Disability Benefits Subject to CPP and EI Deductions

In December 2011, through Bill C-13, the federal government amended the Canada Pension Plan to subject employer fully funded disability benefits provided on a self-insured basis to CPP coverage. Based on the information we received from the Canada Revenue Agency (CRA), deduction and remittance remains primarily an employer obligation.

The responsibility for the administration of Employment Insurance premiums on self-insured disability plans has been an employer obligation since 2003 and this change to CPP requires contributions to be made in a similar manner. Both the employer and employee contributions are owed to CRA effective January 1, 2012. Clients who haven’t started withholding and remitting should start now and should endeavour to collect their employee’s contributions as well.

For more information, please refer to CPP Deductions at www.cra-arc.gc.ca

Survey of Canadian Drug Plans

The 2011 Mercer Survey of Canadian private drug plans included information from 420 employers with an average size of 600 employees. Key findings include:

• 70% of respondents pay at least 80% of drug costs
• 86% have drug cards
• 37% have dispensing fee caps (the average cap is $7.92)
• 52% share costs with employees

For more information, please refer to Benefits Canada 2011 Face-to-Face: Drug Plan Management Forum.

Provincial Plan Coverage for High Cost Drugs

Already available in British Columbia and Saskatchewan, the Ontario Trillium Drug Program can work together with an employer sponsored benefit plan to reduce drug costs to the employer. The coverage is based on the Ontario Drug Formulary which includes drugs for treatment of chronic conditions.

The plan is available to all Ontario residents with a valid OHIP card. There is a deductible that is based on 4% of the previous taxation year’s net income. This deductible is spread equally over four calendar quarters between August 1 and July 31. Once the deductible is satisfied the entire household is eligible to receive drug benefits and is asked to pay up to $2.00 per prescription and then is reimbursed 100% for the cost of drug.

With a carefully designed drug formulary, this provides the employer with the potential to reduce drug costs.

For more information, please forward your enquiry through the Contact Us link on our site.

Insurers to Share Costs of High Drug Claims

A group of 23 Canadian insurance companies, all members of the Canadian Life and Health Insurance Association (CLHIA), who provide supplementary drug coverage have come together to form an industry pool. This pool will pay the costs of high drug claims submitted through participating members’ fully insured employer group plans.

CLHIA indicates drug claims higher than $25,000.00 have been increasing at more than 20% a year since 2008. This has made it difficult for many employers to sustain their employee drug coverage. Under this pooling arrangement, claims greater than $50,000.00 that occur for two years will be entered into the shared pool. This should shield employers from serious premium increases for overall drug usage.

For additional details please refer to www.clhia.ca