Putting together a company benefit plan or going for a colonoscopy which would you choose?
Well, meeting business owners for initial consultation on this topic I find that most lean towards the latter. That's understandable when I find most have been through a quoting process previously and understand from other business owners the never ending increasing costs for such plans. Most advisers, frankly, that work in this market as one group rep stated recently are order takers and don't advise clients. The evolution of the company benefits has been ignored by agents and if I have to make a guess why I'd say it's two fold – compensation and or ignorance. Here's the nuts and bolts of benefit plans.
What are the options?
- Do nothing at all.
- Traditional group.
- Private Health Services Plan/Health Spending Account
- Combination of group and PHSP or HSA
Doing nothing at all does not make sense as there are facts that indicate favorably for employee retention for companies having a benefit plan. The KISS concept is important here for decision making along with letting your adviser do their job. Make it easy for the adviser as we get well paid and need to earn our keep.
Traditional group in my opinion is not the way to go or for companies and those whom have these plans should look to change them. Being contracted currently with over 25 companies and use to be over 40 companies not that long ago when we had over 70 companies in Canada we've seen the evolution of this market and it's exciting thus the new alternatives are best. These plans are cash cows for insurers.
Private Health Services Plans are excellent for companies if it is simply about the money and again working with any agent it is important to make clear the parameters of any plan to investigate. These plans along with Health Spending Accounts are great for companies but more so for the boss. PHSP's have optional insurance within that are common to the basics of traditional plans. The main two characters of PHSP's are CAPPING EXPENSES and believe it or not building EQUITY for the company. There's a bit to this but we make it ABC like for clients who provide good cooperation. The clear down side for PHSP's is the big hit drug claims WILL NOT be covered.
As you may have guessed the combination is going to be the way of the future and amazingly enough the future is here now for business owners that allow advisers to earn their pay. The big hit drug claims can be covered, equality in involvement is finally here for the employees, employee who choose share expense in the plan and the boss gets their wish of capping expenses. The options currently are minimal and undoubtedly will grow but take time as currently group insurers are quite happy with their huge profits. Market share will dictate the future of benefit plans.
Business owners don't get stressed. For those with long term traditional plans get excited as there is money to save and expense to cap and those without plans consider yourself lucky as starting with a clean slate is perfect.