Group Benefits

Competition for Talent Impacting Benefits Strategy

A recent survey by Willis Towers Watson of 130 employers indicates 84% state the number 1 issue influencing their benefits strategies is the competition for talent. Other factors identified include the rise in mental health issues (63%), a focus on inclusion and diversity (48%) and rising costs (40%) as also impacting employers’ benefits strategies. The scope in the definition of “benefits” has also broadened to include flexible work arrangements. In a survey by Express Services Inc., which polled 500 employers and over 1,000 employees, 90% of the employers found employees with flexible work arrangements are productive. Over half (59%) of employers stated workers would maintain their level of productivity if given the ability to design their own schedules. By comparison, 47% of employee respondents stated they would be more productive if they could design their own schedules while 46% indicated their productivity would remain the same. Regarding an actual work schedule however, a third preferred an eight-hour workday with a flexible start time while the same percentage preferred a traditional 9-to-5 workday. Only 18% preferred a compressed work schedule, such as a four-day workweek with 10-hour days.

Are Wellness Benefits an Effective Resource?

To determine the value of a Wellness benefit strategy, it’s an important first step to determine if there is a need.

According to a survey of over 2,000 employees by Desjardins Insurance, fewer than 25% of those polled describe their “wellness” as very good (a score of 9 or 10 out of 10). Overall wellness scores were lower for LGBTQ2S+ employees as well as those who are unhappy with their weight and others who suffer from chronic health issues. Nearly all (96%) of employees agreed that living, working and studying in a safe and healthy environment can enhance overall wellness.

In a survey by Telus Health of more than 3,000 employees, 81% stated physical activity has a positive effect on their mental health. The survey also found 33% said better sleep helped them manage their physical health, followed by affordable and nutritious foods (the latter was the most important for employees age 40 and younger).

So, does a benefit plan that offers more inclusive benefits and focuses on the wellness of their employees important? A survey by Medavie Blue Cross of 1,000 employees and 500 employers in Ontario, Quebec and Atlantic Canada found 40% of employees said they’d consider leaving their jobs for benefits that are more inclusive of their colleague’s diverse needs, and this percentage increases to 60% among respondents age 30 and younger.

A survey by Mercer of 300 employers found they are investing in innovative financial, physical and mental-health benefits to support their attraction and retention efforts. These initiatives include education on eliminating workplace stigma and raising awareness of self-care (64%), virtual therapy (57%), ergonomic assessments (60%)and telemedicine to support physical wellness (55%).

However, in a survey by Mercer Marsh Benefits of over 370 employers, it appears these initiatives still are in their initial stages as only 33% of employers offer health assessments while 27% of employees do not participate in their employer’s retirement savings matching program. These surveys suggest employees are looking for benefits far beyond just the traditional ones.

Some considerations when designing the benefit plan include:

• Make sure the benefits align with your company demographics as requirements change by age
• Make sure the benefits being offered actually are being used by the plan members and, if not, rebalancing the plan to drop some while improving others is an opportunity
• Make sure the benefits are affordable and developing a ROI on some benefits, like Wellness, can help in that regard
• Be sure to communicate the details of the benefit package to plan members so they know how to take advantage of them and also have an appreciation for their value

Does an Employee on Leave have Entitlement to LTD Benefits?

In a recent court case (Soave v. Stahle Construction Inc.) an employer appealed a judge’s ruling that the employee on temporary leave was entitled to long-term disability (LTD) benefits. In this case, the employee went on a medical leave while awaiting hernia surgery. While waiting, he was involved in a car accident. The employer maintained he was no longer actively working on the date of the accident so was not eligible for benefits.

The benefit plan included LTD insured by Great West Life (now Canada Life) and administered by Mercon Benefits Services who also provided the employee benefit booklet where the terminology for the LTD benefit was drafted.

Initially, the trial judge ruled in favour of the employee who had applied for the LTD benefit after his accident. Subsequently, the Ontario Court of Appeal overturned that decision and found the employee was only eligible for LTD benefits:

• If he met the definition of disability on the date he stopped working and throughout the 120 day qualifying period, or

• If he was not disabled within the meaning of the Mercon booklet on the date he stopped working
• after he stopped working if he became totally disabled during his leave of absence and his employer was required to pay benefits during period “as required by legislation, regulation or case law”.

The matter was referred back to the trial judge. It is important for an employer to properly assess whether an employee is entitled to benefits, including LTD, when the employee’s work is interrupted due to a leave or disability. A policy, ideally in a Human Resource as well as an employee handbook, stating what benefits are provided in each scenario is very important.

Stressors for Drug Benefits

The rising cost of Drug benefits has been a consistent topic for many years however the drivers under this benefit have started to change.

