The challenge for sponsors is how to manage rising utilization while keeping plans financially sustainable
Contrary to common belief, plan sponsors are not cutting underutilized benefits. Instead, the focus is on ensuring the long-term sustainability of benefit programs, as cutting unused benefits can inadvertently increase future costs due to reduced premium pools, according to Beneva’s Sunil Hirjee.
Hirjee, VP, group sales and partner experience in Ontario, Western & Atlantic Canada at Beneva, emphasized that cutting benefits can actually worsen the problem. When benefits are cut but claims remain constant, the premium base shrinks while liabilities stay the same, leading to larger renewal increases.
“You’re not taking claims out from the pricing mechanism… you now have less premium to cover those claims, which results in a bigger increase at renewal,” he said. “You create an even more adverse effect when time comes for re-rating.”
Still, while cost-cutting discussions do surface, plan sponsors rarely stay focused on what to eliminate. Instead, they quickly shift toward building sustainable, data-driven benefits strategies.
To get there, Hirjee emphasized the importance of giving employers the right data to make informed decisions. For example, Beneva provides health indicator reports to larger clients that track chronic condition trends – like diabetes - within their employee population. These reports compare current claim levels to previous periods and portfolio benchmarks.
The idea, Hirjee noted, is to help plan sponsors and advisors pinpoint where proactive investments might be needed.
According to Hirjee, the real cost drivers are coming from increased use of drug benefits, particularly with the rise of GLP-1 medications for chronic conditions and the growing demand for mental health and neurological treatments.
Rather than cutting costs or eliminating benefits entirely, the challenge is how to manage rising utilization while keeping plans financially sustainable.
Hirjee outlined a range of strategies that plan sponsors are turning to to ensure their long-term affordability. He emphasized that sustainability is driven less by cutting and more by proactively managing utilization and investing in prevention.
Hirjee believes that giving employees and their families access to high-quality preventive health and wellness resources is a core strategy to curb future claims. That includes not just general wellness, but mental and physical health promotion as well.
At the organizational level, Hirjee said employers are being supported to adopt more structured approaches to well-being - such as forming internal health councils, gaining executive buy-in, and running cyclical, data-informed wellness initiatives.
But drug plan management remains the most critical and complex pillar of sustainability efforts. Hirjee pointed to price listing agreements with pharmaceutical companies as one tool being widely adopted across both public and private plans. These deals allow insurers to negotiate drug costs with manufacturers and then apply rebates retroactively to reduce the claims burden.
“We’re creating agreements with pharmaceutical manufacturers where the members, insured by our organization, will get access to a drug at a lower cost. The challenge with these programs is that sometimes that lower cost isn't provided right at the time of sale, but it is then provided when we do annual reporting and we're able to claim the rebate and deliver that rebate and that reduced claim amount back into a plan sponsor’s claim experience to make sure that we can offset maybe larger increases into the future and again focus on sustainability,” explained Hirjee.
Biosimilars, too, are becoming a mainstay of cost-control efforts. Hirjee compared their current trajectory to the emergence of generics a generation ago, noting that savings can reach up to 60 per cent.
The adoption of biosimilars across Canada’s insurance sector began several years ago, and according to Hirjee, uptake has been strong. But the work isn’t finished. With new biosimilars continuing to enter the market, he sees the transition process as an ongoing responsibility for insurers, advisors, and plan sponsors.
Advisors also play a larger role in scrutinizing plan performance and pushing for better drug management strategies, Hirjee added. That includes use of step therapy and prior authorization protocols to ensure members are using lower-cost drugs when appropriate and reassessing high-cost treatments that may not be delivering results.
For Hirjee, sustainability is also about anticipating tomorrow's costs. That’s why Beneva’s pharmaceutical committees constantly monitor new Health Canada approvals to assess whether emerging therapies warrant inclusion in plans.
“If the outcome desired is not being delivered, why are we continuing to actually reimburse a therapy that’s not working at a high price point? We have to consider the fact that our plan sponsors need to see an ROI for this,” he said.
But despite strong plan design, Hirjee believes one of the biggest opportunities for improvement lies in how those benefits are communicated. The value of a benefit, he said, is only realized if employees understand what’s available and how to use it, particularly when issues like rising claims or chronic condition trends show up. That’s when effective communication becomes even more critical. Hirjee explained that proactive messaging tied to data insights is key to maximizing the value of what’s already in place.
Hirjee acknowledged the creation of Beneva’s own in-house communications team that works directly with plan sponsors and their advisors. The goal is to improve awareness and accessibility, especially in plans that are already designed to be inclusive and responsive to diverse employee needs.
“Because there's frequently a very diverse and equitable and inclusive approach to designing a benefit program, communicating it properly can address those needs, making sure that we're tackling some of those areas. That communication, and it needs to be ongoing, is something that I think is an area of opportunity for plan sponsors. That is going to be a key on getting a ROI on that.”
Hirjee underscored that sustainability isn’t a one-time deal but a continuous responsibility for employers and tackling this challenge requires a collaborative effort between insurers, advisors, and plan sponsors. That three-way dialogue is essential for developing effective strategies and staying ahead of rising costs and shifting needs.
“Make sure the questions being asked aren't just about the price, but about the programs that support long-term sustainability. That's how we're going to make sure that we address this well into the future,” asserted Hirjee.
