Trend – A Second Definition

Sep 22, 2014

When we hear the word trend, we often think of what is happening in the realm of the latest fashion or what is the latest and greatest in the world.

In the benefits industry, the term trend has a different meaning and is an important concept to understand. Most people intuitively know the costs of benefits plans are rising. The major reason for this is trend. It specifically refers to the expected year over year cost increases due to the following:

1. increasing inflationary costs of medical and dental services
2. rate of use of these services (usually always increasing) by the Canadian population

It’s an accepted fact the cost of most goods and services increases each year, mostly due to the fact that the cost of the materials that go into making the good or service increases. In healthcare, this could be the increased cost one year to the next of prescription drugs or medical supplies, such as a wheelchair, or a knee brace. In dental, it could be the cost of an appliance or the materials that go into making a filling or a crown.

From a usage standpoint, it is assumed that as the working population ages (think of the baby boomer generation moving through the system), there are increased incidences of health and dental services and products being consumed.

With an insured benefits plan, the insurance provider applies a certain percentage to their renewal rates. This percentage is what they feel properly represents the additional cost of overall inflation and the increased usage on average. In the past two decades, the trend figures have never been zero or a negative number. They have consistently been 5-12% for dental and 10-18% for extended health, depending on the provider. As such, it can be a difficult discussion to have with the plan sponsor if the claims usage is on par with what the insurance carrier has set as a target, yet there is still a noticeable increase in the proposed renewal rates. The increased rates are often attributed to trend.

For self-insured benefits plans, the trend figure is determined by overall inflation and the group’s claims usage over the year.

For further clarification, be sure to talk to your benefits consultant.

blog rss subscribe button

GET TO KNOW CRAIG

Jump to:

Place content block here for staff contact info
Place content block here for social media links

PREVIOUS BLOG

First and Second Opinion and Treatment Plan Services

By Craig Hewson on June 23, 2014

NEXT BLOG

Wage Increase or Retirement Savings?

By Craig Hewson on December 16, 2014

sectionHeaderImg-Blue 

CRAIG'S LATEST BLOG POSTS

Place content block here. Add accent and heading in editor.

Important Factors to Maximize Your Benefit Plan

By Craig Hewson on March 7, 2017

How Your Benefits Plan Can Run Like a Ferrari

By Craig Hewson on January 3, 2017

Benefit Plans – The Best Time for a Review

By Craig Hewson on October 13, 2015

Wage Increase or Retirement Savings?

By Craig Hewson on December 16, 2014

Trend – A Second Definition

By Craig Hewson on September 22, 2014

The Importance of Communication

By Craig Hewson on March 24, 2014

Critical Illness Insurance

By Craig Hewson on January 13, 2014

Discovery

By Craig Hewson on July 2, 2013

Group Benefit Utilization

By Craig Hewson on September 24, 2012

How To Spot Value In A Benefits Plan

By Craig Hewson on July 3, 2012

What is a benefit really?

By Craig Hewson on March 19, 2012

Depression in the Workplace

By Craig Hewson on February 20, 2012

GET IN TOUCH WITH CRAIG

Learn how Craig can help with your group benefits.

Phone 604.714.4443, email chewson@trggroup.com or send a message.

Message for Craig