Get The Most Out Of Your Benefits Plan By Understanding Reasonable & Customary Limits

Posted by Jaime Laprise on Apr 9, 2019 11:50:41 AM

You know that you and your employees are all savvy shoppers but when it comes to using your benefit plans, this consumer mentality doesn’t always hold true. 

While shopping for health care products and services there is a perception that medical expenses are “covered” by our benefit plan, which leads to us often not getting the best deal or resulting in unexpected out of pocket expenses.

In this blog we’re going to discuss how helping your employees being informed consumers can save them money and help your business without making any changes to the services they have grown accustomed to.

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Why Do These Products And Services Vary In Price?

Just like your local grocer, health service providers and retailers set their own prices for the goods and services they provide. Sticking with the grocery store analogy: an identical bag of quinoa will cost more at Whole Foods than Superstore; and treatment from a registered massage therapist will cost more at a hotel spa than it will at your local clinic.

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There are standardized costs for any good or service we consume, but that doesn’t necessarily mean each provider abides by those standards. The mark-up for products is added at the provider’s discretion and can range substantially depending on what someone is willing to pay.

Prevent Paying Out Of Pocket For A Covered Expense

To address substantial differences in cost for comparable services (and to maintain the long-term sustainability of benefit plans), insurers enforce reasonable and customary limits that will cap the maximum amount that can be reimbursed through the plan.

A reasonable and customary limit is determined based upon the expected cost of the service or medical device in your geographic region - think of it as a manufacturer’s suggested retail price.

To be clear, the limit doesn’t prevent a plan member from obtaining a relatively more expensive service (yes, you can still go to the hotel spa for your massages) or product, it only limits how much will be reimbursed through the plan. Anything above and beyond what’s reasonable or customary will be paid as an out of pocket expense.

There have never been more resources at our disposal to help manage potential out of pocket expenses. Most insurance companies offer technology to help employees identify costs such as pharmacy dispensing fees, and provide reviews on healthcare providers in order to make smart choices.

One such service is the Lumino Health search engine from Sun Life. All you have to do is enter you address and the type of provider your looking for and Lumino will provide a detailed listing of providers near you – with pricing information!

What’s a dental fee guide and what does it mean to me?

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Similar limits are imposed on dental expenses by the provincial and territorial dental fee guides. Fee guides are reviewed annually to provide dentists with suggested fees for the services they provide. Typically, there is an increase every year for the services performed, and insurers use the suggested fees to establish limits for what can be reimbursed through their plans. Effective February 1st, 2019 the overall percentage increase for dental services in British Columbia was calculated to be 2.51%. You can find a complete list of 2019 increases here.

If you’re looking for a best practice, ask your dentist if the fees they charge are consistent with what’s suggested by the fee guide before you have any work done.  Most dentists will send a dental predetermination request to the insurance company prior to commencing any major work.  Your benefits provider will provide your employee with a detailed statement outlining what the plan will pay and the out of pocket amount prior to any work commencing.  

Next steps

With costs continuously rising, all employers, employees and insurers all have a role to play in positively affecting the sustainability of their plans by encouraging smart shopping when it comes to health care expenses.

As an employer, take the opportunity to remind your employees how reasonable and customary limits and the dental fee guides affect what’s reimbursed through your plan. You can ask your advisor to host employee information sessions in the workplace to provide them with a setting to ask questions about their coverage.

Like I said, there’s a savvy shopper in all of us. With this information in mind, let’s start applying those smarts to how we use our benefits.  

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Topics: Employee Benefits

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