one changes the insurer.
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