FREQUENTLY ASKED QUESTIONS
WHAT IS A TRADITIONAL GROUP PLAN?
Traditional plans are "experience" based so if your group usage is high in any given year, your premiums will be reflected in the renewal. If you received a high renewal,(larger than 12%-15%), you may want to consider alternative options such as a pooled benefits program.
WHAT IS A POOLED BENEFIT PLAN?
A pooled benefits program places your group into a large pool of companies that have a longer track record of stable rates. This equalizes the claims and helps reduce fluctuation in your rates, therefore, negating the need to shop around or reduce your level of benefits. Changing providers to another traditional plan doesn’t help either since all insurance companies operate with the very similar "Target Loss Ratios". Pooled plans also have much higher "Non-Evidence limits allowing for a higher level of benefits without the need for medical evidence. This is particularly important when it comes to LTD limits and in some cases Life Insurance for those who aren't eligible as an individual.
HOW ARE PREMIUMS CALCULATED AND WHAT IS A TLR?
Group insurance is a collection of premiums in exchange for insurance limits. Insurance companies operate on the basis that for every dollar collected they are willing to pay a predetermined portion of benefits back to the insured to account for the number of claims as well as administration cost. This is also known as a "Target Loss Ratio" and ranges between 75%-85% depending on your carrier. Most pooled agreements have a higher level TLR, and therefore will payout at 85% as pooled benefits are more efficient and rates are purchased on a wholesale, thus saving you an automatic 10% from inception.
WHY IS 100% PARTICIPATION MANDATORY FOR POOLED PLANS?
Economies of scale, anti-selection and late entrants are the three main driving factors behind a successful plan. The greater the pool of funds, the greater the performance in terms of premiums collected vs paid, which in turn reduces inflation f premiums. The 3rd consideration is protecting people from themselves by ensuring everyone has proper coverage. If an employee attempts to waive coverage at inception and tries to enroll at later date, the insurance company could deny part or all coverage as they would be considered a "late entrant". The two most significant benefits of a group plan are Long Term Disability and Drug Coverage. A late entrant would never be able to foresee this type of event, nor would they be eligible after the fact, which raises the question of liability to the company as to whether benefits were properly presented and implemented at the time of eligibility.
WHEN SHOULD EMPLOYEES BE ENROLLED?
At the time of eligibility is determined by the employer when setting up the plan. The company, at their discretion, can waive the waiting period for specific employees, being either at the first of the month following their start date or the first of the month following the waiting period which can range from 3-12 months usually.
WHAT IF AN EMPLOYEE BECOMES A LATE ENTRANT OR DOES NOT UPDATE THEIR MARITAL/FAMILY STATUS?
If the employee had not enrolled on time, they can still complete an "evidence of insurability" form as well as for their family members. When there's a material change in family status, such as marriage, common-law of having a child, employees need to reflect the change in their coverage from single to a couple of families.
WHAT IF AN EMPLOYEE IS A SINGLE PARENT WITH ONLY ONE CHILD?
Depending on the insurance company, we can request a "couples" rate if the single parent only has one child. If the child or children are covered under another parent’s plan, the employee can waive the family/couple plan and remain/enrol as a single.
IF AN EMPLOYEE HAS A PLAN THROUGH THEIR SPOUSE, CAN THEY WAIVE BENEFITS?
One of the biggest misconceptions is that your partner’s plan covers you for everything. A spousal plan can only share Extended Health and Dental benefits. It does not provide you with Long-Term Disability, Critical Illness, Life Insurance (aside from a small amount of spousal coverage) and finally, Accidental Death or Dismemberment. That being said, an employee can waive the Extended Health and Dental however must provide their spouse’s plan number on the enrolment form. They must still elect the base components of the group plan being Life, AD&D, and if elected LTD, CI and EAP.
DO EMPLOYEES HAVE TO HAVE BC MEDICAL TO QUALIFY FOR EXTENDED HEALTH AND DENTAL?
Some Insurance companies allow it but it's advisable to encourage your employees to apply for BC medical while in Canada, even though they may have travel insurance. Travel insurance is for emergencies only and will not cover a regular visit to the doctors and also has limits of coverage whereas BC medical does not have a limit. The goal of a benefits plan is to keep your employees happy and healthy so they can perform at their best, avoid sick days and accelerate their recoveries.