Thanks to COVID-19, employers can expect to see health benefit costs rise in 2021. In fact, according to a new report by Aon Canada, “the costs of employer-provided health plans in Canada are expected to rise seven percent next year, outpacing general inflation by more than five percent.” Overall, the Aon report forecasts a Global increase to employer sponsored medical plans of 7.2% and states that “the increase will be mainly due to expanded benefits, increased unit costs for medical services and a decrease in expected general inflation.”
Interestingly, Willis Towers Watson reports “that employers can expect a rise in employer health care costs of between 0.5 to 5% above pre-pandemic projections for 2021.” Basically, our original thoughts of increases prior to the pandemic can be thrown out the window! Here at Health Risk Services, we are already seeing client Extended Health Care and Dental Services renewal premiums for 2021 escalating in some situations into the 30% and 40% increase range!
Overall costs for many employers are expected to be down between 3.3 and 8.8% for 2020 because of the amount of time people spent at home. As well, new Canadian stats are indicating that in fact, health care payouts by insurers dropped $4.8 BN because of the pandemic. And yet we are anticipating premium increases?
There are actual physical or definable reasons for the drop in payouts and for the subsequent rising costs such as:
- Employees avoided regular health care visits during the lock downs, and will be catching up on check-ups that will require increased services
- Employees were unable to continue with regular dental appointments or even unscheduled treatments for emergency dental work.
- Employees were unable to continue with pro-active, holistic self-care such as Chiropractic, Massage Therapy and Physiotherapy
- Deferred care for the items above will make up some of this increase, as will costs of care to make up for losses, and added expenses involving Personal Protection Equipment (PPE) and sanitizing protocols.
Other contributing factors will include higher drug prices, the impact of non-communicable health risks and the continued introduction of new and expensive therapies. There is also the occupational risk that will become significant in the increased pricing due to the need for protective gear such as personal protection equipment, plexiglass partitions and continuing social distancing measures.
One area that requires our serious attention as to where employee benefits costs have risen and will continue to rise due to COVID-19, is for employees accessing mental health care and treatment. With the economic crisis that has accompanied COVID-19, we can expect that the mental health and wellness issues will likely continue to rise, which will then in turn, impact not only the costs but the employees and employers alike.
For many companies, COVID-19 has upended their projections for employee benefits costs. Lower costs in 2020 will soon be replaced by utilization premium increases as COVID-19 cases continue to rise dramatically across the country. Employers should already be reviewing their 2021 health benefits plans to anticipate the changing landscape and the shifting needs and risk profiles of their employees.
At Health Risk Services, we can assist employers with understanding the ways in which their plans can be adjusted to keep their costs minimized while still providing their employees with quality added value benefits. We have worked with hundreds of employers to advise and support their analysis process and their adaptations of their benefits to meet their employees’ needs.
If you would like to learn how Health Risk Services can assist you with preparing for 2021, please give us a call.
Health Risk Services