how to negotiate benefits like a fortune 500 company
Post on 25-Jan-2017
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The Beneplan Co-operative
Presentation to CIFFA Members
Ma
rch
2
01
6
How to negotiate
benefits like a
Fortune 500
Company
About Beneplan
The Beneplan Employee Benefits Co-operative
All Rights Reserved
The Beneplan Co-operative
• Member-owned co-operative
• Mutual insurance society
• Created for the purpose of leveraging volume to obtain
lower fees on group benefits premiums
• Owners are small & medium employers
• Recovers excess profit from insurance companies &
distributes it to members as patronage dividends
MennonitesThe Original Mutual Insurance Company
A True Co-operative
What We Know For Sure
• Insurance companies want to make a profit
• Target profits tend to be greater every year
• The larger your business, the better treatment you receive
What do Large Employers Do?
• Size means clout and lower premiums
• Negotiate fees lower
• Challenge & negotiate reserves (IBNR, CFR, etc)
• Challenge & negotiate trend/inflation factors
• Negotiate refunds of premiums if claims are low
• Obtain an RST Rebate from the insurance company
• Leverage size to get freebies added to the benefit plan
• When OHIP offloads onto employers, they offload back to OHIP
Fees & Commissions
• Fees can range from 2% to 30%!
• Commissions can range from 1% to 12%!
• What is fair?
A note on ‘shopping the market’
• Our industry’s not-so-secretive practice
• ‘Buying the Business’
• Target profitability: 30% to 40% of premiums – which is huge for health &
dental which are not insurance products!
• Insurers are willing to lose money in the first year just to jack up the rates in
the 2nd year.
• Unwritten rule in the industry to decline quotes after year 2.
• We ask: Why does the game have to be played like this?
• Beneplan refuses to play games like these, and as a result, prices are non-
negotiable, because all of the profit has been pre-negotiated out of the
equation.
Challenging the IBNR
• What is the IBNR?
• What is a fair reserve?
• How can we be sure?
• How Beneplan treats IBNR.
Trend & Inflation
• Dental trend: 5% to 9%
• Health trend: 10% to 18%
• How does it affect premiums?
• Why is it so high?
• What can be done to reduce this?
Refunds of Premium
• Health & Dental refunds of premium
• Health & Dental benefits are largely not insurance.
• What is self-insurance?
• Why is self-insurance not a good idea?
• How can we achieve full insurance with refunds of premium?
Patronage Dividends
• Surplus = Premiums – Claims – Fees
• From Surpluses, any Deficits in the co-operative are paid
• On average, 20% of employers are in a deficit in any year
• After deficits are paid, surpluses are refunded in the form of Patronage
Dividends to member-owners
• The average employer receives 80% of their surplus back as a
patronage dividend
What happens in bad years?
• The Beneplan Co-operative Reserve
• Target reserve is 5% of claims
• Taken from Surplus slowly over a period of a few years – which is
different from insurers who charge it all up-front in year 1 (first year’s
renewal)
• What happens if the entire co-operative is in a deficit?
RST Rebate
• How does it work?
• How can you receive one?
Perks & Freebies
• Nutritionist on staff
• Manager’s Assistance Programs
• Pharmacogenetic testing
• HR & Employment Law advice
OHIP Offloading
• Paramedical benefits
• Drug benefits
• Other benefits
The Game in the Drug Industry
• “Pill-based” medication vs. Biologic Drugs
• What are Biologic Drugs?
• Why are employers paying for oral chemotherapy and the cure for
Hepatitis C?
• Xeloda, Harvoni, Neopogen, and hundreds of other examples.
• Costs can be in the tens or hundreds of thousands of dollars per year.
The Game in the Drug Industry
• Money flows the path of least resistance
• Ontario Trillium Drug Program
• Exceptional Access Program
• RAMQ in Quebec, BC Pharmacare in BC, and a different program for
each province
• National Pharmacare
• Drug company ‘co-pay reserves’ or ‘patient assistance programs’ will
step in subsidize costs if necessary
The Game in the Drug Industry
• Drug rebates
• The Reformulary Group Story
• -9% vs +9% change in drug spend
• Rebates up to 2% of drug claims
CIFFA Members Case Studies
• Currently 10 CIFFA member companies in the co-operative
• 10-person company: Rates decreased in year 1 by 10%. Year 2, they
received a refund of $5,000 and another premium decrease of 1%.
Year 3, they received a refund of $3,000 and a premium increase of
2%. Year 4, a refund of $10,000 and a premium decrease of 1%.
• 50-person company: Rates decreased in year 1 by 15%. Year 2,
renewal was a 5% increase due to claims usage, and no refund due to
a deficit. In Year 3, there was a $5,000 refund and a 3% increase in
premiums for inflation.
Thank you.
Request a quote:
Yafa Sakkejha
General Manager
The Beneplan Co-operative
yafa@Beneplan.ca
1.800.387.1670 x252
Cell 416.702.9232
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