Cost Containment Strategy for Health Care (Benefit Tips ® - © 2003)

There are three major steps to developing a cost containment strategy.

  • Defining what is Eligible
  • Setting a Reimbursement Level
  • Setting a Spending Limit

Defining what is Eligible

CCRA interpretation bulletin IT-519R2 describes the most generous medical and dental coverage permissible by law. Employers can fine-tune the benefit plan to exclude or limit certain products and services.

Setting a Reimbursement Level

Employers can set the reimbursement level and maximum for each type of product and service. Employee behaviour can be influenced by varying the reimbursement levels, such as 100% coverage for preventive dental services 50% for restorative. Another example is full coverage for the most cost effective pharmaceuticals and partial coverage for medication that is not on the specified formulary.

Setting a Spending Limit

Few employers have the financial resources to provide unlimited coverage. Most set spending limits on specific categories of benefits (drugs, vision, dental, paramedical services, etc.). Some employers take a different approach and set an overall spending limit without restricting the eligibility of expenses or reimbursement level with a health spending account.


Review the cost containment strategy of your present benefits program in light of the results that it is generating. Are your costs contained?