Chris Hylton, a benefits and HR consultant, gave a presentation on wellness and benefit planning. He discussed types of benefit plans like fully insured, ASO, and flex plans. Joint purchasing allows for more flexibility and customization of benefits. Benefit trends include rising drug costs, especially for biologics, and a focus on health and wellness programs to address chronic diseases and improve employee productivity. Carrier programs use electronic claims submission and audits to reduce costs. Flexible spending accounts and wellness initiatives were recommended.

1. Wellness and Benefit Planning
Chris Hylton
Jan 22, 2015

2. Introduction
Chris is a benefit and HR consultant active with
the public and private sector organizations for
many years
Former Director of LAPP and Calgary Parking
Authority
EAP network with 130 counsellors across
Canada
Volunteers with many organizations including
Employee Assistance Society of North America
and Wellspring Calgary
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3. Agenda
Types of benefit plans
Advantages of joint purchasing
Next steps
Benefit trends
Happy to take your questions at any time
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4. Financial Arrangements
Fully Insured Plan, prospectively rated
Refund Accounting
Claims Fluctuation Reserves to stabilize
premiums
 Returns surplus to client annually
Retrospective Premium Arrangements
Administrative Services Only, ASO
Combinaton of insured plus ASO beyond
specified maximum
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5. Fully Insured Plan
Carrier predicts claims based on plan
design, your demographics, plus history of
your claims
Rates are negotiated annually, and
fluctuate with usage and trend
Carrier tries to set a rate that will sustain
the claims for the forthcoming year
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6. Fully Insured Plan
If there is a deficit at year end you can
leave
Carrier is stuck with the deficit, but has a
claims reserve to help off this
BUT the organization still has to live with
the experience, which must be revealed to
bidders on the plan
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7. ASO Plan
Carrier releases reserves and charges a %
of claims to process claims
Risk is that the provisional rate will not be
sufficient to fund the plan, but this is
unlikely to happen, due to the fact
that for large groups, EHC and
dental claims are very consistent
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8. Cost Savings with ASO Plan
Administration & claims processing
charges only, no profit built in
No reserves
No premium tax of 2%
What are the Risks?
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9. Eliminating ASO Risks
1. Stop Loss Protection
“Ceiling”
2. Out of Country
Protection
Amount can be set at
any level e.g. $10,000,
$15,000, per year.
Designed to eliminate
the risk of a very
expensive drug claim
Insurance premium
charged for stop loss
protection
Protects the plan
against an expensive
out of country claim
Insurance premium
charged for out of
country protection
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10. 500 Employee Example
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500
Ees
Estimated
Claims
Insured
Admin IBNR
Insured
Admin
ASO
Admin
ASOAdmin
Total
Health $499,375 16.60% 5.75% 14.20%
$82,896 $28,714 $70,911
Dental $479,375 14.70% 4.60% 9.80%
$70,468 $22,051.25 $204,130 $46,979 $117,890.00
Savings: $86,239.69
10

11. 1,000 Employee Example
CG Hylton
1000
Ees
Estimated
Claims
Insured
Admin IBNR
Insured
Admin
ASO
Admin
ASOAdmin
Total
Health $998,750 12.20% 5.75% 11.70%
$121,848 $57,428 $116,854
Dental $958,750 10.40% 4.60% 7.10%
$99,710 $44,102.50 $323,088 $68,071 $184,925.00
Savings: $138,163.13
11

