Your business is a going concern and requires your attention to every aspect and detail on a daily basis. Among the many quality products and services that your business provides, you have a team of employees that is crucial to the growth and longevity of your operations. As an employer, you provide your employees with stable working conditions, fair wages and job descriptions that have them contributing the greater good of the business. You also provide them with a Health Benefits Program. A critical component of an employee compensation package, a solid Health Benefits Program will assist you to acquire and retain quality employees. Aside from the obvious expenditure that is required to apply a health benefits program, your commitment, time and understanding to the maintenance and effectiveness of the program is also required. So, as an employer, you put forth the expenditure, the planning, the cost and the support of your health benefits plan to protect your employees. Let's ask this: What has your Health Benefits Plan done for you? Is there more that your Health Benefits Plan can do for you?

A Typical Benefits Package
Traditional Group Benefit Plans – these are structured plans purchased entirely through an Insurance Company.
They usually consist of a combination of Life Insurance, Accidental Death & Dismemberment, Dependent Life Insurance, Short Term Disability, Long Term Disability, Extended Health and Dental Coverage. These plans are priced based on the benefits chosen and the experience that your group has encountered with its existing plan over the past few years.

Ultra Competitive Packages
Private Health Services Plans (PHSPs) are relatively new to the business owner and offer an alternative method to providing Medical and Dental benefits to themselves and their employees. Since Medical and Dental services are not insured products but “fee for service” products, we have an ability to remove tem from the Insured Programs and create a benefit package that provides distinct advantages.

1. Cost Savings – self-insured administration fees are significantly less than an insurers’ margin

2. Complete Flexibility – design and use of program is fully customized to meet the specific needs of your business

3. Control of Premium Dollars – unused dollars in your account at year end belong to you

4. Control of Benefit Costs – in the current and future years

5. Employee Management – employees receive benefits from managing the use of their own account

6. Premiums Carry Tax Benefits – employers benefit from 100% tax deductible premiums that they pay for while employee benefits are 100% tax free

PHSPs can be established in one of several ways. There are design options available depending on how you wish to contribute health spending dollars to a plan, which benefits at what amount will be contributed by the employer or how and where employees spend their health premium dollars.

1. Health Spending Account (HSA): funded on a monthly basis the employer determines the annual contribution to each employee, the type of benefits that will be paid, and an option to determine how unused portions of the account will be used

2. Cost Plus Account (Cost-Plus): employers determines which benefits and to what amount will be paid on behalf of the employee. Benefits are paid only as the service is used and administered. Ideal for small business or proprietorships which require a small benefit amount or unlimited usage.

3. Traditional Plan (Traditional): with a PHSP, your existing Medical and Dental plan with an insurer can be mirrored and reduce your costs by 15% or more. Changes to to the structure of a traditional plan are virtually unlimited and are designed to match your usage requirements.

Cost of Basic Requirements
Control of costs is critical to the success an implementation of any plan. The experience of a plan is an important factor in determining a plan premium rate. However, for some benefits, even a single claim can have a significant impact on costs. Pooled Benefits such as Life Insurance, Accidental Death & Dismemberment and Short-Term & Long-Term Disability “pool” the claims to establish an average or more stable premium rate. Experienced Rated Benefits such as Healthcare, Dental Care and Vision are characterized by a high volume of claims and low to moderate dollar claim amounts. There are several key factors to consider when determining the benefits to be incorporated into your desired plan which will have a direct impact on expenditure and your ability to control costs:

Pooled Benefits

Life Insurance – the cost of Life Insurance for your group is directly affected by the size of your group the demographics of your employees and an aging population.

1. Group Size: greater economies of scale are achieved by larger groups as administrative costs are lower

2. Demographics: the age and gender of your group will affect your rates. As your group ages, premiums will increase. A higher ratio of male to female individuals in your group may also increase the rate.

