Author: Qin Lin, AnalystIt's always good to compare your company's rates and cost breakdowns to the average, to see if you're trending higher or lower than where you might want to be.This way, you'll be able to evaluate various aspects of your group benefits and develop plans on how to make improvements, such as alternative plan designs or drug caps.Out of Beneplan's 200 groups (average size: 40 employees), as of the 4th quarter of 2013, here are the benchmarks:

Extended Health Care

Identifying Drug Problem Areas

• If your drug usage is over 70% of your total health spend, dig deeper. What happened?
• Is someone on the plan very sick?
• Could it be a dependent?
• Is it only one plan member, or spread out among many?
• Is someone abusing narcotics?

Recommendation: Implement a drug maximum, and refer employees to the provincial drug assistance program once they reach the limit.Identify Paramedical Problem Areas

• If your paramedical spend is more than 15% of the overall total, ask, what happened?
• What does the detailed claims breakdown show was the most used benefit?
• Is it only one person, a few people, or the entire group?
• Does this match the philosophy of our company? Do we believe that people are entitled to massage and other benefits?

Recommendation 1: Introduce a co-pay per benefit; or,Recommendation 2: Have certain benefits subject to pre-approval, based on medical necessity.Identify Compression Hose / Medical Equipment Problem Areas

• If your compression hose spend is more than 2% of the total, you may have fraud taking place.
• Is it only one person, a few people, or the entire group?
• What was the cost per unit submitted, and is that in line with the industry average?

Recommendation: Request a fraud audit on your plan. If fraud is taking place, consider cutting back the benefit's allowance or having it subject to medical pre-approval.

Dental Care

Basic dental - that's items like cleaning, polishing, fillings, x-rays, exams, etc - take up the lion's share of the dental spend.Costs can be controlled in this area by implementing a co-pay at the point of sale. It can be in the form of a deductible, or co-insurance.Raising or decreasing the dental maximum does not influence premiums in a direct way - rather, changing the co-pay will change premiums up or down more dramatically.The reason is because of people's propensity to pay. The economic demand curve for health care products is not a straight line. It is a curve: the higher the share that an employee has to pay, the lower their likelihood to purchase that service even if they need it.For example, increasing the co-insurance from 80% to 100% usually increases purchasing behaviour by 25%, not by 20%, because the extra coverage makes people more likely to purchase.Major Restorative Services and Orthodontic services are rarely covered by small businesses because of the expense. If your plan covers these items, watch it closely, and never cover more than 50% - if you do, you are asking for premium increases.Questions?Email us at qin at beneplan dot ca or yafa at beneplan dot ca.