The Beneplan Co-operative

Presentation to CIFFA Members

Ma

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2

01

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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