3. Aging Population: an aging population in Canada places upward pressure on benefit pricing. The bulk of the working population since 1998 is centered in the 35 – 44 age band. By the year 2011, the bilk of the working population will be in the 50 – 59 age band.

Disability Insurance – the cost of Disability Insurance, like Life Insurance for your group is directly affected by the size of your group the demographics of your employees and an aging population. However, Disability Insurance premiums are also affected by factors such as Incidence, reserves, CPP & WCB Offsets, Occupation and Plan Design.

1. Incidence: the rate at which people become disabled. Disability pricing moves in direct proportion to the number of people that make a claim. Nervous disabilities and stress also contribute to number of claims in this area

2. Reserves: money that must be accumulated to pay for claims of a long-term nature

3. CPP & WCB Offsets: The amount of CPP or WCB that an employee receives will affect the amount of disability insurance that the insurer will pay out. As CPP & WCB benefits increase, the amount of disability the insurer will pay out will decrease.

4. Occupation: premiums for disability insurance fluctuate with the risk assocciated with each job description

5. Plan design: the nature of Disability as well as the length of time that benefits will be paid determine not only the the quality of the program, but will greatly affect the cost

Experience Rated Benefits
Healthcare, Dental care and Vision care are known as Experienced Rated benefits and are driven largely by changes to your group’s demographics, health and dental trend factors and the experience of your group.

1. Demographics: the age of your employees, the ration of males to females and the size of your group will all contribute to the premium determined for your plan

2. Health & Dental Trend Factors: the trends associated with the development of a health plan are overall utilization, inflation and declining coverage of these benefits through provincial plans. These factors are applied to each plan at renewal

3. Your Experience: Your claims experience is determined by comparing the premium you have paid to the claims you have incurred. Incurred claims include those claims actually paid out plus reserves (required by law). 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. As the size of your group increases, so does the target loss ratio.

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. The higher your credibility, the greater reliance the insurance company places on your experience to establish your rates. The remainder of your required premium that is not attributable to your experience is determined by Health and Dental trends and the demographics of your group.

Health Risk Services provides a number of services that contribute to the efficient execution and proper maintenance of your health benefits program. Our experience and “client first” approach is clearly defined by the following services which are included with each benefits program fro Health Risk Services Inc. throughout the design, administration and maintenance process, many others benefits will result from your decision to choose HRS Inc.

1. Educating both employers and employees to assist in understanding how your program functions, how to use them efficiently and how to be accountable and responsible for the programs that are implemented at your business

2. The adjudication and verification of all claims to ensure that each claim is eligible according to Canada Customs & Revenue guidelines

3. Processing of all Health & Dental claims

4. Provision of all necessary documents and receipts for tax purposes and coordination of benefits

5. To review and manage each program at least once per annum and manage the program to ensure proper functionality

6. To assess and reconfigure each plan so that the best possible usage and best available products are applied to specific needs and requirements of each client

Who You Are and What You Do
Every business is different – size, structure, years in operation. Not only do the physical attributes of a business define what it is and how it operates in a competitive marketplace, but the methodologies and philosophies of operating a business vary as well. Although business fundamentals and solid ethics are commonplace, approaches to employee compensation, operations strategies and use of resources are as unique to the business as the business name itself. These key elements should indicate that an effective benefits program must also be designed and applied to the business that best suits its daily operations. You can purchase benefit plans that are designed to provide general, blanket coverage for a number of different areas of your business. But you don’t have to – you can implement a plan that works best for you and your business.

Existing Benefits Program
The best way to determine what benefit program is the best for you and your business is to take a closer look at what you already have. Do you know what is being used, by whom and where? Where do the dollars go? When do I review and adjust the program? Does the program work the way it was explained to me and can my questions be answered promptly and clearly? As an employer, do I even understand the details of how my health benefits program works?

Desired Benefits Program
One of the first questions you may have is, how do I truly know what I want or what is best for my business if I don’t understand how a benefits program actually works? Where do the dollars go? What are the limitations and uses of a program? Employee interaction is crucial at this point because often what employees want, use or prefer in their health benefits package will determine what plan will work and what options can be included. It doesn’t have to be about covering the basics and general uses anymore – it is about applying a health benefits program with enough options and flexibility to maximize usage and minimize costs.

