Employee Benefit Plan Changes

By June 17, 2020 No Comments
April 20th, 2020
To reflect on the words of a famous leader during times of turmoil…. never let a serious crisis go to waste…. followed by, we can’t wait to get back to normal… even though, some feel that normal wasn’t working. This is new ground for the globe to persevere, overcome, and above all, learn from. The resilience of mankind will insure we get through this together, and stronger.
Many aspects of our daily lives have been affected by COVID-19 including obtaining services that were part of our hygiene and health regiment. Going to the dentist, paramedical services such as chiropractor, physiotherapy and personal care are no longer available (unless for an emergency). While access to these benefit services has temporarily ceased, it does not stop our needs, it has only postponed our utilization of these services. Once we are allowed to visit the dentist, we will all be calling for appointments and to book our kids in, and in turn the service providers, dentists, chiropractors, physiotherapists, massage therapists will be calling us to fill their appointment schedules because of their work stoppage due to COVID-19.
THE GOOD NEWS – The Insurance providers have been monitoring a decrease in expected claims in certain areas and are now providing reductions in employer plan premiums during COVID-19. Insurance providers have announced premium reductions to dental, health care and paramedical premiums from 30-70% (excluding prescription drugs). Some are offering reductions for only one month at the start, and some insurers are offering reductions for three months – April, May and June. Reconciliations from some Insurers will begin to appear on employer plan billings starting in May and June, this is GREAT NEWS for the short term as employers work to keep employees at work and lower their expenses. In addition, many Insurers have deferred annual employer benefit renewals during the months of April through to June and allowed annual plan renewal rates to remain unchanged during COVID-19. It’s nice to see the providers stepping up to do their part to help employers during these hard times.
THE BAD NEWS – As benefit plans move forward from COVID-19 premium reductions and back to full coverage, and claims activity returns to some form of normal, it is worth noting that some benefit plans may be underfunded in premium to support the claims experienced resulting in some unfavourable renewal actions. We will keep a close eye on the situation. In summary, we view the actions of the Insurers as a positive move for employer plans during these stressful times. We will continue to closely monitor and expect the trend to continue with further smoothing of future renewal actions to be consistent in helping employers recover to this new normal.
OTHER NEWS AND TRENDS – AON just released a survey of Canadian employers’ efforts to support employees and their compensation programs, including their benefits during COVID-19:
  • More than a third (37%) of Canadian employers have not made any adjustments to compensation despite the COVID-19 pandemic, however some are considering freezing or postponing non-statutory salary adjustments or merit increases (23%)
  • Cutting pay (15%) or reducing bonuses (4%)
  • Approximately 30% are continuing to pay employees who can neither come to the workplace nor work from home
  • Approximately half of respondents are continuing all benefits, including disability, while about 1 in 5 are not continuing to offer disability benefits
  • 1 in 10 employers with non-unionized staff are continuing only medical, dental, and life insurance benefits
  • Most respondents (72%) are not making any changes to benefits cost-sharing, but 1 in 5 say they are moving to 100% employer-paid
  • Many businesses are grappling with operational challenges brought on by the COVID-19 economy, which has forced them to make decisions to try and manage absences, modify compensation, and, in some cases, facilitate temporary workforce reductions
*Source AON