Analytics and Your Workforce: Using Data to Inform Benefit and Pension Plan Decisions - Sutton Benefits & Pension

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Analytics and Your Workforce: Using Data to Inform Benefit and Pension Plan Decisions

Employee recruitment, retention, and engagement are heavily influenced by the total rewards package you offer your team. Employees are not only seeking meaningful work. They also seek employers that care about them as people. The difficulty is that companies often have employees at varying stages of life, with diverse health, wellness, and financial needs and interests. It’s a challenge to find the right combination of rewards to align with your company values and tie in with overall business objectives while still managing costs.

Data is available to help you understand your situation so you can make informed decisions, but most employers don’t access current, relevant data on the use of their existing benefits programs.

For example, we have been monitoring a new client’s insured dental program for the past six months since its renewal. Dental claims have far outpaced the premiums paid. If the trend continues, dental premiums will increase by at least 30% at the next renewal. Employers should not have to wait until the renewal date to learn of a cost increase when the data is available today. When we examined the dental claims, we found that 85% were for recall visits. One alternative for this client to consider is reducing coverage for recall visits from every six months to every nine. Doing so would lessen the rate adjustment at renewal and stabilize long-term costs. The employer could also consider topping up the Health Spending Account to subsidize the change. When communicated effectively, such a change would add value to each generation in the workforce and cost the company less in the long run.

When you obtain your company’s historical benefits data, you can compare your benefits and pension program to those of similar companies based on size, industry, and geographic region. Benchmarking against what comparable employers are offering their employees increases your confidence in your decisions. For example, if you learn that 60% of comparable companies provide a group retirement plan, what does this mean for your recruitment and retention strategy? Do you plan to offer less, equal, or greater benefits compared with the average in your industry?

Here are two examples of high-cost benefit areas where data is beneficial.

Prescription Drug Costs

Examining prescription drug claims may expose the need for a preventive health and wellness initiative. Trends are critically important, not just claims data. Consider claims data that shows moderate use of pain medication but an increase of 100% year over year. The trend is a more important insight than the actual cost. Prescription drugs account for most health benefit costs. But few companies have an actively managed prescription drug formulary to equip and empower employees to make smart drug choices. Insurance companies pass costs to employers and that burden can shift to employees. That may limit budgets for salaries or group retirement savings programs. When evidence is available to show that an expensive drug is providing minimal or no advantage, why would you want to pay more? Benefits shouldn’t be an open chequebook. Drug plans can be designed to change consumer behaviour. Choosing similar effective drugs that are more affordable will ensure the sustainability of your drug plan. Transitioning to a managed formulary could save 9–15% in prescription drug rates.

Disability Insurance

Disability is a complex issue that can significantly affect productivity in the workplace and an employer’s bottom line. Most employers we meet are frustrated with absenteeism in the workplace; however, many do not track absences due to disability or the associated costs. Until an employer starts tracking disability, it is difficult to know whether there is an existing short-term disability (STD), long-term disability (LTD), or Workers’ Compensation Board (WCB) problem. That makes it very challenging to put solutions in place.

Tracking generations in the workforce is important too. Each generation has different disability and benefit needs. We work with an employer that has an aging workforce and about 65% of STD claims are related to musculoskeletal strains and chronic pain. This data informed the company’s decision to increase the physiotherapy benefit maximum to $1,000 per calendar year to help these employees return to work faster.

In 2018, 39% of Canadians took two or more days off of work for medical appointments, while 46% took the same amount of time to take their children to a doctor.1 When medical appointments are delayed, medical conditions persist and can worsen over time. If medical appointments are a common source of absenteeism, consider adding telemedicine or virtual care as a benefit.

Virtual care allows employees to talk to a physician or nurse practitioner by video or phone. These care providers can diagnose conditions, write or renew prescriptions, and offer other treatments, as medically appropriate. Consider how this could play out in real life: a parent with a sick child late at night would find tremendous value in connecting with a doctor that same night, providing peace of mind and immediate healthcare for their child. The parent is more likely to be at work the next day and will probably be less distracted.

Look at the Links

Prescription drugs and disability are only two of many areas to consider in your plan design. But they should not be considered in isolation. For example, there is a link between financial wellness, a person’s health, and productivity at work. In 2019, 16% of health plan members described their current financial situation as poor; this number jumps to 40% among those in poor physical health.2

People who are financially prepared are more than two-and-a-half times more likely to manage and maintain their health than those who are financially unprepared.3 Making data-based decisions about benefits but overlooking your strategy for your group retirement savings plan may not achieve optimal results, given the link between financial wellness and health.

Plan design decisions require an open mind and a willingness to be proactive – and they should include employee involvement. Showing employees the data and asking for input will increase buy-in and appreciation for the value the plan brings to their personal situation. Feedback could reveal decision-altering information that could have a powerful impact. For example, if you knew your employees would rather pay more for their benefits than see coverage reduced, would you still cut it back? That situation happens more often than employers anticipate.

Engaged, healthy, financially prepared employees are good for business.

1 Hill+Knowlton Strategies/Wello. Workplace Health and Wellness: A Survey of Canadian Workers. Hill+Knowlton, July 2018.
2 Sanofi-Aventis Canada. The Sanofi Canada Healthcare Survey 2019. Transcontinental Media GP, Jan. 2019.
3 Manulife. Manulife/Ipsos Reid Health and Wealth Study. Manulife, Mar. 2015.