Designing a Group Benefits Plan For Your Business

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In today’s episode of Risky Business Paul Martin and Colin Rooke are joined by Ryan Warner to discuss designing a group benefits plan for your business. 

Listen to the full episode here, or read the full transcript below

Paul Martin: Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, the business commentator on CKOM and joining me in the studio, as always, Colin Rooke, the Commercial Risk Reduction Specialist and really, Saskatchewan’s expert in this area. And we have another guest joining us. If you happened to catch the last show, you’ll have heard Ryan Warner. Well, he’s staying in and he’s back for a second appearance. We’re going to talk again about benefits plans. It’s an area we haven’t covered a lot on so that’s why we wanted to maybe do more than one show on this thing. Colin was willing to dig into it because really, every company pretty much a benefit plan so for every business owner, business manager who will be listening to this program, this is going to be pertinent to them.
Paul Martin: We talked about making sure that your plan is structured properly. As a broker, you’re going and talking to business owners all the time. How do you broach the subject? What are the topics that you raise to get them into the … to engage them in the conversation? What are you saying? Here’s why we need to talk about this.
Colin Rooke: Yeah, when we’re working through our risk reduction workshops, I mean, we don’t just focus on insurable topics or physical loss. We are covering a broad spectrum. We do cover topics like the company philosophies, the… like you said, Paul, we assume there is a benefits plan unless it’s a small startup. For some reason, it may not. We talk about the philosophy behind the benefits, what you’re hoping to achieve with it. Is it a recruitment tool? Do you look at it as more of a form of compensation? Why did you do it in the first place? Is it because everyone else has one so I need to? What are the goals?
Colin Rooke: One of the main reasons why we wanted to bring Ryan on is, when we’re talking about property casualty insurance and focusing on risk, let’s say we come across a client that has a checkered past. There’s frequency of claims issue, may be some severity issue where a couple smaller ones, a couple larger ones, maybe a big one. What we have the luxury of doing is we can identify those. We can talk about the costs and the costs of doing nothing. We can put a plan together and we clean that stuff up and we can share that plan with the insurance market and say, “Yeah, you know, they had a checkered past. That’s where they were. This is where they are now, and this is where they’re going,” and we can eliminate a lot of that, those costs. Doing that allows us to tell a more effective story and ultimately provides a lot more options in the insurance market.
Colin Rooke: But talking about high cost drugs, one of the questions that I would like to know about is, “Okay, I’ve put together a plan. I haven’t listened to Ryan’s advice and maybe there is an unlimited cap on drugs and I’ve got an employee now, I’ve just learned, that’s going to be on a million dollar a year cost drug and this is a condition that’s not going to go away. What are my options now from a property casualty perspective?” If I had a client that was going to have a guaranteed million dollar claim a year, I can already tell you their insurance premium would start at a million dollars. Then after that …
Paul Martin: Then it goes up from there.
Colin Rooke: Yeah.
Paul Martin: Exactly.
Colin Rooke: So what do you do in that case? Is there any hope? Or is getting in front of the right from the start, is that the real …
Paul Martin: Well, you know, I love it when you do my job and you ask the questions. So you put the question out there. So now I’m going to ask Ryan to slide into the mic. This is Ryan Warner who is the director of group retirement and benefit solutions with PPI and he is an advisor and a consultant and really a guide for Colin and his team on more technical matters related to benefits plan. So thanks for joining us, for coming into the studio today and being with us. 
Paul Martin: You heard how Colin posed that question. Do you have an answer to how, if you’re faced with that question, how do you deal with it?
Ryan Warner: Fortunately, I haven’t had to deal with it front on too too much. Most of our clients we deal with this long before a big drug claim hits their plan. The challenge, unfortunately, is if the plan is hit with the big cost medication, you are really stuck to a certain degree. I say that because frankly, I mean, the insurance company is going to protect that plan by covering most of the initial costs, but those renewals are going to start to go up and up and up every year, too, as the insurance company tries to mitigate their risk and start to recoup some of that cost.

