By Bill Watt

Pension plans can be audited for any number of reasons; PA discrepancies, late payments of contributions, or simply by chance.  It often comes as a surprise to employers when “The Letter” from Revenue Canada or pension regulators informs them that not only is their Defined Contribution Pension Plan being audited, but the auditors will be arriving in a few weeks.  Some plans we look after have been audited more than once, while others have yet to be audited.

What should plan sponsors do if they are being audited?  Contact your plan consultant as soon as possible to help you prepare for the audit. In our experience, clients preparing for their first audit, without assistance from their consultant, usually underestimate the amount of time needed to assemble and organize the documentation required. Occasionally, specific documents requested by the auditors are not part of your plan governance and it is advisable to have your consultant review this material before the audit meeting.

The audit begins with a meeting between the plan administrator, your consultant and the auditors. Once that meeting concludes, your consultant becomes the auditor’s main contact person, while you and your staff continue with regular duties.

Important points to keep in mind:

• If the date set for the audit needs to be changed, the auditor should be contacted immediately as they are generally agreeable to changing the date to accommodate you.
• When the auditors arrive makes sure all documents they require are well organized in tabbed binders – they appreciate that.
• Provide the auditor with a workspace that has privacy, good lighting, a large work surface, and wall outlets.

At the conclusion of the audit, a report will be presented to you outlining the results of the audit, the auditors’ recommendations and outlining what, if any, items require further attention.

How do you manage a casual absence that turns into a long term disability claim?  For some employers this question is easy to answer as they already have policies and procedures in place that are both equitable and fair.  For most employers, however, a common response is  “We don’t have anyone on claim right now, so we’ll deal with it when it happens”.  While employers understand the need to manage absences, they are often mystified when faced with the task of designing a disability management program. How long do you continue to offer a disabled employee Extended Health and Dental benefits?  If their disability is going to prevent them from returning to work indefinitely, can they be severed? What happens to their life insurance coverage if we change insurance carriers?  Who is responsible for communicating with the employee while they are on LTD?  Can we accommodate an employee that wants to return to work part-time?  All of the above are valid questions that need answers before someone goes on claim.  If your company doesn’t have any policies or procedures in place to deal with long term disability claims, consider having a meeting with relevant stakeholders to gain an understanding on their perspectives.  Ensuring everyone involved in the process, including managers, employees and unions (if applicable), has a good understanding of the company’s corporate strategy is the key to managing expectations around employees who go on long-term disability.

Co-ordination of Benefits is used by the insurance carrier to determine who the first payor will be in the event that an insured person/dependent is covered for similar benefits under another plan.  Benefits payable under the employee’s policy will be reduced, when necessary, so that no more than 100% of eligible expenses are jointly paid by their plan and all plans which come before it in the Order of Benefit Payment.

The Order of Payment is determined by applying standard rules to the various plans which cover eligible expenses.  The rules are applied from first to last until an order is established:

a)     The plan with no co-ordination of benefits provision in the policy is deemed to pay its benefits first (primary carrier).

b)     If all plans have a co-ordination of benefits provision the following rules are applied to determine the Order of Payment and depend on the basis on which the person is covered:

i)       Employee/Member – the plan that covers the person as an employee/member pays its benefits before a plan which covers the employee/member as a dependent.  If the person is an  employee/member under more than one plan the following order applies:

1) The plan where the person is an active full-time employee, then

2) The plan where the person is an active part-time employee, then

3) The plan where the person is a retiree

ii)    Dependent-Spouse: if a dependent spouse is also covered as an employee/member under another plan, the plan which covers the spouse as an employee/member pays it benefits before the plan      which  covers the spouse as a dependent.  If the spouse is an employee/member under more than one plan the order of benefit payment is as outlined under “Employee/Member” above.

iii)   Dependent – Child: if a dependent child is covered under more than one plan benefits are to be paid first under the plan of the parent with the earlier birthdates (month/day) in the calendar
year.  If both parents have the same birthdates the plan of the parent whose first name begins with the earlier letter in the alphabet pays first.

If the parents of dependent children are separated or divorced special coordination rules are established.

