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October 2018 Bulletin

News from The Benefit Specialists Corp.

From: The Benefit Specialists Corp. <>
Subject: News from The Benefit Specialists Corp.

Dear Ann,


We hope you enjoy the October 2018 edition of our bulletin.  Please feel free to contact us if you ever have any questions or concerns, we are here to help!

 The Benefit Specialists Corp. Newsletter



                                                                        October 2018

In This Issue
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The Benefit Specialists Corp. is more than willing to answer any questions you or anyone you know may have had.  If you know someone who has questions regarding the insurance industry or anyone who wants to join our mailing list please contact me, or forward this email to them and get them to click the join our mailing list button below. 



A Health Spending Account (HSA)  is an innovative way

 to complement your group benefit plan. HSAs provide the

 ultimate blend of flexibility and cost containment, while enabling

 your employees to pay for medical and dental expenses not

 otherwise covered by your plan-with non-taxable dollars. Offering

an HSA to your employees not only helps maintain a healthy,

 productive workforce, but gives you an edge for attracting

 and retaining high-calibre employees.


 For .62 cents a day, your employees can prepare their wills, obtain unlimited phone consultations, 3 letters or phone calls per quarter, 5 (10) page documents reviewed, emergency access if arrested or detained and preferred member discount for complex issues.

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How are your Renewal Premiums Calculated? 





Your group insurance policies rates are built with 2 separate and distinct methods:


  1. Pooled Benefits - Pooled benefits based on demographic and market factors - Life, Accidental Death and Dismemberment, and Long Term Disability.
  2. Experience Rated Benefits - Experience benefits are based on your company's usage or claims rate - Short Term Disability, Health and Dental benefits.


Pooled Benefits:

The experience of your plan is an important factor in determining your premium rates. However, for some benefits, even a single claim can have a significant impact on costs. For those benefits, premiums and claims are "pooled" to establish an average, more stable premium rate.


Life Insurance


The cost of life insurance for your group is directly affected by the size of your company, the demographic make-up of your employees, and an aging population.


Company Size:

 Generally speaking, larger groups, as administrative costs are lower achieve greater economies of scale. This lowers the cost of insurance and the premium you pay.



 The age and gender of your group also has a direct impact on your life insurance rates. As your group gets older, the likelihood of death among your employees increases, and thus a higher premium must be charged. In addition, the ratio of males to females will also play a role in determining premium rates for your group.


Aging Population:

 Besides the demographics of your group, Canada's aging working population places upward pressure on the pricing of most benefit lines, and in particular the pricing of life insurance.


Disability Insurance


Like life insurance, the cost for disability insurance is affected by a number of factors, including the size of your group, the demographic make-up of your employees, and an aging population. In addition, disability insurance premiums are also affected by incidence rates, reserves, and Canada Pension Plan offsets.



 The rate at which people become disabled - or incidence rate is a key factor that affects disability pricing. The pricing of disability benefits will fluctuate up or down depending on the number of employees in the "pool" of insured group clients who are disabled. Over the last few years, incidence rates have increased. The rise in incidence rates is, in part, the result of a greater number of claims being made for mental and nervous disabilities such as depression and stress leaves.


Disability reserves are the amount of money that must be set aside in order to pay for claims of a long-term nature. Consider, for a moment, two factors that affect reserves and, therefore, the pricing of the long-term disability benefit.


  • Interest Rates - In the case of a disability, the duration of a claim can be long enough to make interest rates a factor. When interest rates increase, less premium is needed to stock the reserves. Falling interest rates have the opposite effect.
  • Termination Rates - The termination rate is the rate at which employees are no longer considered disabled. When termination rates decrease (meaning more employees stay disabled for prolonged periods), greater reserves are required to pay for benefits. This is why managed disability claims adjudication is so important.


Integration And Offsets:

Most group plans have a CPP / QPP offset or other integration clauses. This means that any long-term disability benefits paid to an employee are reduced by any benefits the employee receives from other sources. If CPP / QPP benefits do not increase over time (assuming inflation), a greater percentage of the total disability benefit is paid by your private plan.


Experience Rated Benefits


Healthcare, dental care, vision and short-term disability are experience-rated benefits. An experience-rated benefit is:

  • Characterized by a high volume of claims and low to moderate dollar claim amounts.
  • Provides a good opportunity for you to directly control the costs of your plan.


The only way to ensure future claims of your employees are adequately funded is to apply these trend factors to your group plan at renewal. The largest impact on health plans is the cost of medication - it represents 71% of all health claims and 89% of all claims incidence incurred.



Your claims experience is determined by comparing the premium you have paid to the claims that have been submitted and approved. Incurred claims include those claims actually paid out plus reserves (required by law).


