A Look Ahead - COVID-19 Impact on Benefit Plans

The COVID-19 pandemic will have a significant impact on benefit plans for years to come, and insurers are already seeing the effects in several areas.

Drug plan impacts

Dispensing fee increases-Supply chains for widely used medications were affected in the early days of the pandemic. As a result, pharmacies were mandated to reduce the number of pills dispensed to 30 days rather than 90 days. Increased fees for dispensing medications will impact benefits renewals as additional premium will be required to support this trend.

Acute drugs: as elective surgeries resume claims for acute drugs will likely increase as plan members address non-emergency health issues.

Mental health and chronic condition medications: insurers have seen an ongoing increase in the prevalence and severity of mental health issues and chronic conditions. These include medications for depression, ulcers, blood pressure, and diabetes.

Unknown COVID-19 related risks: another risk exposure may come from the costs associated with drugs used to prevent or treat infection. This cost is unknown, but potentially high for plan sponsors.

Paramedical Claims

Despite the closure of paramedical practitioners’ offices, plan members took advantage of virtual consultations to support their wellness.

Disability Rates

Long Term Disability: As interest rates drop, premiums for Long Term Disability will need to increase. When a plan member is approved for an LTD claim, insurers must set aside a certain amount of money on reserve to fund that claim. Part of that funding requirement takes into consideration interest rates. So prolonged low interest rates will inevitably require additional reserves to provide minimum funding.

Short-Term Disability Claims: Many insurers responded quickly to support Canadians’ efforts to stay at home and have adjusted so that plan members would be eligible for short-term disability benefits if they were displaying symptoms consistent with COVID-19.

Waiting periods were waived by some carriers so that individuals would be eligible to receive benefits from day one, and disability benefits were not offset by the Canadian Emergency Response Benefit (CERB).

While the impacts of the COVID-19 pandemic may not be visible immediately, our goal remains to assist our plan sponsors navigate any changes that lie ahead.