Group Benefit Plans: Key Challenges Employers and Employees Need to Know About

Group benefit plans tend to be standardized. The provider offers a set of coverage options that are designed to cover the general needs of employers and employees. This is based on the most common needs and the insurer’s own ecision-making process.

Coverage might be fine for some employees, but not for all. A standardized set of coverage options isn’t going to reflect the diverse needs many people have. Some employees may find themselves dissatisfied. They may have to look elsewhere for additional coverage.

There doesn’t tend to be much room to manoeuvre on a group health insurance plan. The employee simply has to accept the coverage they receive as part of the plan. There may be some alterations possible. But customization will be limited.

This can be a problem. An employee may end up missing out on some of the key health benefits they need. At the same time, they may find themselves paying for benefits they don’t need. While the policy is subsidized, it’s still not fair for employees to pay for things they aren’t going to use.

One of the key features of a group health insurance plan is cost-sharing. The employer subsidizes some of the cost of coverage, and the employee pays the rest. Out-of-pocket expenses tend to be paid by the employee, and then may be reimbursed if they fall within the terms of the insurance.

But this can be difficult. It will increase the money that employers need to spend on their workforce, which can put strain on budgets. It may also leave employees exposed if they need to make a sudden out-of-pocket payment — particularly if they were not aware they would need to cover this.

Employee benefits can be difficult to administer. Employers already have a lot to think about when managing their workforce and their business. Group insurance can add to this burden.

Plan management and regulatory compliance require constant attention. Businesses also need to consider how they will communicate all the necessary information with employees and plan members. With so much to consider, employers need to be extremely careful they don’t make any mistakes or errors. This could invalidate the plan and impact coverage.

A common misconception about health insurance coverage is that it is always comprehensive. This is especially risky in group health benefits plans, where plan members may not have chosen the coverage themselves.

In many cases, insurance won’t be comprehensive. A plan member who has specialized needs or a chronic condition may find the policy doesn’t cover all of their requirements. Employees who rely solely on these services for their own care may find themselves unable to pay for the treatment that isn’t covered under the plan.

Group plans may carry a minimum participation rate. If employees leave the company and the participation rate falls beneath the minimum threshold, this could invalidate the plan. Employees who leave the company will also find that their own coverage is no longer valid.

There may also be a problem for employees who join midway through the plan year. These employees may not have the coverage they need, especially if they have to claim before the first year is completed.

Today’s businesses are often highly diverse. While some teams may work in a central office, there may be employees who work from home, or even in other parts of the world. This can put a lot of strain on group health coverage.

The cost of treatments may vary significantly according to region or country. Some types of treatment may not even be available in certain parts of the world. Or the provider may not be able to offer international coverage. This can make life difficult for businesses who want to leverage the benefits of remote work.

We’ve touched on this a little already earlier on, but this is very important. Plan members need to understand the details of their coverage. They should understand precisely what they are covered for and what they are not. They should also know how much they need to contribute and how they go about claiming.

If there is lack of awareness, this can be a problem. Members might not know how they can use their plan and become dissatisfied with it. They may not even take advantage of all the benefits they are paying for. At the same time, the constant need to communicate these benefits adds to the

The group healthcare plan must be regulatory compliant. There’s no two ways about this. Wherever you are operating, the plan needs to meet the specific rules and regulations in that area.

Different states and territories across Canada will have their own rules. Employers will need to abide by all of the rules that apply to them, or they can run into problems. Penalties and additional costs are common, adding to the expense of running the business.

Needs do change over time. Demographics shift, and health trends evolve. The economic conditions of the workforce can change too.

If your healthcare plan remains static, then it can’t keep pace with these changes. The plan may become outdated, failing to align with employee needs.

Employer-sponsored insurance is a great way to invest in the future of the workforce. However, both employers and employees need to be aware of potential coverage limitations and other issues. If employee benefits are not fit for purpose, this can be a real problem.

To better understand your options, and to make an informed choice, reach out to our team today.