Paid Claims:

Claims that have been submitted and approved by the insurance company, and paid out, or reimbursed, for services covered. This category represents the dollar amount paid back to the insured for claims.



It is necessary to establish a reserve requirement in order to ensure that funding is available to pay for claims that were incurred, but not submitted. The ratio of claims incurred to premium is then compared to the target loss ratio, the ratio at which the insurance company has covered both claims and the cost of administering your policy.



The extent to which the experience of your group determines your renewal rates depends on the number of employees covered under the plan and the number of years of experience there is to evaluate. This is known as the credibility of your experience. Generally speaking, the larger the size of the group and the greater the number of years of experience there is to evaluate, the higher your credibility. Smaller groups have a lower credibility factor since it is more difficult to predict claiming patterns from year to year.


The age of your employees and the ratio of males to females are two demographic factors that will affect your health and dental rates. As with life and disability insurance, the size of your group will also have an impact on the premium you pay.


Health and Dental Trend Factors


To ensure that premium will accurately reflect future claims, renewals attempt to predict the cost of today's claims at tomorrow's prices. Some trends we look at are:

* Overall utilization

* Inflation

* Offloading from the government plans.


Utilization and Demographic Trends

While drug prices have remained steady, it should be noted that demographics have an enormous impact on utilization. Health care costs tend to be fairly steady until age 50, at which point they rise steeply with age.


Dental Care Trends



Like healthcare, an aging workforce and the overall impact of aging on claims affect dental care utilization. The average cost per dental service and the average number of dental services covered both tends to be higher for those over


Fee Guides And Inflation:

Your dental plan is designed to reimburse dental procedures based on provincial dental fee guides, prepared by provincial dental associations. While a dentist can charge more, most insurers reimburse procedures based on the provincial fee guide. Fee guides are reviewed annually and increases are usually absorbed by employer-sponsored plans. Although fee guides vary by province, most provincial dental associations increase their fees 2 to 2.5% annually. Approximately 10% of procedures are not subject to fee guide maximums and therefore are completely inflationary. As well more and more dentists are charging up to the maximum allowed by the fee guide.



age 35. The inclusion of dependants also increases the utilization of dental services per employee. During the child-rearing years (25 to 45), the average covered amount rapidly increases. As plan member's age, they also tend to require major dental services more often for themselves.



Updating Salaries

Source: Glen Korstrom - Business in Vancouver


A recent lawsuit underscores the importance for employers of properly administering employees' health insurance plans.


Roxanne Nielsen is suing Tim Hortons (TSX:TSI) franchisee Calecur Enterprises Ltd. for allegedly not deducting appropriate premiums during many of the 12 years she worked for the fast food chain. As a result, when she became disabled, Nielsen received lower payments than she believed she was entitled to, her notice of civil claim alleges.


"Employers' duty goes beyond arranging to have insurance in place and paying premiums to an insurance company," said Kent Employment Law associate Jennifer Wiegele.


She added that employers must also either tell insurance companies when employees get raises or otherwise ensure that higher premiums are deducted and provided to insurers to reflect those wage hikes.


In Nielsen's case, she was working at Tim Hortons in mid-2003 at a salary of $25,056 and that salary rose steadily following her promotion to manager of a store in Mission. By February 2010, when Nielsen was disabled with severe hip pain, she claims that her annual salary was $48,493.


But, Nielsen alleges in her December 30 notice of civil claim, her insurer, Standard Life, had been receiving premiums from Calecur based on a $25,056 salary.


"[Calecur] had failed, neglected or refused to advise Standard Life of [Nielsen's] salary increases since 2003 and had failed to deduct and remit the premiums appropriate to her increasing salary," states the claim.


Nielsen is not suing Standard Life, which is paying her 60% of her 2003 salary. Instead she is suing her former employer for the difference between 60% of her 2003 salary and 60% of her 2010 salary.


That compensation, Nielsen claims, is what she would be entitled to had Calecur filed the necessary paperwork and deducted appropriate premiums. Her claim for compensation from Calecur stretches until October 2043, when she turns 65.


Calecur principal Calvin Adams declined to comment.


None of the allegations have been proven in court, and no statement of defense had been filed by deadline.




The information contained in this bulletin is for general information purposes only. The articles published in this bulletin have been collected by The Benefit Specialists Corp. (TBSC) and we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability or availability with respect to the information, products, services, or related graphics contained.  Any reliance you place on such information is therefore strictly at your own risk.  In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits out of, or in connection with, the use of the information contained in this bulletin.  Through this bulletin you are able to link to other websites which are not under the control of TBSC.  We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.
Ann Hauk
The Benefit Specialists Corp.
(403) 547-5236

The Benefit Specialists Corp., 339 Tuscany Estates Rise NW, Calgary, Alberta T3L 0C6 Canada
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