Ontario Retirement Pension Plan moving forward

The provincial government recently stated their intent to move forward with implementing the Ontario Retirement Pension Plan (ORPP). Companies with 500 or more employees will be the first required to participate or provide a comparable (equal to or better than) pension to their employees by January 1, 2017. All employers will be phased into the plan by 2020 with the exception of federally regulated companies which, at this time, are not included.

Starting January 1, 2017, companies with 500 or more employees that do not have a comparable pension plan will be required to earmark 0.8%of payroll towards the ORPP which will be matched by the employer. That percentage will rise to 1.9% in 2020 with a match by the employer. Pensionable earnings maximum under the ORPP will be up to $90,000 (by comparison, the maximum earnings under CPP was $54,900 in 2015). Companies with between 50 and 499 employees will begin their phase-in period in 2018 and firms with under 50 employees will start in 2019.

At this time, there remain a number of issues unresolved including acceptance of Group Registered Retirement Plans and Tax Free saving Accounts as “comparable plans” as well as some form of relief for older workers who will pay into the plan but not receive full benefit. The target date for benefits to start being paid is 2022.

Increase in Employment Insurance Benefit

Effective January 1, 2016, the federal government announced the Employment Insurance (EI) rates and maximums:

• Maximum insurable earnings of $50,800
• Maximum weekly EI benefit of $537

If a Short Term Disability plan’s maximum benefit is insured and based on the EI maximum or insurable earnings, their premiums will likely be adjusted automatically on their January billing statement. For plan sponsors that do their own billing, they will need to incorporate these changes into their system so the new billing reflects the higher volumes.

Alberta Premium Tax Increase

The Alberta government delivered a new budget that included an increase to the insurance premium tax rate from 2.00% to 3.00%, effective April 1, 2016.

All insurance carriers will increase premium rates on April 1. Some insurers are implementing the change only for plan sponsors with their primary location in Alberta while others are also applying the change to groups with employees residing in Alberta.

It is expected the rate change will be implemented by all insurers at the next renewal effective date following April 1, 2016. This will be applied to benefits that are funded on an insured basis including Life insurance, Dependent Life, Weekly Indemnity (short term disability), Long Term Disability, Critical Illness, Health and Dental.

Provincial Dental Fee Increases for 2016

At this time of year, most provincial and territorial dental associations release their annual fee guides. Typically, there is an increase across the board for all services and, as a plan sponsor, it is important to understand how this can influence your rates. Often an insurer will use “trend and Inflation” as the two areas to support adjustments to rates as well as the actual benefit’s claim experience.

The following chart summarizes fee guide increases by their respective dental associations with the exception being Alberta, which does not publish an annual fee guide. In our experience, each insurer has their own approach for setting fee guide adjustments in Alberta and we have used an average for this illustration.

These fee guide adjustments are overall averages of the adjustments for each service. In the following chart, we have identified the actual adjustment by service for the province of Alberta where the overall average increase is 2.92%.

The plan sponsor should review what services are being used under their Dental benefit and then apply the appropriate fee guide adjustment when negotiating the annual renewal with the insurer to ensure an appropriate factor for “trend and inflation”
is applied based on your group’s experience.