Managing Drug Plan Costs

Opportunities now exist for plan sponsors to further manage their drug benefit costs through effective integration with provincial drug programs. As provinces expand their coverage to cover drugs beyond their basic drug formularies, your plan administrator (in most cases an insurance company) should be recognizing these coverages and ensure your plan is second payor regardless if it is a plan supported by a drug card or it is based on reimbursement of a paper claim.

There are specialty programs in most provinces (at this time, only Quebec does not participate because individuals with private plans do not have coverage through the provincial plan – RAMQ)) for disease specific treatments, e.g. cystic fibrosis or multiple sclerosis. These programs vary by province and patients must meet medical criteria to qualify. The onus is on the patient and/or their physician to apply the program.

Communication is key to effecting this integration so the plan member needs to understand what will happen, as follows:

• If the province provides full coverage, the claimant will not be eligible for reimbursement through their group benefit plan
• If the province provides partial coverage, the administrator/insurer will pay the remaining portion of the drug cost, according to the terms of the group benefit plan
• If the province does not provide coverage, the administrator/insurer will continue to cover the drug according to the terms of the group benefit plan

It is important that the plan administrator/insurer has the technology and process in place to to affect this process. In many cases, the drugs that are eligible for this integration are very expensive so the cost savings to the plan sponsor can be meaningful.

Reduce Group Disability Plan Litigation

A group benefit plan is a key part of an employee’s total compensation plan and is viewed as a safety net in the event of a serious health situation. The employer may feel that providing a new employee with the benefits booklet fulfills their obligation to educate and inform. However, there is a risk the employee could sue their employer if they do not understand all elements of their plan, especially the Long Term Disability coverage.

In all cases, this benefit provides a percentage of earnings to a maximum monthly benefit, e.g. 66.67% of earnings to a maximum of $5,000.00. However, there are two areas where a misunderstanding can result in potential litigation – first, the definition of earnings and, second, the requirement to provide medical evidence for coverage in excess of the non-evidence limit. It is important to communicate what qualifies as eligible earnings under the contract (many plans do not include bonuses and others may include an average of commissions over a period of years) and also when they need to provide medical evidence (usually a short form medical declaration as a first step) to qualify for the additional coverage.

To reduce the risk of employee frustration and possible litigation, plan sponsors should do the following two things:

• Have each employee sign an acknowledgment that they have read and understood the benefit program’s features, and
• Ensure that employees are notified when they reach relevant earnings thresholds where insurability is triggered by a requirement for medical evidence at that level.

We believe these two steps will help reduce the plan sponsor’s risk of lawsuits and also improve the employee’s understanding of their coverage should the need arise.

New Legislation in Ontario for Disabilities

New legislation governing an employer’s responsibility for managing disabilities is being phased in for operations in Ontario. The Accessibility for Ontarians with Disabilities Act is establishing standards that will require organizations to identify, remove and prevent barriers to an employee with a disability. These standards will eventually cover five different areas:

• Customer Service
• Environment (buildings and facilities)
• Employment
• Information and communications
• Transportation

Of these, the Customer Service standard has been passed into legislation. Beginning on January 1, 2012, almost all businesses operating in Ontario will be required to comply with this standard. The Act sets a deadline of January 1, 2025 to implement all five of the accessibility standards.

For more information on this legislation, please refer to www.aoda.ca.