What’s Happening in Dental Plans?
Tuesday, June 17th, 2008Some recent surveys on dental benefits in Canada report the following:
Although estimates vary widely about the amount of the increase, it is generally accepted that dental benefit costs and health benefit costs continue to rise each year. The Toronto Board of Trade reported that 78% of employers had seen their costs increase in 2007; the Conference Board of Canada reported increased costs by 51% of employers. (Toronto Board of Trade, Benefits and Employment Practices: volume 6 of the Compensation survey for the Toronto Region, 2007 and Conference Board of Canada, Compensation Planning Outlook 2008).
Past cost containment strategies such as increased co-payments and deductibles, lagging the provincial fee schedule, etc. are considered inadequate to limit cost increases. Benefits consultants such as Buck Consultants are now urging employers to augment their efforts by emphasizing prevention and education in their benefits plans. The growth of wellness programs, fitness centres, vaccination programs, and health counseling and education are the evidence of the new priorities in benefit plans. (Buck Consultants, Canadian Health Care Trend Survey Results 2008, p. 7).
16.4% of GTA employers plan to introduce a dollar limit/cap on coverage for specific benefits in 2008; 16.4% also plan to introduce or increase employee contributions. 17.6% plan to introduce a wellness/health promotion program. (Toronto Board of Trade, Benefits and Employment Practices: volume 6 of the Compensation survey for the Toronto Region, 2007.)
Flexible benefits plans appeal to employers (who see them as a cost-saver) and employees (who see them as providing more control and value) . Hewitt Associates, a benefits consulting firm, reported in 2006 that 38% of Canadian employers offered flexible benefits, with an expected increase to 64% by 2009. (Hewitt Associates, Attracting and Retaining the New Workforce, 2006)
A new twist on flex benefits is the Health Spending Account (HSA) or Health Care Spending Account (HCSA). Typically, the HSA is offered alongside traditional health care and dental benefit plans, allowing employees to draw on the funds allocated to their account to pay for expenses not covered by the standard plans – for example, deductibles, co-payments, as well as any other eligible health supplies or services not covered by a government or private plan.
Ellen Whelan, a benefits consultant with Mercer HR Consulting, has written that Health Spending Accounts will be become much more common for providing retirement benefits in the future (Ellen Whelan, “Balancing Act” in Benefits Canada November 2006. p. 105).
According to Statistics Canada, one third of Canada’s population will be 50 years and older by 2012, and there will be more seniors than children in our country. The coming wave of retirements of baby boomers is well-documented. Yet only 16% of surveyed GTA employers offered dental benefits to their retired workers in 2007, according to the Toronto Board of Trade. In an Ontario-wide survey which focuses on smaller employers, the Central Ontario Industrial Relations Institute report that 20.2% of employers offer dental benefits to salaried retirees and 18.3% of employers offer them to hourly retirees. (Central Ontario Industrial Relations Institute, Annual Survey of Salaried Employees in Ontario, 2008 and COIRI, Annual Survey of Hourly-Paid Employees in Ontario, 2008).
The low rate of dental plan coverage for retired workers (16% vs. 83% for active salaried employees in the GTA) is a stark example of the effect of cost containment efforts by employers. From this low base, another 3.3% of GTA employers plan to eliminate benefits for future retirees in 2008. (Toronto Board of Trade, Benefits and Employment Practices: volume 6 of the Compensation survey for the Toronto Region, 2007.)
In the GTA in 2007, 83% of employers offered at least a basic level dental plan by to their salaried workers and 47% of employers offered the same to their hourly workers. 51% of employers offering plans provided 100% coverage; for the remainder who offered co-insurance, the most common co-insurance level was 50%. (Toronto Board of Trade, Benefits and Employment Practices: volume 6 of the Compensation survey for the Toronto Region, 2007.)
Elizabeth Perry
