Aiding retention with unique health benefits incentives
| Date | 01 January 2007 |
| DOI | https://doi.org/10.1108/14754390780000949 |
| Published date | 01 January 2007 |
| Pages | 12-13 |
| Author | James Geneau |
| Subject Matter | HR & organizational behaviour |
12 Volume 6 Issue 2 January/February 2007
REWARDS
,
Short case studies that demonstrate best practice in rewards
Aiding retention with unique
health benefits incentives
innovative employer.
The development process
The law firm began working with
Canadian health-benefits supplier,
Benecaid. After gauging the firm’s
problems/goals and needs (insurance
premium increases, attracting a younger
workforce, senior management
requirements to reduce costs), one of
the first things Benecaid did was review
the firm’s insurance claims experience
and its current benefits offerings. Claims
had been increasing steadily by 5-10
percent each year since 2003 and the
annual insurance premium had
increased by 30-35 percent.
The plan included CDN$1 million in
prescription drugs offerings (with 80
percent reimbursement); basic dental
coverage; paramedical services (such as
chiropractic, massage therapy and
acupuncture); travel costs; hospital costs
and private-duty nursing.
Like most companies using traditional
insurance, the plan had not been
changed for 10 years. Cost savings were
achieved by switching carriers and the
plan was simply re-applied to each
insurance company until 2004, when
they decided to cut vision coverage to
save costs.
Attracting the younger generation
The two companies collated a list of
goals, and needs were created to map
out the requirements for its new plan.
Firstly, the firm’s struggle with recruiting
younger employees would be a challenge
given that the only way to cut costs
would appear to be the overall plan
design.
Younger employees traditionally
enjoyed paramedical services, so cutting
these services from the plan could have
damaged the recruitment and retention
of younger lawyers to the firm.
The new rewards plan
A strategy was proposed incorporating
Benecaid’s “FlexStyle®” administrative-
services only solution and its Health
Spending Account. FlexStyle® is a self-
insurance model designed for the
Canadian business market. Many large
Canadian employers have used this model
as a means to pay claims more cost-
effectively, while leaving insurance
premiums for the unforeseen events.
Traditionally, the high-deductible
insurance/stop-loss policies (where you
pay less in coverage premium) have
protected employers for unforeseen
employee costs, sometimes exceeding
$30,000 per employee. While the overall
model is more cost-effective, it’s difficult
for an employer with 20-30 employees to
assume the potential cost of $30,000 of
expenses per employee. Benecaid offers a
set of capped stop-loss levels, meaning
the risk to companies of having to pay
out massive sums is decreased.
B
y 2005, a small law firm in Canada
(with 26 employees) had gained a
strong, reliable reputation and
had started to see significant growth.
However, one challenge the firm faced
was the competitive landscape for
attracting younger and specialized legal
talent to support growth. Another was
the ongoing increase in premiums
submitted for the firm’s health-benefits
program.
The health-benefits program was a
contentious issue within the firm. The
older partners felt that it cost too much
money and that it should be cut back or
scrapped altogether. Being a relatively
small firm, no one had been assigned to
play the role of HR or benefits manager,
so as with most companies, it was
handed to the finance manager with
the instruction of “stop the cost
increases by the end of the year – or cut
back the plan.”
Fighting off the competition
Unfortunately, many other major law
firms at the time offered far more
competitive health-benefit programs.
Cutting back benefits options would
make the already challenging effort to
attract younger legal specialists even
more difficult. The finance manager
needed to recommend a solution,
focused on saving money, containing
long-term costs and increasing the
overall perception of the firm as an
James Geneau, vice president of Canadian health-insurance provider, Benecaid,explains how tailoring the
health-benefits packages at a Canadian law firm helped cut costs and meet the needs of its employees.
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