Thursday, May 27, 2010

Generic Drugs Vs. Brand Name Drugs

I found this great Infographic on the differences between Generic and Brand Name Drugs. Hat tip to Mint.com where I found it.


Tuesday, May 25, 2010

The Future

I have a new carrier I have been working with for about 6 months or so now. Their name is Benecaid, and I think they have one of the best product offerings availible today. They have a nifty little 7 minute video which I uploaded to Youtube that explains it all really well.



This is the Future of benefit plans.

Friday, May 21, 2010

A Benefit plan – The Basics




You are a business owner, an employee comes to you and asks if you would pay for their dental bill. You agree, congratulations you just started a benefits plan.

Now what if that same employee has an embarrassing medical condition, you said you would pay for their bills, but the employee doesn't want you to know about their private medical history. We now have a need for a third party who can process the claims confidentially. These third parties are usually insurance companies or trust companies.

There is a possibility that the employee could have very expensive medical claims down the road, possibly in the tens of thousands of dollars. As a business owner that is too much of a risk to take on by yourself, you still want to provide the benefits, but not be on the hook for a huge claim. An insurance company will gladly take that risk for you in exchange for health insurance premiums.

Another way to limit your liability is to simply say that you will pay for expenses up to a certain dollar amount, but no more. This is the basis of a Health Spending Account, every employee gets a predefined amount of money they can spend on healthcare and once it is gone, the business is no longer liable.

Through both insurance and a dollar maximum the business owner can control their liability. But what if employees start to abuse the benefits? What if they start claiming expensive cosmetic procedures like Botox, or gold teeth? Plan designs can be put in place to control what is eligible and what is not eligible.

Governments like healthy citizens, so benefits payments are given preferential tax status. Paying for medical or dental claims is a deductible business expense for the business owner, and the cost is not added to the income of the employee. This way the business gets a write-off and the employee doesn't pay income tax on the benefit they receive. Because of this taxation the benefits payments are far more affordable than paying a similar raise or bonus.

Tuesday, May 11, 2010

Is you benefits plan in the crapper? We can help flush away your problems!

I take business seriously, but I find it all too easy to make fun of myself.

This is a stupid little video I made for a friend (Chris Vleck of Strategic Insanity) who was doing a "How NOT to make a promotional video" seminar. There were other videos with poor framing, bad sound, terrible lighting and loud background noise. This just happens to be my favorite.

I never miss an opportunity for self deprecating humor!

Monday, May 10, 2010

A tooth ache can be taxing.

Claims paid through a Dental Plan are Tax Free!

No Dental Plan

Salary                                    $1438

Taxes (30.5%)*                   ($438)

Net for Dental Claim            $1000


 

Vs.

 

Dental Plan

Dental Claim (non-taxable)        $1000

Taxes (0%)                                 $0.00    

Net for Dental Claim                 $1000


 

Tax Cost Difference $438

*income of $62,000 average BC combined provincial and federal tax rate 25.22% ($12,485), Employment Insurance Employee and Employer Contribution 4.15% to $43,000 ($1784), Canadian Pension Plan Employee and Employer contribution 9.9% of $47,200, ($4672). Total taxes and deductions, ($12,485 + $1,784 + $4,672 = $18,941) effective average tax rate 30.5%

Friday, May 7, 2010

Why Price sometimes doesn't matter

When thinking about how Health and Dental insurance is priced it is easy to get confused.

Because these benefits are usually "Expereince Rated", that is to say high claims beget high premiums, and low claims beget low premiums, price is really determined by the claims, not the insurance company.

If I compared two identical groups, but one claimed $10,000 a year, and the other claims $20,000 per year, there would be a direct correlation in the premium they pay. Moving the high claiming group to a different carrier isnt going to reduce their premium to $10,000. Maybe you can save a bit on Admin expenses (refer to last weeks post comparing Manulife and Wawanesa) or maybe the carrier is willing to take a loss in the first year to earn the business, but in the long run your premiums are going to be based on your claims.

Sure there is some pooling going on, and one carriers pool might be better than the next, but over time this pooling drops away, and we are never given info regarding the pool. Is the group in the fancy French springwater pool with great claims? or in stinky sewage pool?

When it comes down to it, if you are happy with your carrier and they are doing a good job you should consider staying with them. That is of course assuming "good job" encompasses things like fair renewals and efficient TLRs.

At the end of the day, if you take away the marketing dollars, the new business discounts, and the other fluff that clouds the way, two identical groups with identical claims but different carriers should see the exact same rates.