Rising utilization on a group benefits plan gets treated as a cost problem by many plan sponsors, when it's often a sign the plan is doing exactly what it was designed to do, according to Vincent Ng (pictured), director of group health solutions at RBC Insurance.
"Whoever pays for the benefit today, whether it's chronic disease management or preventive service, pays for it today, but the benefits don't accrue until years from now," Ng said. By then, he added, the plan sponsor may have switched carriers, or the employee may have moved on entirely, leaving the cost and the payoff disconnected in time.
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That mismatch is one reason a lot of benefit plans go underused despite being generously designed, Ng said. Employees tend to approach their coverage the way they'd approach a hardware store errand.
"It's like the old saying, when someone goes to Home Depot, they're not looking to buy a drill, they're looking to make a quarter-inch hole in the wall," Ng said. Benefits, in his view, have traditionally been sold and structured the same way as the drill rather than the hole: framed around the product an insurer is offering rather than the problem a plan member is actually trying to solve.
That framing is shifting, according to Ng, away from what he calls point solutions.
"Employees often view benefits as point solutions," Ng said. "I need a dental cleaning, so I go and get the dental cleaning and file a claim. I need a drug, so I get a prescription, I file a claim." Increasingly, he said, insurers are building holistic programs instead, citing menopause care as an example: a nurse works directly with an employee across a range of symptoms and related conditions, rather than routing each symptom to a separate, disconnected claim.
Ng called that shift, from treating benefits as a menu of separate transactions to designing them around what a plan member is actually trying to solve, the biggest misconception employees carry into their coverage: they still expect a program for every symptom, rather than one program built around the whole problem.
Because the payoff from these programs often lands well after the cost is incurred, Ng said insurers are working with plan sponsors to define both short-term and long-term outcomes up front, rather than leaving the return on investment to be measured much later, or not at all.
A weight management or diabetes program, for instance, can show a short-term win by reducing spend on expensive drugs like GLP-1s, Ng said, while its long-term value shows up in something plan sponsors feel just as directly: avoided short- and long-term disability costs.
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"Short-term and especially long-term disability is a huge expense for employers," Ng said. Structuring a program's goals across both timeframes, he said, is a way of trying to "define the R in the ROI" more concretely, rather than leaving plan sponsors to intuit a payoff that may not surface for years.
That shift is also turning benefits data into a planning tool rather than just a bill, according to Ng. Insurers are increasingly using claims patterns to recommend coverage changes before a cost problem fully materializes.
"If you see that your claims data shows that you have a higher than, let's say, industry average number of mental health drug claims in the last year, maybe that means you need to put in a more robust mental health program to prevent mental health issues, prevent downstream LTD costs," Ng said.
Under that framing, a spike in utilization stops reading as bad news on its own. A plan sponsor seeing higher uptake in a mental health program, Ng said, can instead read it as confirmation that a real need existed in their workforce, and that addressing it proactively likely headed off larger disability costs down the line.
"That's one way of being less reactive," Ng said, describing plan sponsors who can look at a spike in program usage and conclude it reflects a risk they caught early, rather than a cost they failed to control.
That read on utilization isn't unique to insurers pitching their own programs. Mark Spence, vice president, group health and life insurance, Canada at Westland Benefits, has made much the same point from the broker side of the table.
"If it goes up, you've actually communicated it the right way. People are using it. Those numbers are actually good," Spence said, adding that employers sometimes misread growing utilization as a cost problem rather than a sign the plan is finally reaching the people it was designed for.
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Spence said the real test isn't a single spike in usage, but whether that trend holds up over time, and whether the people footing the bill agree on what it means.
"When you start to get enough quarters in a row of trend lines, you know if your investment was worth it," Spence said. Getting there, he added, requires the CFO and the HR director to be aligned on the same read of the data well before those numbers come in, rather than reacting to the first uptick in isolation.
