January 2021

2020 has come and gone, and a new year brings new ambitions. Whether it’s trying the trendiest at-home workout app or buying those new blue light prescription glasses, with the reset of benefit plan maximums, Humi is here to help your employees feel revived and restored as they move through 2021. 

This month, to make sure your employees make the most of your benefit plan, we’ve simplified those hard-to-grasp concepts around benefit years and renewals. 

Benefit year 

A benefit year is the allotted time where employees can submit claims through their insurance plan before maximums reset. 

Benefit years are generally reset every 12 months. While many benefit years run from January 1 to December 31, refer to your booklet to confirm yours, as it may vary among providers.

The benefit year is fixed. Despite your employees’ start date, the opportunity to claim benefits is the same. If a start date is June and your benefit year closes December 31, the employee has six months to submit their claims. 

Maximums

Maximums are the total amount that can be claimed for a given benefit over a benefit year. 

Maximums are specific to your organization’s benefit plan. You have a maximum for each type of coverage, meaning the maximum amount allotted for paramedical services may differ from medical services and equipment, which may differ from the amount for dental; it’s important to know the maximum for each type of coverage. 

There are differing reset periods for medical services. Make sure to refer to your booklet for more information on maximums, as medical services and equipment (think custom orthotics/orthopedic shoes, sleep apnea machines, and many more) have varying reset periods ranging from 24 months to five years. Additionally, some lifetime maximums - like life insurance - do not get reset. 

Renewals

A renewal is the time of year where insurance companies:

• Reprice premiums based on an organization’s employee updates 
• Review an organization’s utilization
  

Utilization analyzes the total premiums paid versus the amount the insurance company pays out in claims. The data collected generally covers a 12-15 month cycle, and insurance companies refer to utilization to determine the new premium rates that will go into effect at the renewal period. 

And what’s a premium again?

A premium is the amount organizations pay their insurance provider monthly for benefits. 

So how are these renewal rates determined? 

There are two main factors insurance companies consider when generating renewal rates: 

Incurred Loss Ratio (ILR): After looking at how your organization’s employees used their benefits, your insurance company analyzes the discrepancy between premiums paid and the amount the insurance company paid out in claims. This Incurred Loss Ratio influences the proposed renewal rates. 

Target Loss Ratio (TLR): During the quoting process, the insurance company will present you with their Target Loss Ratio. Simply put: this ratio is the insurance company’s break-even point. If the insurance company’s incurred losses approach or exceed the TLR, there is not enough premium to fund the claims made. When this occurs, organizations can expect their renewal rates to increase.  

How does Humi support you? 

We receive and review renewal reports, negotiate on your behalf, and provide counsel to ensure you secure a benefit plan that is the right fit for your organization. 

Our benefits team receives renewal reports six to eight weeks before your benefit plan renews. During this time, we review your report and negotiate the best deal possible. 

Once negotiations are complete, we’ll schedule a meeting with your plan administrator to review the revised plan and suggest potential adjustments. For ample time to review, we try to book this meeting a minimum of four to five weeks before the renewal date. 

To ensure there are no surprises

Humi sends out quarterly reports to plan administrators, outlining plan performance, ILR, and TLR for the extended health and dental portion of the plan. If you are not receiving these reports, reach out to support@humi.ca so we can add you to the mailing list. 

Have any other questions regarding benefit years, maximums, and renewals? 

Refer to your booklet for information on benefit years, maximums, renewals, and more!