Specialty drugs are accounting for a slightly smaller portion of the total drug spend, declining from 33.6% of the total in 2021 to 33.1% in 2022 according to the Telus Health annual drug trends report. When this claims data is analyzed based on member’s ages, there is a large difference in average annual eligible amounts per claimant - $498.58 per claimant aged 25 and younger compared to more then $1,000 for claimants 45 and older. However the growth rate for those plan members age 25 and younger (14.2%) is more than double that of plan members aged 60 to 64 (6.2%) and aged 50 to 59 (5.4%).

In this same report, diabetes (12.9%) was the largest drug claims category by eligible amount in 2022 overtaking rheumatoid arthritis (11.2%).

Completing the top 6 are:

• Skin disorders (8.1%)
• Asthma (5.3%)
• Depression (5.2%)
• ADHD/narcolepsy (5.1%)

The new areas of growth are treatments for diabetes and ADHD which each are relatively high-cost compared to other traditional drugs.

Group Savings

New Rules in Place for Defined Contribution Plans

On June 22, 2023, Bill C-47 received royal assent which includes amendments that permit retroactive contributions to defined contribution (DC) pension plans. Specifically, a “permitted corrective contribution” (PCC) must relate to a failure to enroll an individual as a member of a plan or to make a required contribution in accordance with the plan’s terms.

The plan administrator is required to notify the Canada Revenue Agency within 120 days of the date the PCC is made to the plan in respect of an individual member by filing a completed form T215.

There are options available for the funding of the employee portion as well as guidelines on the maximum amounts allowed for the PCC. These contributions can have an impact on an individual’s RRSP deduction limit for the following taxation year.

These are factors to be considered when acting on this new legislation.

RRSP Contributions Declining

A recent survey by the Healthcare of Ontario Pension Plan (HOOPP) of 2,00 Canadians found 44% were unable to put money aside for retirement in the past year, a jump of 6% from the prior year.

The survey indicated the cost of living is a major concern (70%), how to keep up with inflation (66%) and if they have saved adequately for retirement (59%). The survey indicates 69% will accept lower pay for better pension which is a consistent message for the most recent 5 years.

The profile of an employer sponsored pension plan has steadily increased during this timeframe with employees willing to make reasonable deductions (80%), employers being required to make contributions (78%) in order to access more affordable pensions (76%).

Manitoba Legislation Provides Flexibility to Beneficiary Designation

On July 1, 2023, an amendment to the Manitoba’s Beneficiary Designation Act came into effect. This allows a pension plan’s member’s legal representative to make a beneficiary designation on behalf of the member if they cannot make the designation themselves. There are guidelines and also a responsibility for the plan administrator to verify the identity of the person making the designation as well as the identity and authority of a representative prior to making a change.

Legislative

Ontario Expanding Biosimilar Coverage

Effective March 31, 2023, the Ontario Drug Benefit (ODB) recipients who are on a biologic drug will begin to transition to a Health Canada approved biosimilar drug at no cost.

Ontarians receiving coverage under the ODB plan for Copaxone, Enbrel, Humalog, Humira, Lantus, NovoRapid, Remicade and Rituxan will be required to transition to the biosimilar version by December 29, 2023.

The ODB benefit can be applicable to over-age dependents and employees over the age of 65.

Biosimilars have been used in the European Union for over 15 years and are also being used by Alberta, British Columbia, New Brunswick, Nova Scotia, Quebec and Saskatchewan.

Changes to Quebec Drug Plan

Regie de l’assurance du Quebec (RAMQ) has published the new contributions and premiums for the provincial drug plan for the period July 1, 2023 to June 30, 2024.

These rates affect Quebec residents between the ages of 18 and 64 as well as seniors age 65 and older who are not receiving the Guaranteed Income Supplement.

The highlights are:

• Annual out-of-pocket maximum increases to $1,196
• Monthly out-of-pocket maximum increases to $99.65
• Monthly deductible increases to $22.90
• Co-pay reduces to 33%
• Premium increases to $731

These changes affect those benefit plans with Quebec employees as the plan’s reimbursement level for drugs will move to 100% once a plan member reaches the annual out-of-pocket and the plan’s co-pay must be equal to or better than the RAMQ co-pay.

Changes to Manitoba & Federal Policies for Leaves

On May 30, 2023, Manitoba’s Bill 235 came into force expanding the length of unpaid leave on the death of a family member from 3 days to 5 days and by permitting an employee to take up to 5 days of unpaid leave if the employee or their spouse or common-law partner experiences a pregnancy loss.

On June 22, 2023, Canada’s Bill C-47 came into force increasing the maximum leave if an employee’s child dies or disappears to 156 weeks from 104 weeks.