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SmallBiz Employee Benefits – Benefits Fraud

By August 27, 2020 No Comments

A headline that captured a lot of attention last year was “Toronto hospital dismisses 150 for alleged benefits fraud” As much as $5 million in benefits were falsely claimed over an 8-year period.

According to the Canadian Health Care Anti-Fraud Association, the annual numbers range in the hundreds of millions of dollars in North America alone, yet 75 per cent of Canadians incorrectly believe that the only punishment for benefits fraud is higher premiums, or being forced to reimburse claim payments, according to a March 2018 report from Environics Research on behalf of the CLHIA.

The reality is that the consequence for being caught isn’t that the employee has to pay back the claim, they could lose their job and have a criminal record.

What can you, as an employer, do to counteract this growing trend?

There is a good article “Four tips to help Employers curb benefits fraud” written October 13, 2017 in Benefits Canada that is still relevant…”The old is forever new.”

To summarize,

  1. Do a thorough retrospective review of the claims utilization. Example: Why does it look like quite a number of employees are maxing out on their Orthotics claims…and if you peel the onion back another layer…why are the claims all coming from the same Provider?
  2. Always revisit why you set up the Benefits Plan. Does it make sense that your benefits plan is really only being utilized by 5% to 10% of your workforce?
  3. Educate employees why they should care. Higher claims = Higher premiums, which can lead to the termination of a Benefits Plan, if it isn’t sustainable.
  4. Get creative with Plan Design. Taking a look at adding more stringent maximums like combined paramed or family maximums may be worth considering. Switching from a Traditional plan to a Health Care Spending Account may be seen as more drastic but sometimes “desperate times call for desperate measures.”

Of course, the other thing that you could have going for you, as an employer, is that your employees are a conscientious group. We can always hope.

Located in Cambridge, ON Sharkey Group Insurance  provides independent Employee Benefits advice & counsel for Small Businesses across Ontario.