Covering the Gaps
Health Risk Services functions to assist you in answering these questions and outlining the solutions that will begin to close the gaps between what your current health program offers and what the next best solution can provide. The key elements of maximizing how efficient your health program can be is in the design, implementation and management of the plan. This is the role of HRS and how we will:

– maximize employees usage and involvement – developing a program that introduces options and flexibility by meeting the specific needs and uses of each employee and involves employees to the extent that they determine what components of the program are most critical to them

– minimize costs – including products that can and will be used by the personnel of your organization that it is meant for. This process eliminates excessive coverage and pinpoints direct usage to individuals who use it more and those who do not require a benefit to the same extent

– options for unused portions of benefit expenditures – where funds for Health Spending Accounts (HSAs) are applied, unused portions of benefit allotments have options for rollovers or reinvestment purposes

– review and maintenance process – an essential component to your program which continually assesses the effectiveness of coverage, control of expenditures and outlines processes to adjust and realign programs where required

– program that is understandable and usable – eliminating the unknowns and educating owners and users of the health program how to best maximize the provisions of the health benefits program. Allowing both employers and employees to make informed decisions for structuring the program as opposed to making purchases of products that are only perceived as necessary

– program that is best suited for the size, structure and operations schedule of our business – introducing components of the program that are best used by the business in terms of it’s operations and are available based on the requirements and risks associated with the business style and working conditions

The basics of every health benefits plan should include a solid structure for the implementation of products and a service component which allows for accurate administration and program maintenance. More importantly, the coverage that your program provides should compliment the structure and activity of your business. Although there are many products available for a number of different insurance coverage, your plan should include those that are most cost-effective to you and your business.

There is no fixed standard for what may be included in a traditional benefit plan but there are certain areas of health insurance coverage that employees of your company may become accustomed to seeing in a plan that is offered to them. Generally, the basics of most plans will consist  of a combination of the following:

  • Life Insurance
  • Accidental Death & Dismemberment
  • Dependent Life Insurance
  • Short Term Disability
  • Long Term Disability
  • Extended Health & Dental Coverage

Private Health Services Plans (PHSPs)
Private Health Services Plans (PHSPs) offer an alternative method of providing medical and dental benefits for self-employed individuals, small business owners and larger sized businesses with several employees. Services that are ineligible through traditional insurance programs can now be included in your coverage such as vision and major dental that may have been very costly under another plan. Medical and dental services are not “insured” products but are “fee for service” products. This means that as a service is required or used by an individual, then the benefit is administered and paid for as opposed to paying for a service inside of a plan that may or may not be used. PHSPs allow for businesses to implement a health plan without incurring the cost of traditional plans which are most cost-effective when designed for a large group of employees. A more detailed explanation of PHSPs can be seen here:


Of course you do have some design options when choosing the structure of your health plan. HRS Inc. can establish a health plan or PHSP in many ways which can add very specific and cost effective components through the design of the plan. Many components of Traditional Health Plans can be incorporated into you plan design with other components, or options of a PHSP. For example, although your preferences for life insurance may reside with an insurer that you prefer or are comfortable with, a plan to cover your preferred amount of Dental and Vision benefits may be served best through the creation of a PHSP. Te two can work effectively together.

Understanding Options
Health Risk Services not only provides the insured products and design services for your health benefits plan but also ensures that your business will thoroughly understand its options for the use of the plan. Regular reviews of your plan are conducted to ensure efficiency and the addition or deletion of products that may be more beneficial to current employee requirements. Having options in plan design and an ability through HRS Inc. to administer them effectively will most certainly provide a cost savings to you. Managing your plan through HRS Inc. will ensure that your chosen options remain effective and the plan design itself is continually meeting the needs and changes of your business.