HR Professional - September 2013 - (Page 19)

Benefits 20 WAYS TO SAVE ON YOUR BENEFIT PLAN B Y YA FA S A K K E J H A There are many ways that you can reduce your premiums without drastically cutting benefits. REDUCING ADMIN FEES 1. Join a buying group: Admin fees are based on the volume of a group. If you have less than 200 employees, it makes sense to join an aggregator in order to reduce your fees. 2. Negotiate your target loss ratio (TLR): The higher your TLR, the lower your rates are. The best possible one is in the high 80s. Ask your broker—if it’s anything lower than high 80s, see if you can get it up between 83 per cent and 89 per cent. 3. Negotiate a crown scale commission structure: You are entitled to know how much commission is built in for your broker—it comes directly from your pocket. It should decrease as your group expands and hires new employees. A fair percentage is 8-10 per cent for small employers, and five to six per cent for large employers. 4. Partner with other companies to reduce admin fees: Even if you are already part of a buying group, you can link up with another business owner under the same policy # (maintaining different plan designs) in order to obtain a lower commission rate. 5. Negotiate a refund on unused health and dental premiums: If you have joined a buying group, or if you are currently on a fully 6. 7. 8. 9. insured plan with more than 100 employees, you should easily be able to receive a refund on any premiums you paid that were not put towards claims or fees. Negotiate a lower trend or inflationary factor: All carriers will inflate your premiums in anticipation of higher claims in the next year. However, the inflation rate they set is often higher than reality. Bring this down to 11 per cent for health and five per cent for dental. Negotiate the reduction or the Incurred But Not Reported (IBNR) reserve: IBNRs were originally built into plans to budget for claims that employees made, but which have not yet been submitted: the shoebox effect. However, in the electronic age, most claims are submitted very soon after occurring. Reduce this reserve requirement as much as you can. Negotiate a refund on unused life & long-term disability premiums: If you are large enough, or part of a buying group, rebates on pooled insurance products exist. Ask your broker how to build this in. Negotiate a refund on retail or provincial sales tax: If your plan is ASO, make sure that your sales tax is calculated as a percentage of Claims + Fees, instead of on Premiums. The government allows this, and make sure your carrier is paying you this tax refund. 10. Ask your carrier if they have rebates for prescription drugs: Some insurance companies are starting to give rebates on the prescription drug benefit, which is completely separate from surpluses from any ASO arrangement. PLAN DESIGN Benefits are priced in the same way that hydro is billed: the more usage, the more you pay. You can control the consumption in fair ways by trimming the fat, without cutting back on benefit levels. 11. Cover the dental fee guide from last year or 2 years prior: The dental fee guide is the fair market price list set by the provincial dental association, and it increases every year with inflation by about 3 per cent. However, a closer look shows that more frequent services may increase by 10 per cent, and less frequent ones by 0 per cent, netting out to an average of 3 per cent. Having your plan pay last year’s fair market price does not cut on the benefit, but allows your H R PROM AG .C OM S E P T E M B E R 2 0 1 3 19 http://www.HRPROMAG.COM

Table of Contents for the Digital Edition of HR Professional - September 2013

Editor’s Letter
Leadership Matters
Legal Words
Embracing Loss: Succession Planning for Sudden Departures
Motivating Gen Y
Looking Ahead 10 Years: Top Challenges Facing HR
Making Connections for Immigrant HR Professionals
Interview with an HR Hero: Rod Jackson, MPP
Off the Shelf
The Last Word

HR Professional - September 2013