Introducing our latest issue of Thorpe Thoughts, where we tackle some of the most pressing topics in group benefits today. In this edition, we take a closer look at the complexities of drug plans, shedding light on managed formularies—an approach aimed at optimizing the cost and effectiveness of medications within your benefits plan. We also address Lifestyle Spending Accounts (LSAs), where we explore their rising popularity and the implications for both employers and employees.

Finally, see our video with Roger, Allison, and Bianca - where we discuss the integration of wellbeing programs into the benefit plan offering.

Stay ahead of the curve with insights that matter to your organization and your people. Let us know if any of these issues resonate with you and you organization.

IS IT TIME FOR CANADA TO ADOPT MANAGED FORMULARIES FOR BETTER COST CONTROL AND DRUG EFFICACY?

There is an aspect of drug plans that we have taken for granted. As employers, we rely on pharmaceutical companies and Health Canada to make and approve the drugs we need – and ideally manage or control the pricing of these drugs. That said, this does not guarantee that the drug itself that you take is affective or even efficient in terms of the cost-benefit of that drug. Of the 10,000 drugs available in most drug plans your doctor is likely familiar with an average of about 50.

Have doctors done the study and the research to determine which drugs are better than others? Other than wanting the best for their patient, they do not have an awareness necessarily for the cost of that drug versus another one. Aside from allowing the substitution of generics where appropriate, there may be seven brand drugs that treat the same illness - but have a large variance of effectiveness.

Given the overall cost of health care on employer sponsored plans, it makes total sense that only the most cost-effective drugs would be reimbursed at the highest level.  The decision of what drugs are included cannot be made by the employer. A third party is sourced to make these difficult decisions.

Assuming we do not have an unlimited budget for drugs, it would make sense that someone is paying attention. We believe that “managed formularies” are an approach that should be considered on every benefit plan. It doesn't mean that we think they are right for everyone, but it does make sense to consider it. We have a process to determine if they are appropriate for your plan.

There is more analysis required on your benefit plan to determine whether there is a lot of money being spent on inefficient or ineffective medications. Managing these choices and reimbursements is potentially going to result in a real range of savings.

Is that savings enough to make it worthwhile? Do we want to risk an impact on morale or “employee experience” as it relates to our benefit plans? Up to now we have ignored this but we think it’s time to have this conversation with your benefits consultant. If you missed our September Client Roundtable on this subject, we would be happy to share the highlights.

THE POPULARITY AND CHALLENGES OF LIFESTYLE SPENDING ACCOUNTS

Lifestyle Spending Accounts (LSAs) or "Wellness Spending Accounts (WSA's) have become a popular benefit among employees and employers alike. After all, who wouldn't want to be reimbursed for essential expenses? This appeal is rooted in the simplicity of getting money back for things you already spend on, making LSAs a no-brainer for many.

A key reason for their popularity is the flexibility they offer. Giving employees choices in their benefit plans has always been attractive. LSAs allow employees to spend their allocated funds on what matters most to them, be it gym memberships, running shoes, or other health-related expenses. This flexibility is supposed to enhance the overall employee experience, making benefits more personalized and relevant.

However, the objectives behind LSAs merit deeper consideration. Are we merely aiming to reduce out-of-pocket expenses for employees, or is there a broader goal of fostering healthier behaviors? Ideally, these accounts should incentivize new habits that positively impact health. Not behaviors that they have already converted to habits or rituals.  Encouraging sustained healthy behavior through financial incentives can be complex and may not always yield the desired long-term results.

Alternatives to LSAs, such as cash bonuses or Visa gift cards, present their own challenges. While a cash bonus is straightforward and appreciated, it lacks the targeted nature of LSAs. LSAs can specifically direct spending towards health-related expenses/categories, promoting wellness more effectively than a generic cash bonus. Don’t forget that either way – this is all just cash in the hands of the employee… so it is all a taxable benefit. Something we sometimes forget to consider.

The attractiveness of LSAs lies in their ability to link benefits with healthy expenses. By earmarking funds for gym memberships or running shoes, employers subtly encourage healthier lifestyles. However, once these accounts are established, changing or removing them can be problematic. Employees may come to rely on these benefits, and any changes could lead to disappointment. 

In conclusion, while LSAs are popular for their flexibility and targeted health benefits, their long-term impact on behavior and the challenges of altering these benefits require careful consideration. Balancing immediate financial relief with the goal of promoting lasting healthy habits remains a key challenge for employers. Let us know if you would like to discuss your options as it relates to Lifestyle Spending Accounts. Join our November Client Roundtable to participate in more learning and debate on this subject. 

LATEST PODCAST:  IS EMPLOYEE WELLBEING YOUR PRIORITY? - THE INTEGRATION OF WELLNESS AND BENEFIT PLANS

INVESTING IN EMPLOYEE WELL-BEING has been a topic of discussion for years, but why is it more critical today than ever before? With rising urgency and crisis in the workforce, it’s become clear that this is no longer just a trend—it's a necessity. Employees have been vocal about their needs, and the data backs them up. A benefits plan is no longer just about reimbursement; it’s about supporting employees on their health journeys, whether through a healthy lifestyle or managing chronic conditions.

In our latest discussion, we delve into why prioritizing employee well-being is not only the right thing to do but also a competitive edge for any organization. We explore a practical model for investing in well-being—one that is simple, consistent, inclusive, and community-based, recognizing that healthy behavior is a journey, not a quick fix. This conversation is more than just a business strategy; it’s about making the right choices to help your team thrive.

AT THORPE BENEFITS, we have developed a comprehensive library of resources designed to support professionals in the Group Benefits sector. Our collection features cutting-edge insights and expert knowledge, including blogs on the latest industry trends and podcasts with leading voices in Group Benefits and wellness. Explore our library to stay informed and enhance your understanding of the field.