LEADING COSTS DRIVERS IN THE BENEFITS LANDSCAPE
April 8, 2013- Article featured in Benefits Canada Magazine
Every year plan administrators are faced with the unique challenge of finding creative ways to control benefit costs and enhance employee value.
According to the Conference Board of Canada, between 2010-2011, benefit costs escalated by an average of 6.2%, more than twice the rate of inflation.
Contributing to this figure are the increasing health risks amongst Canadians, with 63% of us demonstrating three or more unhealthy behavioural patterns relating to physical activity, tobacco use, daily fruits and vegetable intake, hours of sleep each night, coping with stress, and maintaining a healthy weight (2010 Sun Life Canadian Health Index).
Added to the mix is the effect of an aging population, which not only creates varying generational demands within an organization but also puts added pressure on drug costs as a result of the increase in multiple medications taken at once. In 2011, 50% of Canadians were taking three or more medications at once and 7% were taking seven or more (IMS Brogan).
Even more alarming is the cost of absenteeism, which costs $572 per employee per year, according to the Conference Board of Canada. Statistics Canada adds that 73% of the reasons for absenteeism are due to employee illness or disability. It doesn’t stop there! The Globe and Mail states that lost productivity from presenteeism is found to be 7.5 times greater than lost productivity from absenteeism.
With 22% of Canadian workers experiencing depression (CBC News), it is no surprise that Mental health is the fastest growing category of these high disability rates and represents more than 25% of open claims, contributing to a 6% increase in the disability leave rate in 2011, according to Manulife Financial.
As you can see, controlling costs is no easy task!
What we do know is that employees truly value their benefit programs to the extent that 37% of employees are willing to pay a higher premium in order to maintain current levels of benefits, according to the 2012 Sanofi Health Survey.
So what can we do to ensure employees are able to continue to enjoy their current level of benefits? It all starts with proper employee communication as educated employees make smart consumers and users of benefit programs. Employers, benefit consultants and insurance companies share a responsibility and must work together to educate employees on both short-term and long-term health and wellness initiatives.
Peter Demangos MBA, CFP, CLU, is the Managing Director at PDF Financial Group Inc. email@example.com