7 Hidden Liabilities in your Employee Benefits Plan  

Sometimes, an employer can’t see or predict the potential problems that could arise within their employee benefits plans…like that of an iceberg where the majority of the damaging ice is located below the water. At Health Risk Services, we have completed hundreds of audits on benefit plans, and have identified 7 possible hidden liabilities that could be lurking in your employee benefits plan that we would like to share with you.

Most of these liabilities are due to the absence of restrictions, caps, or time limits on specific benefit coverages. In either, the absence of or non-communication of such restrictions, caps, or time limits, it becomes very apparent that the overall costs of the benefits plan coverage will increase for both the employer and the employees.

1. Unlimited Prescription Drug Coverage VERSUS Drug Caps

Some benefits plans have drug caps on certain medications or classes of medications. Unlimited prescription coverage exposes the employer to the potential burden of both the increased utilization of drugs within a very short period as well as the exorbitant cost of those drugs. One way to control this liability of specific drug utilization and cost is to implement drug caps & types of drugs that would be eligible.

  • Forteo This drug is a prescription medication used to treat postmenopausal women, as well as men, who have osteoporosis and who have a high risk of suffering from broken bones or fractures. Forteo is administered by injection either by a physician or self-administered with a pen. Each pen costs between $1400 (generic) to $2115 per month (brand name) which is a total of $16,500 to $25,000 per year.
  • Carboplatin + Etoposide This drug combination is used as a part of chemotherapy for various types of cancer such as lung cancer, and the cost is $1228.50 per 21-day course. Patients might be on this drug for several months, after which time the patient may require different chemotherapy if the cancer has not been arrested. In general, the cost of cancer medications rises if a patient moves from one Stage to a higher Stage. This is the kind of hidden liability that can be detected with a liability audit.

2. Types of Drugs Eligible for Coverage  

Does your drug plan make it mandatory for prescriptions to be filled using generic versus brand-name drugs? Do you remind your employees to ask their pharmacist to use a generic equivalent if it exists? As a comparison, in Canada, a brand-name drug that costs $114.22 could cost $19.45 for the generic version.

Does your plan allow for Biosimilar or Biologic drugs as well, and if so, are the Biosimilars mandatory? Biosimilars saved Canadians an estimated $168 million in 2020 and $232 million in 2021. However, this is only a fraction (30%) of the potential savings that could be realized if more players switched to biosimilar initiatives. This includes provincial public drug plans as well as private insurance companies.

3. What are the Major Medical Allowances and Maximums? 

For example, are there Annual Expense Maximums, Period Maximums or Lifetime Maximums? One example would be Hospital Beds: Are all types of beds included such as Electric? What is the Maximum Expense Maximum – $1500.00, $2500.00, $3000.00 etc.? Is this a lifetime maximum or can the bed be replaced after a designated number of years such as every 5 years?  Other examples would be oxygen or CPAP machines. Will the plan provide 1 machine for Life only, or will the insured be able to purchase additional machines as per the designated time periods?

4. Unlimited Semi-private Hospital Coverage

Staying in a semi-private hospital room is a luxury, especially now when many hospitals are at maximum capacity due to the long-term effects and delays from the pandemic. In Alberta, a semi-private room costs $60.65, so a week-long stay would cost $425.55. If an employee or a family member had a serious illness or injury, they might be hospitalized for an extended period. Does your plan have a maximum for the number of days that the semi-private room will be covered?

5. Eligible Medical Supplies Maximums

Are the eligible Medical Supplies maximums identified or open-ended? Example – Limitations to the types of Diabetic supplies that are eligible and the annual maximums or lifetime caps. Does the plan allow for the new and expensive diagnostic equipment such as the FreeStyle Libre machines and if so, maximum, and how often? Will the plan provide for the Testing Strips and again, to what maximum? 

6. Dental Age and Allowance Restrictions

Are there any Dental Age and Allowance Restrictions for services such as x-rays, cleaning, exams, fluoride or orthodontics? For example, some dental benefit plans do not cover children over 21 unless they are full-time students and stop coverage of seniors over the age of 70.

7. No Maximum Limits on Accidental Dental Benefits

Accidents happen, and when teeth are damaged while playing sports, or in a fall, or other cause, the treatment of those dental injuries can cost thousands of dollars and require months of treatments. Does your plan have a limit on accidental dental coverage, as well as a time limit for the work to be completed?

It is important to remember that when claims are paid for these hidden liabilities, the additional costs will become part of the insurance company’s renewal calculation and will undoubtedly increase premiums for the upcoming year. For employers and benefits plan managers, identifying the hidden liabilities in your benefit plans could save your company a considerable amount of money each year. By providing limitations and greater clarity to your employees, you can minimize the potential damage that the “iceberg” could present.

At Health Risk Services, we conduct a liability audit as part of all our regular reviews. We find hidden liabilities AND we present you with solutions so that you can take control of your benefits plans. We provide in-depth knowledge of where company savings can occur while offering employees comprehensive and desirable plans.

To schedule your Complimentary Consultation with Health Risk Services, please call 403-236-9430 OR email: info@healthrisk.ca

Stay tuned for the introduction of our TOTALHealth™ program! To be launched in 2023.