Benefits Today: Trends Topics & Myths Debunked Seminar

We recently held our Benefits Today: Trends, Topics & Myths Debunked half-day professional development seminar at the Fairmont Hotel Vancouver. This was the second year for this event and the feedback from attendees has been great – 70% of attendees responded a 9 or 10 when asked if they would recommend this seminar to a colleague and another 26% rated it as a 7 or 8 on a scale of 10. As well, we are very proud that TELUS Health chose our event to launch their new AI-driven Virtual Health Care tool – our attendees were the first in Canada to see this exciting tool!

We were happy to see another highly attended session of HR professionals, finance personnel and key decision makers, along with top industry leaders for a morning of insightful learning, exploring practical solutions and strategies for businesses and gaining a better understanding of the current realities of employee benefits through a wide spectrum of topics. The speakers did a fantastic job, and we appreciate them taking the time to share their expertise and insight. Continue reading for a summary of some of our key takeaways from the day.

Special thank you to our session sponsors for their support:

Gold: iA Financial Group, Pacific Blue Cross, SSQ Insurance 

Silver: Equitable Life of Canada, The Great-West Life Assurance Company, Green Shield Canada, LifeWorks, Sun Life Financial

Bronze: RBC Insurance

Financial Update on the Employee Benefits Industry

• Employee benefits continue to be a significant cost to employers and these costs continue to be under inflationary pressure, likely higher than other areas of the business, with no relief in sight.
• Over the past couple of years, we had been projecting annual cost increases of 8% to 9%. Based on survey results, 47% of attendees indicated their plan costs increased 0-5% over the past year and another 39% indicated the increase was 5-10%.
• For 2019, we are seeing a little bit of relief, and projecting cost increases of 7% with some relief related to drug costs as the costs for a broader range of generic drugs are coming down. Based on survey results, 31% of attendees expect their plan costs will increase 0-5% over the next year and another 54% indicated they expect the increase will be 5-10%.
• Over 40% of attendees do not intend to make changes to their benefits plan in light of this inflation either because of the tight labour market or because they can handle the cost increase, and another 33% may consider plan design changes to reduce costs.

Revolutionizing Healthcare Access in the Workplace

• The strong majority of Canadians believe that technology is one of the keys to solving the problem of Canadians still not having a family doctor.
• Virtual care has been growing but TELUS Health believes further opportunities are available by combining virtual care with Artificial Intelligence for a wide spectrum of health issues.
• TELUS Health is partnering with Babylon, a global organization at the forefront of healthcare technology specializing in AI already with millions of users globally and trusted by hundreds of global companies as their digital health provider. Their technology is built to mimic a doctor’s brain and combines 530 million medical facts and is the software equivalent of 10 years of medical training.
• This service is going to be offered to Canadian organizations starting in 2019. Initial access is via an App that accesses a “chatbot” which can lead to a teleconference with a doctor and follow-up (i.e., prescription, another appointment), if necessary.

Bird’s Eye View on Retirement Benefits

• Group retirement plans are now playing a bigger role in the attraction, retention and engagement of employees, even for younger employees, including Millennials.
• In general, Group Registered Retirement Savings Plans (RRSPs) are the vehicle of choice for providing retirement benefits.
• The size of employer contributions has increased and the average employer contribution is now close to 5% of earnings.
• The majority of employers now provide these plans to employees immediately with no waiting period.
• The insurance industry is the predominant service provider for Group RRSPs with 5 Canadian insurers currently managing close to 90% of the retirement plan assets in Canada.
• Consistent with fiduciary (CAP) guidelines in Canada, most employers have reduced the number of investment options available to employees but most plan sponsors also now provide a series of Target Date and Target Risk funds, which are now the most used funds by employees (over 65%).

Paramedical Practitioner Coverage: Past, Present … What’s does the Future Hold?

• How is it that the plan designs for paramedical practitioners have not changed over the last 20 years even though costs have increased significantly and employees’ perceived value of these benefits are now very high?
• Almost 60% of employees make a paramedical claim each year with the highest usage for individuals 30 to 55 years of age, and utilization is likely to only increase further.
• Most employers generally believe that these benefits are valuable to employees but 83% of attendees do not believe they are seeing a positive return on investment and 84% of attendees do not believe employees are making smart decisions when accessing these services.
• So there is a question about how sustainable paramedical benefits are going forward but there are changes plan sponsors could consider.
• At the end of the day, employers need to confirm their overall philosophy towards benefits, and likely towards total rewards, and their current and future financial reality. There is no one right answer and each organization’s solution should be unique to them.

Cannabis – Post Legalization Update

• Some time has passed since “10/17” and the legalization of marijuana and the world did not end on that day.
• Even though there has been a big change related to recreational cannabis, the access to medical cannabis has not really changed at all – it has been legal in Canada for medical purposes since 2002 and it is generally only available through mail-order.
• More insurers have added it as an eligible expense under plans and the remaining insurers plan to or will likely add it in 2019. Most insurers advise that they will “continue to monitor this area”.
• Only 5% of attendees currently cover medical cannabis under their benefits plan but 44% of attendees are planning to do so in the next 12 to 18 months, which reinforces the view that a higher percentage of plan sponsors in BC are open to this relative to the rest of Canada.
• Undoubtedly the pressure to add medical cannabis to benefits plans will increase over time as the stigma related to the legalization of recreational cannabis subsides.
• At ZLC Financial, we neither encourage or discourage adding medical cannabis to a benefits plan, but we have concerns: the prescribing is imprecise, there are significant equivalency issues as no two products appear to be the same, and the costs are significant (approximately $10,000 to $15,000 per year for an average daily dose).
• Of more significance are the changes in the workplace related to the legalization of cannabis, which are really not very different, in principle, to alcohol in the workplace, but there are some additional considerations.
• Cannabis-specific legislation does not address cannabis in the workplace and employers are responsible for developing policies and addressing applicable requirements.
• Employers should look at their existing policies and update them, where applicable, to address cannabis specifically. We note that 55% of attendees have already addressed this and another 24% have developed policies but not yet communicated changes to employees.

This information is designed to educate and inform you of strategies and topics covered during our session. As each individual’s circumstances differ, it is important to review the suitability of these concepts for your particular needs with a qualified advisor. Please let reach out to your Employee Benefits Advisor if you would like to discuss the results for any of these sessions further.