By Brent Delveaux and Queenie Yeung

Paramedical practitioner coverage is an integral part of a benefit plan and includes services like massage therapy, chiropractors, physiotherapy etc. They are often the second highest claimed category after prescription drugs in extended health care coverage. This can be a conundrum for plan sponsors because on one hand, employees can prevent absenteeism and/or presenteeism by taking care of their health instead of taking time off or using long-term medication. On the other hand, these claims are costly and there could be the question of whether employees are using these practitioners as a “feel good” tool instead of using them when they are medically necessary.

It is important to note that insurance companies have controls set in place for the payment of these claims. They will verify that practitioners are registered before payments are issued and they will only pay up to their reasonable & customary (R&C) guide. It is important that employees understand that there are R&C limits within their plan and that a $200 one hour massage would not be fully reimbursed regardless of how much is left in their maximum.

We are also seeing technological advancements with certain insurance companies where paramedical practitioners can submit claims directly to them for reimbursement as opposed to having the employee submit a claim form.  In the future, employees will be available to search for these practitioners through smart phone technology.

We encourage employers to review their paramedical claims with their benefit consultant because there are many ways in which a plan sponsor can help control claims.  Most of this can be done through plan design.  However, it is equally as important to ensure that employees understand that any abuse or fraud will affect future pricing of the benefit plan and ultimately the design and cost sharing parameters of the plan.

We can help you with your paramedical claims… just ask us how!

As an employer, communicating with your workforce is a delicate balance of being informative and trying to pursue a particular company objective.  It becomes even more challenging if the
central theme is a sensitive issue such as healthcare and benefits. So how should an employer effectively communicate around these sensitive issues without the perception of interference in employee choice? The simple answer is….delicately and straightforwardly.

Before taking on the challenge of the message, the issue must be worth communicating. An effective and directed communication strategy can impact how employees consume healthcare and in turn affect benefit plan costs. There tends to be very little understanding into the complexities that go into the consumption of healthcare benefits. We happily take our prescription from our physician to the pharmacist without much thought beyond what we pay out of pocket. Although this is a broad and sweeping statement it is probably not too far off for most employees.  With that basic foundation, how then can we expect the average employee to fully understand the intricacies of their plan, employer changes that may have been made to curtail costs, and how they can play a role in cost reduction. The importance of how the message is crafted is as critical as the “what” is being communicated. Below are a few thoughts to help you tackle your next benefits communication…..

Determine the objective behind the message. Is it to inform employees their plan is changing, or ask employee’s to be more accountable when they purchase benefit related items? If the writer is unclear on what their objective is, results will certainly fall short or the audience will be left confused. As an example, if the issue is drug costs and dispensing fees, the communication will be much more effective if the message specifies specific pharmacies in their region and average costs at each pharmacy, rather than simply asking employees to shop at low cost providers for their medications.

Be clear about the message. Concise communication that is straightforward about what is being desired is essential. Don’t expect your employees to read between the lines and pick up on the hints that you are dropping. If the objective is to inform employees that their individual choice in pharmacy may have a direct relationship to their out of pocket costs, then it should be stated that clearly.

Don’t be afraid to bring others into the conversation when crafting your message. An abundance of information is available from internal resources, insurance companies and independent advisors. Use the resources around you to craft your voice and message. Data for your message can be obtained from credible sources to support a certain position or perspective

Use Positives more than Negatives. Using the above example, think about how many announcements start with a negative, followed by unpleasant consequences? For example, if we don’t cut claim costs, we’ll have to start cutting benefits or having employees increase their cost share.  Focusing on the advantages of shopping at particular pharmacies and how employees actually can make a difference to their costs and the longevity of plan will make the audience feel more engaged and part of the solution.

By Patrick Burkart, BComm, CEBS

Many employers are aware of Employee Assistance Plans (EAP) but few really understand the benefits that their organizations can reap from them.  The main purpose of these programs  is to provide a
counseling outlet (most benefit plans do not include coverage for counselors, only for psychologists) for employees in a crisis situation.  These plans, more than any other benefit, recognize the human element of organizations.  When employees are dealing with personal issues, their employer can show their benevolence by offering this service.

