benefits
HEALTH AND DENTAL BENEFITS ARE PRICED ON
AN “EXPERIENCE-RATED” BASIS, MEANING THAT
PREMIUMS ARE LARGELY DRIVEN BY THE VOLUME
OF CLAIMS SUBMITTED BY EMPLOYEES.
SEASONAL INDUSTRIES
A workplace in a seasonal industry, such as construction, does
an annual layoff in the winter when their work slows down, and
an annual re-hiring in the spring. If these seasonal employees are
provided benefits either during the work period or during layoff,
they are likely to maximize their benefits, since they are unsure of
whether or not they will be called back. One Mississauga employ-er
saw 10 per cent of their workforce claim short-term disability
(STD) every year, around the time that layoffs were coming – the
STD plan was more generous than EI.
This is tricky: an employer may want to continue health and
dental benefits in order to maintain a link with employees, so as
RexDaxLuma/Shutterstock.com
not to lose the talent. However, it is important to recognize that if
workers are not called back, but formally terminated, they should
have been given an extension of benefits of at least the ESA min-imum
durations.
Further, insurance companies usually do not allow seasonal em-ployees
to be covered under a benefit plan, and it is important to ask
this upon initial underwriting. The reason is because if there is a ma-jor
claim (death or disability), and the insurer looks into the file, they
may reject the claim or refuse to continue coverage of the group on the
grounds that this was not disclosed upon policy setup. Needless to say,
this could create costs of legal action and potential costs in having to
shift insurance carriers at an unfavourable time.
Solution: If a company chooses to extend benefits to seasonal
employees, they are better off to consider replacing any short- or
long-term disability coverage with a solid critical illness policy. The
reason is because it is not contingent upon income loss, and is less
likely to be abused in this scenario. Regarding health and dental,
they should consider offering a plan with maximums on all bene-fits,
especially the paramedical category, to minimize the impact.
If a company further chooses to extend benefits during a layoff,
they should offer disability only during the statutory requirement,
and always notify the insurer of their intentions before the lay-off
begins.
RAPIDLY GROWING START-UP
A rapidly growing employer lands a major contract and decides to
hire many of their temp workers full-time from the staffing agen-cy.
These workers would not have had benefits coverage with the
agency, and have potentially gone many years with no coverage. As
soon as they are hired full-time, they are likely to maximize their
plan, especially if they are unsure as to whether or not they have
secured permanent employment.
Solution: Companies should consider providing a “ramp-up”
plan in between having no coverage and full coverage. This can be
a middle ground, and can provide a soft speed bump to prevent
sudden cost escalations. For example, if the full plan has 100 per
cent coverage on dental, the “first-year hire” plan could have 50 or
70 per cent, with a lower maximum. Once they reach one year of
full-time employment, they can join the full plan.
Regardless of the reason for the churn, it is always a best practice
to provide a tiered coverage system so that permanent, established
employees have more coverage than junior or temporary entrants.
Ensuring a smooth transition into full coverage will provide a soft-er
inflationary figure than the spikes of a full benefit plan with a
revolving door. n
Yafa Sakkejha is the general manager of The Beneplan Co-operative.
30 ❚ JULY/AUGUST 2016 ❚ HR PROFESSIONAL