The challenge, unfortunately, is if the plan is hit with the big cost medication, you are really stuck to a certain degree.

Ryan Warner: It’s really challenging to try to move to another insurance company because there’s just not an appetite. You’re forced to disclose what’s gone on inside your benefit plan. So naturally, as a result other insurance companies are likely to decline the option to quote on that plan.
Paul Martin: Is this a common problem in Canada? Are we talking about the unicorn here, very rare experiences, or is this way more common than people think?
Ryan Warner: I would say it’s pretty darn common. The reality is for every 50 life group out there, it’s highly likely that one individual is going to need a medication over $10,000 per year. So as a result, I mean, it doesn’t take many 50 life companies and you’ve got a handful of people that are spending substantial amounts.
Ryan Warner: Remember, you’re not just talking about the employee. It could be their spouse or their children as well.
Paul Martin: You say 50 life companies. That means 50 workers? 
Ryan Warner: That’s correct.
Paul Martin: Okay. So that’s not a particularly big company. If you’re a business owner listening to this program, I mean, don’t play the lottery on this thing. Pay attention to what we’re talking about here because the odds are you’re going to be covered or you’re going to be hit with this. Is that what you’re saying? 
Ryan Warner: That’s just it. You know, I see too many plans out there that certainly on the small to mid sized business category that still offer unlimited coverage. As a result, that unlimited coverage leaves those small to midsize businesses exposed. So the plans will pick up these costs, but once it comes onto that plan, that’s where the real challenge starts to kick in because now the business owner is either hung with that insurance company and the renewals they’re going to give them, the negotiating power has kind of gone out the window. Or you have been faced with a really challenging HR decision, which may mean making a plan design change that now directly impacts that individual that needs that medication.
Paul Martin: You make a design plan that targets a single member of the team?
Ryan Warner: Well, not so much …
Paul Martin: Effectively.
Ryan Warner: Yeah, I mean, realistically, let’s call a spade a spade. You’re not making the change to target that individual, but you’re making a change that impacts that individual. That’s the only way to eliminate that high cost medication off the board.
Paul Martin: We talked about in an earlier program that for most employers, benefits plans are a part of the recruitment process. So I put that out there and I hope to attract good talent. Now all of a sudden, I find I’ve hired somebody new and they’ve got a family member who’s got, in comes the first set of claims and it’s thousands of dollars. As an employer, how free am I to protect myself in the sense of being able to ask questions about the health of the worker or their family members? Privacy legislation comes in, all of this. How do I protect myself as an employer?
Ryan Warner: Oh, that’s a great question and a great point because frankly you can’t ask those questions. So you don’t really know what you’re inheriting when you bring on a new employee and that can be concerning if you haven’t structured your plan design properly. So considering how things look in that benefit booklet, the first word I’m always looking for is unlimited. Then I just simply as the business owner, “Can you afford unlimited coverage? Is this a Ferrari package you want to offer your employees, or do we need to do something that makes it more sustainable?”
Paul Martin: I’m guessing that most employers are not offered a package that says, “This is the Ferrari and this is the economy vehicle,” correct? They’re never described that way. 
Ryan Warner: I would say very rarely they’re described that way.
Paul Martin: It’s up to the employer to be buyer beware on this, ask pertinent questions. If you listen to us today, you’re going to get the questions you need to ask.
Ryan Warner: Absolutely.
Paul Martin: Well, listen. We’ve got to take a little break, and we’re going to come back. The one area we haven’t talked about and I want to dig into it after the break is the whole question of marijuana. That is now on the agenda. So you’re listening to Risky Business Commercial Insurance with Butler Byers. We’re going to take a little break. We’ll be back after this.
Paul Martin: Welcome back to Risky Business Commercial Insurance with Butler Byers. Paul Martin here, your host. Joining me in studio, Colin Rook, the commercial risk reduction specialist with Butler Byers. He has asked to … with us in the studio, Ryan Warner. He comes to us from the east, but he’s the director of group retirement and benefits solutions with PPI benefits. He is an expert in this field and there just really is very few people in the country who know as much about the ins and outs of how to structure a plan than this guy. So we’re really thrilled to have him in the studio with us and to provide us an opportunity to get just a wee bit more insight into how a business manager, a business owner should be approaching this. What kind of questions do I need to ask? How do I arm myself? So I deliver what I want, which is a benefits plan to my employees, but I don’t create a hidden time bomb that I don’t know about. 
Paul Martin: We talked about these high cost drugs that are popping up, and I guess they’re getting more and more common, aren’t they, the high cost drugs? It’s just the way the world is evolving, correct? 
Ryan Warner: They certainly are. The amount of time, research, and development that goes into these medications, you can imagine big pharma has some serious dollars invested. So naturally, as they try to recoup those investment dollars, these medications can get pretty pricey.
Paul Martin: Well, I eluded or sort of set it up before the break that I wanted to talk about marijuana and what impact that has had on benefits plans. Now first of all, we’ve legalized recreational marijuana use in the country, not to be confused with what your drug plan or your medicinal needs are. Probably the fact that medicinal, or sorry, that recreational has come along has focused more attention on marijuana in general, and as a consequence on the medicinal side. What does it look like from your side of the lens in terms of what are you seeing in the industry in Canada as a result of legalization? Has it just increased conversation or has it actually made a difference?
Ryan Warner: Well, I guess the good news is on the medical cannabis side of things, the costs aren’t as dramatic as they are in a lot of the medications that are available out there. Certainly on the cannabis side of things in benefit plans, the big question most business owners should be asking right now is does my plan cover it? If it does, how much does it cover? What limitations do my employees have? 

