FAQs

  1. How do the insurers determine our renewal premiums?
  2. We’ve just had our renewal. Do we have to wait until our next renewal to look at other carriers/insurance companies?
  3. What are coordination of benefits?
  4. What sort of medical evidence is required?
How do the insurers determine our renewal premiums?

When a policy is first implemented,the insurance carrier uses data gathered from their other clients, to estimate what the claims will be for your company for the upcoming year. They then set something called the Total Loss Ratio (TLR). The TLR is used to cover a number of expenses – administration fees, printing booklets and drug cards, processing fees, and paying taxes just to name a few. In a nutshell, the TLR shows how many cents they can pay out in claims for every premium dollar collected. They also set the Incurred But Not Reported (IBNR) (a reserve for future claims) and the Trend (inflation).

Approximately 2-3 months prior to your renewal date, the insurance carrier looks at your claims for the past 12 months, and compares your actual claims experience to what they anticipated. They then factor in the Trend (how they forecast what the cost of paying out claims this year as compared to what it will cost to pay out the same claims next year), and then IBNR (the total of the claims they think have occurred, but have yet to be submitted).

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We’ve just had our renewal. Do we have to wait until our next renewal to look at other carriers/insurance companies?

Absolutely not. Employee benefit plans run from month to month. You are obligated to provide your current carrier with a minimum of 31 days written notice if you wish to terminate.

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What are coordination of benefits?

If your spouse also has benefits coverage through their work, then you can use both plans when claiming expenses, but you CANNOT receive more than the amount of the claim. If you have a claim, submit it to your own plan first, and then if there is any unpaid amount, to your spouse’s plan. So, for example, if your plan has $300 of physiotherapy coverage, and you exhaust your annual allotment, you can then submit any subsequent physiotherapy claims under your spouse’s plan. If you have children, the parent whose birthday falls first in the year sends the child(ren)’s claims to their plan first. For children whose parents have the same birthday, claims should be sent first to the plan of the parent whose first name begins with the earlier letter in the alphabet. There are guidelines that determine the order claims for dependent children should be submitted when the parents (including same sex parents) are divorced, separated, re-married, or living in a common law arrangement. In most cases, each benefits plan issues any payments to the plan member, regardless of the custody arrangement*. This means payments could be issued to the parent not incurring the actual expense.

Single custody – an arrangement in which one parent has legal custody of the child and the child lives with that parent.

Joint custody – any arrangement other than ‘single custody’.

Single custody – Submit claims in the following order:
To the plan of the parent with single custody of the child.
To the plan of the (new) spouse (if applicable) of the parent with single custody of the child.
To the plan of the parent without single custody of the child.
To the plan of the (new) spouse (if applicable) of the parent not having custody of the child.

Joint custody – Submit claims in the following order:
To the plan of the parent with joint custody whose birthday (month and day) occurs earlier in the calendar year, regardless of age.
The plan of the other parent with joint custody.
The plan of the (new) spouse (if applicable) of the parent whose birthday (month and day) occurs earlier in the calendar year.
The plan of the (new) spouse (if applicable) of the other parent with joint custody.

If both parents with joint custody share the same birth month and day, the alphabetical order of the parents’ first names determines which plan the claim is submitted to first.

*In the event a parental relationship has broken down and the parent who incurred the dependent child’s expenses is unable to recover payment from the parent whose plan is the first payer, the guidelines permit the order of payment to be changed. The plan sponsor of the parent who incurred the charges, as well as the insurance company that provides the plan, must be in agreement with the change.

In addition, a plan member can also contact his or her ex-spouse’s insurance company to see if special claim submission and/or payment arrangements can be made. These inquiries need to be made before the cost is incurred.

Source: Canadian Life and Health Insurance Association

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What sort of medical evidence is required?

Each insurance company states that you must have a minimum number of employees before they will not medically underwrite your benefits policy at time of issue. That number differs from insurance company to insurance company, and can vary from 2-6 employees. Within your benefits coverage, there are medical maximums for life insurance, short term disability (STD or WI) coverage, and long term disability (LTD) coverage. These maximums are called “non-evidence maximums” (NEM), or guaranteed issue limits as they are the maximum amount of coverage that the insurance company is willing to offer without proof of good health. Generally speaking, the larger the group, the higher the NEM’s.

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