Pressure on the public healthcare system has also raised employee expectations. “Finding a family doctor and having access to care is harder, and employees believe that if the government isn’t able to provide through the public system, the employer should cover that gap,” says Drolet. “But this accessibility is mostly given by the private sector, and this has brought some great new coverage in plans, but the overall costs are higher than they were before.”
Smarter management, not blunter cuts
For organizations looking to reduce benefits spend without gutting coverage, Drolet suggests a data-first approach – examining claims by category and matching interventions to actual utilization patterns rather than making blanket reductions. The conversation between HR and finance has shifted accordingly, with finance increasingly focused on return on investment and the role of predictive analysis in understanding the downstream cost of cutting coverage.
Switching carriers is one underused lever. “Not all benefits providers are equal – they look similar from the outside, but the way they manage drugs, and the sophistication of their system – some of them can go really far and do a really, really good job,” says Drolet. “Sometimes switching from one carrier can actually result in better management of costs and making sure employees are taking the right drugs at the lower cost.”
He also points to the hidden cost of manual HR administration. Automating the connection between human resources information systems, payroll, and carrier data removes friction and generates savings that rarely appear on a premium invoice. “HR functions can do more with fewer people if we can reach that bar,” says Drolet. “Disability management isn’t labour-intensive on the employer side – that’s a real cost they’re saving – and we never factor that in when we look at the overall cost of the plan.”
The legal and turnover risk of getting benefits cost control wrong
Oren Barbalat, an employment lawyer at Littler in Toronto, says organizations can expose themselves to serious liability when cost-cutting decisions intersect with termination. The most common mistake is cancelling coverage too early, according to Barbalat.