From a profit perspective, an EAP will limit the amount of presentee-ism amongst the workforce.  By talking and working issues out with Masters level counselors, employees can resolve their issues,  or at least bring them to a manageable level, thus allowing them to focus on their work.  The most obvious benefit, therefore, is a more productive work force.  Other lesser known services offered by many EAPs include financial and legal advice.

One of the most overlooked aspects of EAPs is the fact that organizations can utilize an EAP to help train their managers in areas ranging from dealing with HR issues , conflict resolution  and crisis management.  This type of training can galvanize an organization’s management and help ensure a uniform application of their internal policies.

Finally, EAPs can also be employed as crisis management teams.  In a situation where a critical accident or event affects the greater employee population, a crisis management team from the EAP provider can be dispatched to the workplace to help the employees deal with the grief from the event.

As is evident, there are many benefits that can be derived from implementing an EAP.  Let us know if you are interested in learning more about them.

By Craig Hewson

• “We do specialized work and it’s hard to replace someone if they leave because the skills are so rare. Benefits help keep them.”
• “If it’s a showdown between us and another firm, I want the Benefits to tip the scales in our favour.”
• “Valuing our team isn’t just something on the board room wall, we mean it and we invest in it.”
• “The more we keep our employees’ mind’s free from worry, the more they can concentrate on the business.”
• “We’re among the best at the work we do, we want to be among the best at caring for our staff.”

By Greg Pallone

With all the recent  talk about the PRPP, pension reform, pension adequacy and savings rates, it seems like the Capital Accumulation Plan Guidelines (CAP) which were introduced into the pension  savings universe in 2004, have disappeared onto that dusty shelf in back room no one wants to enter.  The CAP Guidelines aren’t ‘trending’ now and consequently it’s easy for plan sponsors and  many advisors to forget about them.

The fact is CAP guidelines can be your best friend if you’re a plan sponsor. They clearly set out what your responsibilities are and more importantly, what they aren’t.  They can protect you from plan members who never attend an education seminar and who never review their asset allocation.  They can mitigate some of the liability associated with sponsoring a retirement savings plan in the first place but you have to use the Guidelines and assess the administration of your plan against those guidelines on at least an annual basis.

Despite being off the radar lately, the CAP Guidelines have had a good impact on retirement savings in Canada.  The data coming out of the 2011 CAP Benchmark Report from the Canadian Institutional Investment Network, tells us that 92% of plan members in Defined Contribution Pension Plans (DCPP) and 99% of Group RRSP plan members are making their own investment decisions. Not the plan sponsor. And correlating with that data is the trend of plan sponsors simplifying their plans by reducing the number of investment options available and establishing quality over quantity as a guiding principle.  They have also used the CAP Guidelines to establish a better default option, making participation in the plan mandatory and increasing contribution rates while more plan sponsors ask members to match employer contributions into the plan.

A big part of what your advisor does for you and your plan members is keep the governance and stewardship of your retirement plan on the radar. The CAP Guidelines offer up some great tools to help you establish your own best practices in plan governance so don’t let anyone tell you they don’t matter.

Few opportunities exist to invest in and enhance benefit programs.  The past decade has seen significant benefit cost inflation driven by drug costs and newer expensive drug therapies.   Although the historical double digit health inflation trend appears to have slowed slightly in the past two years, there remains little appetite to fund additional benefits as maintaining the current funding of status quo, still depletes available resources.

If plan sponsors can successfully lower long term inflation (currently 14%) on their Extended Health benefits by over half, they can literally free up hundreds of dollars per certificate over the long term.

The concept of off loading various claim costs (specifically drugs), and possibly catastrophic drug risk, has been increasing in popularity as sponsors gain insight and clarity around the opportunity of cost-shift back to government programs.  If sponsors achieve success in transferring this risk, making their benefits program second payer in many instances, there is potential for plan sponsors to invest these newly found funds in other areas of the benefits plan.

There are numerous examples of plan sponsors doing exactly that.  Some sponsors have figured out that reining in benefit costs in one area of the plan and removing duplication or redundancies in other areas, can free up money to reinvest in the benefits strategy for the company.  The net result: a more competitive benefit offering than the competition. When you are competing for talent and a more sustainable future for that benefit offering, that may just be the edge your business needs in today’s challenging economic climate.