Talking About Financial Matters That Affect You and Your Organization
4 Employee Benefits Trends for 2017 (and a wish)
Jan 17th, 2017
Oh January how we welcome thee!
Time for New Year’s resolutions - the optimism that comes with a fresh start and of course – a list! [Note:by today’s date – something like 80% of New Year’s Resolutions have failed]
In the Employee Benefits world 2017 could be the biggest roller coaster we’ve been on in a long time. So without further ado – here’s my list of the top 4 Employee Benefits trends this coming year and at the end – one small wish.
1] The War on Drugs!
Not THAT war on drugs, but none the less a war that is escalating and will continue to do so (unless Trend #3 on the list below comes to fruition – which is a game-changer).
Need proof? Here you go:
Specialty Drug Claims now account for roughly 30% of total drug costs. That number has doubled since 2007.
Many new drugs entering the marketplace are high-cost, speciality drugs – so expect costs to continue to escalate (I.e. It’s not getting better).
Every Employer should have a clear understanding of A) the impact this will have on their Employee Benefits programs and costs and B) how they will deal with those costs (either proactively, the preferred route or re-actively, out of necessity).
2] Your Benefits Plan – Yoga Style!
2017 will usher in the era of flexibility for Employee Benefits programs.
A number of factors are driving this trend hard – and to the forefront as we enter 2017:
- Workplace demographics are as diverse as ever. Boomers have started to retire, leaving most workplaces with a hodgepodge of Boomers, Gen X and Y’s, and Millennials. The “one-size-fits-all” benefits programs no longer work. Employees are looking for flexibility to better meet their individual needs and have the value employers are looking for.
- It is well documented that Canada (and many other nations) will be facing major shortages in the work force in the years to come. Automation and technology will deal with some, but definitely not all of it. Immigration will continue to fill the gaps. With immigration comes an ever diverse work-force – posing the same challenge as the generational one noted above.
- Technology – see #4 below.
3] Welcome to the party Trillium! (Were you invited?)
To me, this one is the greatest unknown. Over the last several weeks I’ve read different interpretations, seen different data sets and heard numerous opinions.
The Ontario Trillium Drug Plan essentially covers the cost of most catastrophic (i.e. high cost) drugs, for those either without private coverage or where private coverage is exhausted, after a deductible based on family income is paid.
Trillium has always (although there is even some argument over this point) been second payer to private plans. If your private plan has no annual cap on drugs, Trillium generally is not applicable unless your out of pocket costs due to co-insurances and deductibles are extremely high.
That appears to be changing. For a concise summary check out Mike Sullivan's article in Benefits Canada HERE.
In a nutshell – Trillium may become first payer after a specific deductible is satisfied, regardless of plan design. This could have a dramatic (positive) impact for employers, employees and for insurers, who today are absorbing much of the growth in high cost drugs, then passing those on to employers in the form of massive pooling charges.
This is a game-changer. It remains to be seen how this evolves and/or if the government fully understands what they are proposing to take on.
While I put this one at #3 – hands down it could be the biggest story of the year.
Let’s be honest – the insurance industry has, in many ways embraced technological evolution the way the tortoise embraced the challenge from the hare – slow and steady wins the race.
Consumers (employers and their employees) have suffered as a result.
There are huge opportunities for suppliers (i.e. insurers) to leapfrog the competition if they are willing to dive headfirst into technology rather than toe-dipping their way along.
A blog post for another day- but there is no inch of the industry that cannot be advanced and improved through technology. However – I’m not holding my breath on this one for 2017, but rather hoping for a glimmer of promise.
Finally – An open wish to all….
Much of the Employee Benefits industry remains cloaked in mystery.
My wish thus is for transparency and clarity to become the norm rather than the exception.
Employers don’t trust insurers. Insurers don’t trust employees. Employees don’t trust employers. Large swaths of everyone place little trust in the brokerage and consulting community.
Sometimes it’s a communication issue. Sometimes it’s an issue of using jargon, instead of plain language. Sometimes it’s business practices that create a wild west mentality over stability and consistency. Sometimes it’s a blend of all of the above.
As an industry and individuals we should be striving for transparency at every level. It will help those doing the good work, from suppliers right through to the employees and practitioners involved in day to day transactions.
Transparency can only create trust.