Published On: Monday, 23 April 2018
How to Combat Rising Benefits Premiums
HUMAN RESOURCES - Many employers and RTW professionals are not aware of the factors that impact their benefits premiums. To bring attention to one of these factors, prescription costs, I have asked Randy Schueler from Schueler Group Benefits to offer some advice.
How are the costs of prescriptions changing in Canada?
Spending on prescription drugs is steadily increasing in Canada. We now have the second highest drug prices in the world, after the United States. By 2020, it’s expected that the cost of specialty drugs will increase from 30% to 42% of total drug claim costs.
What are ways that employers can reduce the impact of drug costs on their plans?
There are a number of plan design options that can contribute to significant savings while still providing comprehensive benefits to your employees:
- Mandatory generic drug substitution means that the pharmacist dispenses the lowest priced equivalent, usually the generic version, of the prescribed drug if one is available. Mandatory generic substitution ensures that all claims for drugs with a generic version are cut back to the lowest priced equivalent.
- Co-insurance and co-pays are effective tools for cost sharing. Plan sponsors can set a per-prescription deductible and choose the percentage that plan members are reimbursed for each claimed prescription.
- Strategize dispensing quantities. Most pharmacies will charge one dispensing fee regardless of whether you fill your prescription one-month at a time or three months at a time. If you are on a maintenance drug, have your Doctor prescribe a 3-month supply and you will save $10 to $23 in dispensing fees.
- A dispensing fee maximum encourages plan members to research which pharmacy provides the best value. Average dispensing fees vary from around $5 to over $11. The higher the dispensing fee, the higher the cost applied to your group plan
- A drug plan maximum caps the amount of drug claims reimbursed in a calendar year.
Why do employers need to pay attention to rising drug costs?
As a plan sponsor, you know that escalating health-care costs mean rising premiums, which can result in more strain on your benefits budget. Finding the right balance between plan benefits and plan cost is key to the overall success of your benefits plan.
• We have an aging population with a longer lifespan.
• More chronic conditions are being diagnosed.
• An increased number of new and more expensive specialty drugs are available to treat these chronic conditions.
• Patients are driving demand for some treatments as they take a more proactive approach to their health.
For more information on how to maximize the value of your benefit plan and promote the health of your employees, register for our monthly webinar by emailing firstname.lastname@example.org.
Derek Sienko is President and CEO of Diversified Rehabilitation Group.