VP of benefits consulting at BFL CANADA highlights why employers need to be proactive when it comes to benefits, amidst rising costs
David Krieger doesn’t mince words when it comes to the trajectory of employee benefits costs. They’re going up and employers need to be proactive about how they handle it.
After all, one of the biggest mistakes employers make is not leveraging available data to understand their workforce’s needs.
"Claims are insight,” the regional vice-president of benefits consulting at BFL CANADA said, while comparing them to “an x-ray into the body of a benefit plan. That can help a lot.”
He emphasized employers who actively analyse claims data can better adjust their offerings to match what employees use and can then deal and redistribute costs as needed, especially as he warned employers not to expect benefit costs to come down anytime soon.
“There’s no question medical care claims are going to increase. Drug claims are going to increase. Disability is probably going to increase. Nothing’s going down,” Krieger said. "Costs for helping people is really going up, and employers want to mitigate cost increases and be as responsible as they can be to their business.”
This leaves employers with a critical question: how are they to maximize ROI when it comes to their benefits offering?
At its core, a benefits plan is an expense, a line item on a balance sheet. But to employees, Krieger said, it’s something entirely different.
“If you're spending $10,000 on an employee, that employee thinks you're spending $30, $40 or $50k,” he said. This has led to a perception gap around communication and education for benefits and employers need to ensure employees understand the value of what they’re receiving.
Krieger emphasized that employers who effectively communicate their benefits offerings not only see better ROI but also cultivate a more loyal workforce.
“Benefits statements and communication are a real part of this solution,” he added.
As costs rise, employers are faced with a complex model as many employees are struggling financially. In turn, balancing benefits costs is a critical decision for employers.
However, Krieger is adamant the simple solution isn’t to just cut costs. Employers will also have to be strategic about how benefits align with employee needs. He makes the case that benefits aren’t just about numbers because they directly impact workforce health, productivity, and engagement.
“What is the value of a happy, healthy, engaged workforce? Increased productivity [leads to] reduced absence, reduced mental health, reduced claims,” he said. “Like, who wouldn’t want that?”
Employees are also demanding more from their benefits like expanded mental health support, weight management programs, better drug coverage, while companies are under pressure to keep spending in check.
"Mental health coverage is important," Krieger said. "Access to therapy, consulting, wellness programs… These of course are driven by heightened awareness of mental health challenges, especially post-pandemic.”
Weight management benefits, including coverage for drugs like Ozempic, are also a growing concern.
“It’s a cost that can be costly over the course of a year,” he said. “At $1,500, let’s say you shared the cost with the employee. It’s $750 each. It’s a lot to an employee after tax.”
Pharmaceutical benefits remain one of the biggest expenses in employer-sponsored plans, and Krieger expects these costs to continue rising. “Drug coverage is probably the single most expensive item. Access and affordability are a top priority as are trying to find ways to deliver the same thing less expensively,” he said.
Customization is another area where employers need to evolve because employees increasingly want more control over their benefits. This is pushing many organizations toward flexible benefits plans and health spending accounts that include access to gym memberships, fitness and nutritional counselling.
That’s why Krieger advised employers to give employees a choice “and let them pick what they want.”
While flexible benefits aren’t new, some companies have struggled to implement them effectively. That doesn’t mean they don’t work; employers will need to be strategic about how they design these programs.
"Maybe instead of having 100 per cent drug plan, you've got 80 per cent, but you've also got a health spending account, so it introduces choice and flexibility," he said.
Beyond core medical and dental coverage, Krieger acknowledges family benefits, telemedicine and caregiving support are gaining traction, driven by the demands of the “sandwich generation” who have to balance work with child and elder care.
All this results in a growing demand for virtual healthcare solutions and remote work so employees can work from home to meet these needs.
Krieger is quick to offer a simple solution. The answer lies in striking the right balance between cost control and meaningful support with employees.
“To win the minds of an employee, you have to win their hearts,” he said. “The shortest HR book in the world reads like this: The more love you show, the more love you get.”