12. What to do with a Surplus
• Reduce health and dental
rates
• Enhance benefits
• Leave in account to reduce
possible future deficit
• Give employees a “premium
vacation”
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13. Group Purchasing –
Improved Flexibility
The larger the group size, the greater the
flexibility in offerings
 For groups over 100, customization of plans is
pretty much a starting point.
Once groups hit the 250+ range, the idea of
“flex” plans starts to become a possibility. This
is where employees might be offered 1 of 3
Health/Dental options – giving ees choice .
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14. Flex Plans
Once groups hit the 500+ range (but really,
closer to 1,000 is more realistic), “full flex”
plans come into play.
These provide great flexibility re Life and
Disability options, extensive choice on
parameters within the health & dental
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15. Greater Plan Maximums
Larger clients spread risk of claim over a
greater number of lives
therefore from a Life and Disability point of
view, both the overall dollar maximum
available, as well as the non-evidence
maximum (NEM), increases with size
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16. FAQs
Q: Do we all have the same plan design?
A: No, you can maintain your current plan
Q: Do we have the same rates?
A: No, your rates are based on your
demographics, job mix, and claim history
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17.  Nature of Business
 Affiliates and Subsidiaries
 Waiting period for new hires, current ees
 Definition of part time work
 Disabled employees
Prognosis
DURATION of Disability/Return to Work date
Has Life waiver been accepted
 Cost sharing with ees
 Name of current carrier
 Years with current carrier
What info is required
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18. Info Required – sample
rates last 3 years
Rates Effective Rates Effective Rates Effective
Benefit Jan 1/12 Jan 1/13 Jan 1 /14
Basic Life $0.21 $0.21 $0.27
AD&D $0.05 $0.05 $0.05
Dependent Life $1.67 $1.67 $1.89
Short-Term
Disability
$0.67 $0.73 $0.79
Long-Term Disability $1.29 $1.29 $1.37
Health Benefits
Single $23.17 $35.00 $35.00
Family $42.04 $63.50 $63.50
Dental Benefits
Single $34.21 $32.00 $32.00
Family $55.07 $52.50 $52.50
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19. Claims History
Long Term Disability
Policy Year Paid Premiums Incurred Claims Loss Ratio
Jan 1/10-Dec 31/12 $0 $0
Jan 1/11-Dec 31/13 $0 $0
Jan 1/12-Dec 31/14 $0 $0
Extended Health Benefits
Policy Year Paid Premiums Incurred Claims Loss Ratio
Jan 1/10-Dec 31/12 $0 $0
Jan 1/11-Dec 31/13 $0 $0
Jan 1/12-Dec 31/14 $0 $0
Dental Benefit
Policy Year Paid Premiums Incurred Claims Loss Ratio
Jan 1/10-Dec 31/12 $0 $0
Jan 1/02-Dec 31/13 $0 $0
Jan 1/03-Dec 31/14 $0 $0
Info Required – claims last
3 years
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20. Employee Data
Name/Employee
number
Occupation Date of
Birth
Earnings Hire
Date
S/F/Waive Gender Class
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21. Benefit Trends
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22. Extended Health Care, Dental, STD, LTD and WSIB costs
The Cost of Doing
Nothing…..
$3,400
$3,600
$3,800
$4,000
$4,200
2009 2010 2011
$3,701
$3,891
$4,119
ActualCost$
Total Benefit Costs Per Employee
22
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23. How will this change with the impact of an aging population, increase in biologic drugs
costs and the increase of chronic health conditions?
The Cost of Doing
Nothing…..
$3,400
$3,800
$4,200
$4,600
$5,000
2009 2010 2011 2012 2013 2014
$3,701
$3,891
$4,119
$4,345
$4,584
$4,836
ActualCosts$
Total Benefit Costs Per Employee - Projected
23
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24. Trend # 1 – Drug Costs
24
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25. 25
Continued Impact of Biologic and
Specialty Drugs
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
$5,000 to $20,000 > $20,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
< $1000 $1,000 to $5,000
+ 6.1%
+ 15.8%
Source: Manulife Financial
- 0.3%
+ 1.3%
Biologic and Specialty Drug Spend1:
• Increased from 10% to 19.5%, from 2005 to 2011
• Estimated to account for 25% of drug spend by 2015
Source: 1) ESI Canada
0%
20%
40%
60%
80%
100%
< $1000 $1,000 to $5,000
2005 2007 2009 2010 2011
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26. Average Drug Dispensing Fee Calgary
Costco $4.48
Sobey's $10.74 - $11.85
Bridgedale Pharmacy $19.63
Wal-Mart $10.62 - $11.17
Loblaw's $9.83
DrugStore Pharmacy $9.75 - $9.99
Canada Safeway $11.19- $11.7 3
Britannia Pharmacy $13.69
Shoppers DrugMart $11.07 - $12.94
Calgary Co-op $10.45 - $11.95
Medicine Shoppe $10.22 - $12.55
Rexall $10.61 - $11.58 26

27. Trend #2 - Health and Wellness
Programs
27
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28. Why? Employee Productivity
Absenteeism
Presenteeism
Stress
Chronic Disease
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29. Common Chronic Disease Risk
Factors
High Blood
Pressure
Type 2
Diabetes
High
Cholesterol
COPD
Lung
Cancer
Respiratory
Disease Cancer of
Pancreas,
Bladder, Kidney
Colon
Cancer Breast
Cancer
Prostate
Cancer
Cancer of mouth,
pharynx, larynx,
esophagus, liver
Heart
Disease
Mental
Disorders
Overweight/
Obesity
Tobacco
Smoking
Unhealthy
Diet
Physical
Inactivity
Alcohol
Consumption
Musculoskeletal
Renal
Disease
Source: Ontario Ministry of Health and Long-term Care
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30. Employee Health Today
Most individuals are stuck in the “pre or
contemplation” stage, High risk
individuals will change health behaviors
given the right coaching. Challenge for
Employers: Engage employees who want
to make this change
Contemplation
Preparation
Action
Maintenance
Completion
Pre-contemplation
Risky Behavior
Permanent Behavior
Change
Source: Mike Humphrey and Erika Van Flein of the University of Alaska.
30
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31. Health and Wellness Initiatives
EAPs
Wellness Programs
Flexible Spending Accounts
Support Services
On line resources
Work culture
Disability Management
31
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32. Trend #3 Carrier Programs
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33. Paramed e claims
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Ab
Providers
E claimers
% of Total
Optical 700 57%
Chiropractic 550 48%
Physiotherapy 260 54%
Massage 700+ 13%
In 2011, 33% of Extended Health and
78% of Vision 91% of EHB, Vision,
Dental and Prescription Drug claims
submitted electronically by the
provider
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34. Audit many claims at once
Creates a presence in the provider
community
Provides an opportunity to educate providers
Can flag a provider to review all claims
Can remove eClaim rights if necessary
May result in monetary recovery
Paramed / Dentist Audit
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35. Best Practices
Flexible Savings Account
Health Spending Account (non taxable)
RSP (tax neutral)
Fitness Account (taxable)
Bonus (taxable)
Easy to administer
Great employee satisfaction
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36. Thank you!
Chris Hylton, MA
CG Hylton Inc.
517– 7620 Elbow Dr. SW, Calgary, AB T2V 1K2
403 264-5288
chris@hylton.ca
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37. CG Hylton Inc.
Employee benefits consulting
Wellness at work
Attendance management
Workshops / lunch and learns
Chris Hylton
403 264 5288 chris@hylton.ca
37CG Hylton

38. Definitions
IBNR – Incurred but not reported claims
ASO – Administrative Services Only
Includes stop loss on Health ($10,000)
Savings – Year One, Year Two would not
see the reserve savings, but would see
the ongoing Admin savings
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