GSI’s Philosophy of Benefits
This section addresses the rationale GSI follows with respect to Health Benefits Plan, particularly with respect to going to market with it.
Overview
GSI is the ELCIC Group Benefits Plan Sponsor. GSI has entered in subscription agreements with all ELCIC congregations and select affiliated ELCIC organizations. These agreements establish the roles and responsibilities for the administration of the ELCIC Group Benefits Plan, including acknowledgement that GSI enters into a contract with the provider and establishes premiums and fees, and determines administrative policy matters.
The Value in “Going to Market”
Typically, the reasons for going to market may include one or more of the following:
- provide a governance review
- address dissatisfaction with the service provided (provider starts to get sloppy),
- address changes in philosophy or values where client and provider are no longer aligned,
- expected cost savings.
Governance Process
The GSI Board reviews each of its suppliers on a rotational and regular basis.
GSI establishes the benefits program considering objectives, priorities and the budget. Annually the Board reviews the benefits program including the plan design, utilization, underwriting, cost/expenses and tax implications.
The Board engages a consultant for expert and independent professional advice including:
- an audit of the financial reports to ensure they meet the terms of the financial agreement with Manulife,
- a review of the funding / underwriting methodology to ensure they are still appropriate,
- confirmation of whether the rate adjustments are warranted based on the experience results and current demographics of the group and generally accepted trends and other factors,
- a review of claims experience for trends and abnormalities when the benchmarked against industry standards,
- a review of the renewal proposal offered by Manulife to ensure the proposed pricing is appropriate, and
- a benchmarking of Manulife’s expenses to ensure reasonability.
The consultant uses technical expertise, proprietary tools and leverage with providers in negotiating renewal adjustments. They also keep the GSI Board apprised of significant changes and / or trends in employee benefits including changes in legislation.
In addition to the GSI Board’s annual review, the GSI office team:
- receives monthly reports on the claims experience, which are carefully reviewed by division to note trends and risk areas,
- hears member feedback, including appreciation, claims concerns, and service issues,
- communicates regularly to plan members via the website and newsletters regarding benefits matters,
- assists employers with proper member enrollment to ensure liability issues are minimized,
- advocates for members on claims issues to ensure proper adjudication,
- provides member education on the ELCIC Benefits Plan including what the plan consists of for working members and how the benefits are affected during transitions, and
- manages the GSI office for accurate enrollment, premium collection and payment to the insurer.
This may prompt the question of why hire a consultant and not take those tasks in-house?
Engaging a consultant provides an external and independent evaluation as well as a breadth of knowledge from experiences with a diverse client group. GSI does not have the internal expertise nor capacity at the current staffing level to perform those tasks. Additional staff with those skills would have be hired. The costs would not be largely eliminated, and the independence would be lost.
Based on the governance process described here, the GSI Board currently does not believe a marketing will add sufficient value to the governance objectives for the cost of process.
Service Issues
From time-to-time services issues arise for plan members with respect to their claims with Manulife. GSI recognizes that regardless of which insurance company is appointed, it is likely that some service issues or concerns from plan members will arise. GSI staff has established a strong working relationship with Manulife and is able to take these concerns forward. When concerns are of a significant nature, they are reviewed by the board (on an anonymous basis).
GSI has entered into a Performance Standard Agreement with Manulife to describe service expectations and financial penalties for Manulife if they do not meet the standards set out.
Also of note is that in the 2019 benefits survey, plan members rated their personal experience of Manulife’s services as excellent 37% and good 50%. The comments were positive in this area.
GSI believes that services issues have been adequately addressed in the past and that service is not a valid reason at this time to go to market.
Changes in Philosophy
The most significant change in the past decade has been a shift to view benefits from a wellness perspective. GSI believes that Manulife has demonstrated that they have adapted appropriately with this trend with the programs like Vitality and their approach to disability management.
Therefore, changes in philosophy are not a valid reason at this time to go to market.
Cost Savings
GSI regularly reviews the cost components of the health premium. Each are described as follows:
Claims – The greatest piece of the premium cost is paying for the health claims. Changing the insurance carrier will not affect the claim amount. For example, if the plan provides $200 towards glasses, when the member purchases glasses and makes a claim for the $200, it doesn’t matter who the insurance carrier is: the charge to the plan is $200. The only way to change the claims amount is to change the design to have a different glasses provision.
Reserves – The reserves required by Manulife are largely dictated by the way the plan is underwritten and the legislation regulating insurance companies.
Adjudication expenses – The expenses that Manulife charges to adjudicate the claims are benchmarked independently by GSI’s consultant from their vast database, and GSI has been advised that the expenses are reasonable.
Manulife profit – All insurance companies need to make a profit in order to remain viable, and there would not be a significant difference changing insurers.
The cost of a marketing must be weighed against the following
- minimal amount of possible savings if design remains unchanged
- risk of not finding a better provider
- risk of not finding any cost savings
- risk of the losing the advantages with the current insurer with respect to philosophy and service standards, and
- disruption and confusion to plan members.
Other considerations in changing insurance carriers
While a marketing would not necessarily mean a change to plan design, each insurance company may have differing definitions and standards that would vary from the current plan. While this may not affect the claims cost factor discussed above, it would require creating new employee booklets and member education, both of which can also be costly. There is a possible loss in continuity of benefits that could be frustrating for members. There would also be additional time and cost for the GSI to review new contracts. Review and distribution of new member cards would also add to staff time and mailing costs.
In Conclusion
Changing a health benefits provider for a large, geographically dispersed group is a very significant undertaking. Going to market without the certainty that a change will or needs to be made is not a responsible use of funds in this market.