Certainly on the cannabis side of things in benefit plans, the big question most business owners should be asking right now is does my plan cover it? If it does, how much does it cover? What limitations do my employees have? 

Ryan Warner: We certainly won’t see benefit plans anytime soon covering the recreational side of things, but on the medical side, there are some hidden elements that as an employer I would want to know.
Paul Martin: All right. You teased me there. What are those hidden elements, that as an employer, you would like to know?
Ryan Warner: I think this stems right back to that unlimited comment that we made earlier. You know, is that the element that’s there or is there some kind of a cap in place specifically for medicinal cannabis?
Paul Martin: How much do employers actually understand this cannabis market? I mean, there’s recreational. There’s medicinal, and there are differences. There’s a difference between CBD and THC. How’s that? I’ve got two acronyms right there. I have no idea what either of them means, but I know they’re out there and I hear business people talking about them all the time. Presumably, you guys have to be talking about that as well.
Ryan Warner: Absolutely. So I would say the insurance companies have done a reasonably good job of communicating the medical cannabis side of things and how they are going to cover it. Unfortunately, I don’t think there’s enough communication going on, and certainly from the advisor/consulting relationship, it needs to be brought to the forefront so those employers, again, just understand what their potential cost exposure is and what do they want to cover or possibly not cover?
Paul Martin: Are insurance companies actually including medicinal marijuana? Like it’s just sort of a standard add on to a program? They’re mostly embracing it and away they go?
Ryan Warner: Yes, they absolutely are. There’s a handful of reasons someone would be entitled to claim medical cannabis. Certainly, types of cancers. There’s limitations even there, but a number of different elements that someone would be classified as able to claim that medical cannabis. So there’s limitations there, but most of the time, insurance companies are now covering it.
Paul Martin: I assume that because there are billions in investment capital flowing into the cannabis industry right now from the people who want to infuse it in their soft drinks to you name it, that we are, as a consequence of all of this capital outlay, getting whole bunches of new product lines, much more refined and sophisticated product lines. Are employers up to speed on that?
Ryan Warner: I would say it’s highly likely they’re not. No. There’s too much information for an employer that, like we said in an earlier show, that they have focus elsewhere. They are experts in their field, and this probably isn’t a priority topic, but something they need to be at least conscious of.
Paul Martin: Mm-hmm (affirmative). The notion of CBD, which I guess is the medicinal component, THC being the one psychoactive component in cannabis. CBD, we’re starting to see more products that are actually specific to that. They don’t even have the sort of high side of the product. Is that where we’re going to head do you think? Is that where these programs are going to be restricted to these more refined type products?
Ryan Warner: I would assume so. I mean, I won’t call myself an expert in big pharma and how the medical cannabis field is going to develop, but frankly, as they start to target specific issues, eating disorders, cancers, some high pain type diseases, the more that we can refine CBD and medical cannabis, the more likely we are going to be able to target specific issues. As a result, insurance and policy is naturally going to be written to either cover it, exclude it, or welcome it. 
Paul Martin: So employers have to go through this conversation when their policy comes up every year, correct?
Ryan Warner: That’s right. I mean, I’m having conversations on a regular basis to help people wrap their head around simple policies in house. Are they allowing people to work and function on cannabis, whether recreational or otherwise? So I mean, most times it tends to fit right in with their drug and alcohol abuse policies, but certainly something that they want to consider.
Ryan Warner: Then beyond that, once you start talking about benefit plans, how much are they comfortable covering? I’m seeing a lot of companies now set up specific health spending accounts that are just for medical cannabis.

