Benefits fraud doesn’t start with a sophisticated scheme. Often, it starts with an employee who doesn’t fully understand that what they’re doing is wrong — or doesn’t think anyone is watching.
For employers trying to protect their group benefits plans, that reality is both a challenge and an opportunity. Fraud prevention begins long before an insurer flags a suspicious claim. It begins inside the organization itself.
“Fraud prevention starts with employers playing a vital role,” said Shelley Frohlich, AVP of fraud risk management at Sun Life.
HR departments that treat fraud awareness as a once-a-year checkbox exercise are leaving their plans exposed. The steps required to build a fraud-resistant workplace are neither complicated nor expensive. They do however require consistency.
Know the gaps
Frohlich said the most common weaknesses she sees in how organizations approach benefits fraud fall into two categories: lack of awareness and lack of time.
“Plan members are not always aware of the latest scam techniques. It’s important to be updated with the most recent schemes,” she said. ” Employers need to take a proactive approach by educating employees about fraud prevention and fostering a culture where reporting suspicious activities is encouraged. And employers should have protocols in place for addressing benefits fraud including taking appropriate action to mitigate future risks.”
Start with policy
A clear written policy is the foundation. That means defining what constitutes fraud, spelling out the consequences for employees who engage in it, and updating employment contracts and codes of conduct to reflect those standards.
Codes of conduct and employment contracts should be updated to address how employees will be handled if found to be engaging in fraudulent activity related to the group benefits plan.
Equally important is explaining the reasoning behind these policies — not just issuing mandates. When employees understand that fraud raises premiums, reduces coverage, and can ultimately cost them their benefits and their jobs, they are more likely to take it seriously.
Education that sticks
Frohlich said fraud awareness should be woven into regular communications rather than confined to a single annual training session.
“Each year, we support Fraud Prevention Month with a broad campaign. We share information, resources and insights on fraud during the campaigns. We share with both plan sponsors and plan members. We also use social media. We keep it simple and manageable. At the same time, we reinforce an important message: preventing fraud is something we all need to focus on all year-round,” she said.
Practical approaches for employers include sending regular newsletters or emails explaining what constitutes fraud with real-world examples, incorporating fraud awareness into new employee orientation packages, displaying posters or infographics in common areas, and creating a dedicated section on the company intranet with fraud prevention resources.
Training does not have to be formal to be effective. Lunch-and-learn sessions, online modules employees can complete at their own pace, and training that equips employees to recognize and respond to potential fraud are all worthwhile options.
“To stay informed about fraud schemes, best practices and emerging trends, employers should review any materials provided by their insurance carrier. Case studies can be valuable training resources as well,” Frohlich said.
Use the tools available
Sun Life provides employers with a range of fraud awareness materials that can be shared with employees as part of new hire onboarding or distributed throughout the year, including a comprehensive fraud awareness webpage and a plan member presentation designed to help organizations educate their staff.
It also recommends that employers conduct periodic reviews of member plan setup to confirm the eligibility of plan members and dependants, and encourage plan members to complete the Canadian Life and Health Insurance Association’s fraud awareness module.
Create safe channels for reporting
One of the more practical steps an organization can take is establishing an anonymous reporting mechanism — a confidential hotline or email address where employees can flag suspected fraud without fear of retaliation.
“Employers can raise awareness through a formal education and training program as part of an overall risk management strategy and offer anonymous hotlines for employees to report suspicions of fraud,” Frohlich said.
Whistleblower protections for those who report suspected fraud should be part of the policy framework, with clear escalation procedures so employees know who to contact.
Partnership with the insurer
Frohlich said employers should not treat fraud prevention as a solo exercise.
“Training should aim towards increasing awareness related to common schemes and emerging fraud trends that can threaten plan sustainability. Employers should recognize warning signs such as complaints or tips coming from employees related to the misuse of benefit plans and report them to their insurance provider,” she said.
The organizations most resistant to benefits fraud are those where employees understand what is at stake, where policies are clear, and where the culture encourages reporting of suspicious activities.
