Use your benefits wisely – it’s your money

Learn how McGill’s Health and Dental plans are managed, and how you can help keep benefit costs affordable for everyone.

In this article:

Financial arrangements | Contribution rates | Advisory committee

What drives the Plan’s cost? | How you can make a difference | Shop around | Prevention

Pharmacy_700pxPeople sometimes take for granted the benefits they have at work, but seldom ask how these benefits are managed and financed.  How are contribution rates established? What are the major costs associated with the plans? What part do we play in influencing the plan costs?

This is a brief overview of how McGill’s Health and Dental benefit plans are managed, and how you can help influence the costs to keep the plans sustainable and affordable.

Financial arrangements

Like many large organizations, McGill’s Health and Dental plans are self-insured. This means that we contract with Manulife for administrative services only, which includes the adjudication and processing of claims.  This is a more cost-effective method of financing our plans, as it eliminates the expense of an insurance premium.  As the plans are self-insured, the rates are not determined or set by the insurance company; rather, rates are based on the experience of or usage by the plan’s members.

In order to protect the Health plan against high-risk items, such as emergency out-of-country expenses, and prescription drugs, the plan is insured for individual claims of $75,000 or greater.   Claims below this amount are self-insured.

Contribution Rates

Each year, the annual rates paid by plan members and the University are reviewed. The renewal rate is based on a number of factors:  the contributions received, the claim reimbursements to plan members, administrative fees paid to Manulife, and the projected trends relating to health and dental care.  As the Health and Dental Plans are self-insured, the major factor is the group’s claims experience.  In a given year, if claims paid out exceed contributions, this will trigger an increase in rates.  But if claim payments are lower than contributions, plan members may benefit from either a reduced rate or a stable rate the following year, as has been the case in previous years.

Staff Benefits Advisory Committee

The Staff Benefits Advisory Committee (SBAC) advises the University on issues concerning the benefit plans, such as costs, funding and plan design. The committee may make recommendations to the University so the plans remain affordable and sustainable. The SBAC is made up of representatives from the unions, faculty and staff associations and the University administration. A benefits consultant also advises the University and the SBAC on related matters.

What are the major cost drivers with the Health Plan?

The two major cost drivers within the Health Plan are emergency out-of-country expenses, and prescription drug expenses. Prescription drugs account for approximately 75 per cent of the Health Plan costs. As mentioned, the Health plan is insured for individual claims of $75,000 and greater; however, claims below this amount are fully absorbed by the plan.

Since January 2010, if a generic equivalent exists for a brand name drug, the McGill Health Plan will reimburse the cost of the lowest generic equivalent at 80 per cent of its cost.

Brand name drug expenses will be reimbursed at 80 per cent if a generic is not available, or if a physician indicates that the brand is not to be substituted for the generic equivalent.

How you can make a difference

By choosing to purchase generic prescription drugs, where possible, you can achieve savings by decreasing your out-of-pocket expenses, and reducing the claims paid from the Health Plan.   Keep in mind that the Health Plan contribution rates are directly influenced by the claims paid from the Plan.

By using generics, both you and the plan save money.

In the table below is an example using the costs of the brand name drug, Lipitor, and its generic equivalent, showing the amounts reimbursed by the Health Plan, and the plan member’s out-of-pocket expense for each drug.

LIPITOR

Cholesterol-lowing drug

Cost

(excludes dispensing fee + pharmacist mark-up)

Reimbursement from Health Plan

Out-of-pocket cost

paid by plan member

         %           $
1 Generic 10 mg

$28.24 (90 pills)

80%

$22.59

$5.65

2 Brand name 10mg

$155.69 (90 pills)

67.5%*

$105.09

$50.60

3 No substitution

$155.69 (90 pills)

80%

$124.55

$31.14

*Because 80% of the generic ($22.59) is less than 67.5% of the brand, the plan is obliged by the RAMQ to reimburse at 67.5% of the brand. Please refer to the Benefits website for further details.

The costs indicated were obtained from the RAMQ website.

By purchasing the generic equivalent instead of the brand name drug, the plan member’s savings in their out-of-pocket expense can be as high as $44.95 ($50.60-$5.65), and the savings to the Health Plan can be as high as $101.96 ($124.55-$22.59).

The third example (No Substitution) illustrates the amount reimbursed, and out-of-pocket expense, if your doctor indicates ‘no substitution’ on the prescription.

Here’s where you can find more information on reimbursement of generic equivalents versus brand name drugs.

It pays to shop around

Did you know that different pharmacies charge different amounts for the same medication?  In addition to the cost of the drugs, other charges include the pharmacists’ dispensing fees and markups.  As indicated in the example below, these costs can vary among pharmacists.

Drug Name

 

Treatment Cost differences between pharmacies
Atorvastatin 10 mg

Cholesterol-lowering

$20.41-$43.66

Novo-Venlafaxine XR

Depression

$23.78-$46.42

Ramipril

High Blood Pressure

$13.94-$31.83

The figures provided reflect Green Shield Canada submitted claim data for the province of Quebec between   October 2011 and March 2012

We all have a stake in using McGill’s health plan wisely by making sound choices when it comes to claim payments.

Prevention is encouraged

Prevention is the most obvious way to reduce paying out claims due to illness. McGill’s health and wellbeing program offers a wide range of tools and tips to guide you in developing healthy eating habits, exercising regularly and dealing with stress, to prevent illness.  Find out more.

The New Year is usually a time when many of us make resolutions, usually related to our health.  Now is a good time to factor cost savings to your McGill Health Plan that will benefit all plan members.

Comments on “Use your benefits wisely – it’s your money”

  • This article is very interesting. I would also like to see a comparison chart for a three tier program a) singles; b) couples (or one adult, one child), c) families.
    At the moment, couples are paying as much as families and I would be willing to bet that they do not use the plan as much. I would be interesting to see the numbers.

  • I agree this is very interesting. It would also be nice if those who do not use the plan as much as others get
    rewarded by having their premium contributions frozen and not increase along with all those who do use it more. It would also be nice to have more flexibility in the plan so that members can choose what they want coverage for rather than it be pre-packaged for them.

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