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Affordable Health Benefits 101

Guest Written by Joelle Parenteau of EpicPerks

An innovative collective approach delivers affordable solutions for individuals, small businesses and the self-employed.

Finding health insurance in today’s marketplace can seem impossible.  If you’re one of the millions of Canadians who buys their own health coverage, health insurance can offer you a confusing array of options — not all of them good, and few that are inexpensive.  Sure, you may find an agent who will offer you a cheap policy, but here’s the thing: health coverage isn’t cheap if it doesn’t adequately cover your expenses when you need it most.

Truth is there is no magic when it comes to the pricing of a traditional benefit plan.  All insurance companies base their rates on a combination of a group’s claims experience and the insurance company’s administration cost, (commonly expressed as a Target Loss Ratio – or TLR).

So what is an independent contractor, self-employed professional or small business to do?

Affordable Health Benefits

We all know the saying, ‘there is strength in numbers,’ and this is no less true when it comes to insurance — though harnessing this power is no small feat.  Although they have existed in many other industries for decades, Collective Purchasing Plans are a relatively new (and rare) concept in the benefits marketplace.

The notion itself is fairly straightforward: leverage the collective purchasing power of a group of policyholders while maintaining complete independence between members.  Although simple in theory, very few of these arrangements exist in the Canadian marketplace.

Given the obvious benefits of such arrangements, you might ask – why?  The answer, once again, is quite simple.

  • Revenue & Profits: underwriters and brokers generate greater revenues by maintaining independent relationships with policyholders.

  • Supply & Demand: consolidation is used to generate growth, reducing the need to generate revenue by underwriting new policies.

  • Critical Mass: underwriters require a good business case to put aside their drive for profits per account to turn their sights on lower margins but higher revenue growth and retention rates.

  • Comfort Zone: many brokers are comfortable and successful without innovating and we often trust existing broker relationships to provide new and innovative approaches.

How do these Collective Purchasing Plans generate cost reductions?

All benefits’ plans have a set expense margin, the percentage of each premium dollar used to cover the insurance company’s administration expenses.  Typically smaller businesses pay higher margins because their numbers don’t allow for cost efficiencies from an administrative standpoint, and they present a higher risk.

Through a Collective Purchasing Plan, businesses of any size benefit from lower expense margins than they would on a stand-alone basis.  The lower expense margin translates into lower overall premium rates and important cost savings for member companies participating in the program.

Here’s what combining purchasing power can mean for you:

  • Insurer’s expenses are lower per individual thanks to shared administration costs, resulting in lower premiums.

  • Improved plan design options and features such as preferred underwriting criteria, (less small print and higher levels of no evidence benefits).

  • Greater premium stability, (fewer budget surprises).

  • Undeniable influence and reduced time spent negotiating with insurers.

Do you benefit from a Collective Purchasing Plan?  If so, who are you working with?  Share your experiences and recommendations with other contractors in the comments section below!


Two years ago a Canadian startup set out to solve the collective buying gap. EpicPerks, a small business buying group, created a first-of-its-kind Small Business Collective Benefits Purchasing Plan, a new solution for Canadian businesses that benefits the little guy.

“Epic Perks provides an invaluable service for small business owners looking for health care coverage that is both appropriate and affordable.  It is especially useful for those new to the entrepreneurial mindset that are accustomed to having things taken care of for them!  Thanks for making the enrollment process such an easy and pleasurable experience.  The service was superb: rapid, courteous, and, above all, professional.”  -Scott Fromson (CEO, F2 Investor Intelligence Inc.)