Group Benefits

Customizing Benefit Plans To Acknowledge Gender Fluidity

In 2019, the Canadian Life and Health Insurance Association developed an industry statement regarding the issue of acknowledging people in insurance documents that don’t identify as “female” or “male”. The statement reads;

“everyone in Canada has the right to define the gender by which they would like to be identified. Life and Health insurance pricing depends on the insurer’s ability to properly assess risk. A person’s sex or gender is one of the factors that may have an impact on risk. The life and health insurance industry recognizes that it needs to adapt to the changing environment to ensure that everyone who applies for insurance will be assessed fairly.”.

There’s a growing demand for employers to offer a non-binary gender option in addition to the “female” and “male” options for employees as well as for any spouses or children that may be on the plan as dependents.

The industry is trying to adapt however many of the administration systems still do not enable them to manage “non-binary” or “other” as a gender option. Insurers are acknowledging the issue by updating their customer service areas by dropping gender-specific terms, like husband and wife, and using more inclusive terms like spouse and partner. They are also not using gender specific pronouns so as to avoid assuming a person’s gender. Where they continue to struggle is in the area of underwriting as gender remains a factor in pricing. It’s important for the plan sponsor to understand the insurer’s approach in this area to ensure appropriate wording in documents and all communications as well as their approach to managing demographic information to ensure the pricing associated with benefits, like Life insurance and Disability, is also reflective of the risk.

Quebec Pharmacists Required to Disclose Drug Cost Information

On May 3, 2021, the Quebec Court of Appeal issued a ruling requiring pharmacists to disclose detailed drug cost information to insurers. Previously pharmacists had given detailed invoices to their patients in the pharmacy but not when sending claims to insurers.

This new information will enable the pharmacy benefit managers at insurers to improve the costs associated with private drug plans in Quebec. It’s important that the plan sponsor has assurances from their insurer that the appropriate resources are in place to manage this opportunity.

IDEL Extensions Continue

The Ontario government announced the “deemed” Infectious Disease Emergency Leave (IDEL) COVID-19 period will be extended to September 25th, 2021.

Deemed IDEL allows all in-force coverage, including disability, to remain in force on a premium paying basis until September 25th, 2021.

If the government ends deemed IDEL on September 25th, then the following will apply commencing September 26th:

• The Employment Standards Act (ESA) regular rules will apply around constructive dismissal and an employee may be dismissed even for COVID-19 related reasons. In such a case, the group benefit coverage for the employee would be terminated
• The ESA regular rules around temporary layoffs resume and the temporary lay-off clock resets. Employees who cannot return to active employment will be considered on temporary layoff with September 26th being the first day of that layoff. In this case, the termination provision rules under the group benefit contract will apply pertaining to extension of coverage.
• An employee can apply for regular IDEL if they meet the criteria and, in this case, an employee’s benefit coverage, minus disability, will continue as this is considered an ESA leave.

Group Savings

Majority of Plan Sponsored Plans Meeting Their Goals

According to a recent survey by Fidelity Investments. 72% of plan sponsors believe their retirement savings plan is meeting its goals which is up from 66% in 2020. While 68% stated their employees are saving enough for retirement, 86% of participants in the survey stated some members are delaying retirement due to a savings shortfall. Only 16% stated they reduced the employer matching contribution to their retirement savings plan over the last two years.

A very strong indicator that the plan’s profile is increasing can be found as 88% indicate they are making changes to their investment menus and 82% are making changes to their plan design.

One third of respondents indicated they are looking to change advisors citing better plan member communication and education, lower fees, and a better investment lineup as the primary reasons.

Temporary Relief Measures for Employers

On June 23, 2021, the Department of Finance enacted temporary relief measures for employers who sponsor registered pension plans (RPPs).

The relief temporarily allows RPPs to enter into a loan or series of loans after April 2020 and before February 2022, provided the loan(s) are repaid no later than April 30th, 2022. This relief effectively extends the maximum 90-day term of allowable borrowings.

The new relief also permits retroactive contributions to an employee’s money purchase account to replace required contributions that were not made in 2020 or 2021. The employee or employer needs to make these retroactive contributions after 2020 and on or before April 30th, 2022. Where these conditions are met, the retroactive contributions would be added to the employee’s pension adjustment for the year in which the contribution would have otherwise been made to ensure retroactive contributions plus any regular contributions in 2021 or 2021 do not exceed the maximum contribution limit for those years.

The relief also broadens the definition of “eligible period of reduced pay” to allow RPPs to recognize pensionable service for employees experiencing a period of reduced work and pay during COVID-19. The regulations include the following:

• Allow employers to provide unreduced pension coverage to all employees by temporarily removing the requirement that employees must be employed at least 36 months to qualify for “eligible period of reduced pay”
• Remove the requirement that a reduction in pay must be commensurate with a reduction in work hours so, for example, if an employee works full-time for a period during which wages are reduced by 20%, the employer can provide pension coverage based on 100% of wages that existed before the reduction.