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Health benefits help attract employees

Melanie Collison
For CanWest News Service

Tuesday, October 17, 2006

EDMONTON -- The time to look into supplemental health benefits for your staff is the day your cash flow looks stable enough to be sure you won't have to backtrack and cancel a benefit your employees count on.

Benefits are a tool to distinguish your business from other potential employers.

"A business owner may not only want to support employees in meeting their health needs to have healthy employees, but round out the compensation package to attract and maintain quality employees in a tight labour market," says Susan Bramm, spokeswoman for Alberta Blue Cross.

In Alberta supplemental health benefits are offered by Blue Cross, the major insurance companies, and an Edmonton-based company called Quikcard Solutions Inc. which administers companies' health benefits spending, rather than taking an insurance tack.

Alberta Blue Cross is a legislated organization created in 1948 to offer health care insurance for services beyond those that are publicly-funded. It provides plans for employers of any size as well as individuals. As a not-for-profit organization, it does not have shareholders looking for a return on their investment, unlike insurance companies.

The basic principle of insurance is that the losses of the few are shared by the many. People's payments -- premiums -- are pooled and those who experience a loss draw upon the pool.

"Large corporations long ago understood that basic benefits shouldn't be insured but should be paid for," says Quikcard CEO Lyle Best. "I started this company in 1989, having worked (in insurance) with these big corporations, and asked why aren't we offering this service to small businesses?"

Quikcard programs target predictable health maintenance expenses such as dental checkups and cleaning, eye exams, counselling and physiotherapy -- things that tend to fend off expenditures on surgery and major drugs.

"It's the concept of wellness," Best says. "This is an investment that pays for itself over and over again. You wouldn't not change the oil in your company trucks. Why wouldn't you treat your employees the same way? We say self-insure to cover the basics, then buy stop-loss insurance to cover catastrophic illness, and so on."

Both Quikcard and Blue Cross tout "health spending accounts" which allow employees individual flexibility. The employer decides the menu of health-service options and allocates money per employee. The employee makes personal selections from the menu.

Both also offer cost-sharing between employee and worker. The employer's portion of the plans is a 100-per-cent tax deductible business expense. If the employee pays a portion it's tax-deductible at the lower medical expenses rate. Beyond that, "Employees gain a tax-free benefit instead of paying for their services in after-tax dollars," Best says.

"If the employer gave a raise instead of a benefits package, he would have to pay workers' compensation and Canadian Pension Plan (fees) and the employee would pay more tax," Bramm adds.

Bramm declines to indicate the cost of a sample plan because there are so many variables. She says rates must enable Blue Cross to remain financially viable, cover the costs of services and benefits, invest in developing products and services, and maintain a reserve fund, which is "vital for providing the backstop we need to successfully provide for claims that could result from a catastrophe or pandemic, and to maintain reasonable rates despite economic fluctuations."

Quikcard says a company describes the program and options it wants. "We figure out how many people, including family members, that means," Best says. "We estimate what they'll spend, or they may know exactly what they'll spend if they're coming off a group plan. If it's $6,000 per year, you pay us $500 month and we'll pay your claims. If there's a deficit you pay at the end of the year." A surplus is carried forward.

"You could make the deductions yourselves, but the third party adjudicates the claims, so if you're audited we explain it. Otherwise you'd have to have a separate bank account. The Privacy Act means employers don't need to or can't know who is getting what coverage."

At the time of service, the employee presents a card to the practitioner, who pays a small merchant fee. In the case of practitioners who have not signed a contract with Quikcard, the patient pays, then forwards the bill to Quikcard.

"I think of this as a partnership with the practitioner; I promote utilization," Best says. "Our role is to make sure the money is there to pay for the claim that's legitimate. The employer just wants to know the money is properly allocated for their employees."