I’m seeing a lot of companies now set up specific health spending accounts that are just for medical cannabis.

Paul Martin: Is that right? Health spending accounts are something we haven’t talked about today, but it is another option that’s out there for a business. Is that growing in popularity? I realize we’re kind of near the end of the show and I start to raise this entirely new topic. You know, is it something that employers are looking at more and more in depth?
Ryan Warner: I think the really nice part about the health spending account is the budget friendly feature of it. The business owner has the ability to dictate what that cost is going to be. Then they know what their max exposure is rather than going back to that unlimited comment and really having no idea what their end cost could look like. So health spending account is probably the cleanest way for them to include medical cannabis with ensuring that there’s some limitations in place.
Paul Martin: Is it your experience that insurance brokers tend to offer that, put that on the table early? Or is it an afterthought?
Ryan Warner: You know, I guess, it’s hard to say. You know, I run into all shapes and sizes. As far as I can tell, most employers haven’t factored it in, yet, the medical cannabis side. So whether they’re going to structure a health spending account to cover that or look at other means, I don’t know that many companies are getting that detailed, and they really should be to have an understanding of what their flexibility is with their plan, but also that sustainability piece. 
Paul Martin: Ryan, thank you for jumping in on this. I just want to bring Colin in for maybe a final comment. We only have under a minute left in the program, but Colin, you bring people like Ryan in all the time because you know, your mission is to provide employers with as many answers as possible in your risk reduction plan. 
Colin Rooke: Yeah. I mean, our goal always is to educate our clients on risk, both new and emerging and existing risk. You know, I think the more we’re making the audience aware of, again, plan design and drug caps and changes to plans with regard to medical marijuana, they’re important conversations to have. It’s all part of the work we do and the why we do this work. Having the conversation before the issue, really, and again, for anyone listening, this is all … these are all the types of topics that we need to be cognizant of and make sure, again, if you’re working any sort of risk management plan, that there is that proactive element to it.
Paul Martin: Colin, as always, very insightful. Thank you. I want to thank Ryan Warner as well for joining us. Our benefit specialist consultant, who provided some really powerful insights into the questions employers and business owners should be asking themselves as they prepare their benefits plans for a day to day basis. 
Paul Martin: You’re listening to Risky Business Commercial Insurance with Butler Byers. Thanks for joining us. We’ll talk to you next time.