CLHIA Advisor Compensation Disclosure

The new Canadian Life & Health Insurance Association (CLHIA) guideline (Guideline G19) sets out industry standards for intermediary compensation disclosure in Group Benefits and Group Retirement Services businesses. This Guideline G19 was developed because:

• Regulators and other stakeholders increasingly expect our industry to proactively identify and address market conduct risks.
• The life and health insurance industry believes that transparency in group intermediary compensation disclosure is an important component of helping to ensure fair and appropriate outcomes for plan sponsors, and
• CLHIA believes that the proposed Guideline G19 will strengthen the industry's practices around compensation disclosure and is in the best interest of plan sponsors.

For more information about Guideline G19 and for access to the supporting Explanatory Notes, please visit www.CLHIA.ca.

We believe that it’s important that you, as the plan sponsor, have access to all costs impacting your plan and, as such, heartily support this initiative. The Guidelines will disclose information on the following:

• Direct Compensation which will encompass commissions (there is an industry standard commission scale) as both a percentage and a dollar amount
• Indirect Compensation which will include all bonuses paid from an insurer to an advisor
• In-kind compensation which will include travel prizes, business loans, support with office expenses, etc

CLHIA has moved the implementation of the Point of Sale Compensation Disclosure from July 2018 to January 2019 for plan renewals and January 2020 for new business.

What To Expect From OHIP+

The Ontario provincial health care plan introduced universal drug coverage for all children and youth age 24 and under, regardless of family income, effective January 1, 2018. Called “OHIP+” the public benefit will cover all drugs (approximately 4,400 under the Ontario Drug Benefit) plus additional drugs under the Exceptional Access Program (EAP), without co-pays or deductibles. The program will act as the primary payor (whether or not private coverage exists) providing full reimbursement for the eligible drug.

There is concern about the relationship between private plans and the EAP, which requires Ontarians under age 25 to apply for the coverage. Attending physicians and pharmacists should be able to support the application process. However, due to the time it can take to reach a decision on EAP funding by the Ministry of Health and Long-Term Care, insurers will continue to cover certain drugs until June 30, 2018.

These drugs (which fall into the categories of antibiotics and anti-infectives, blood thinners and drugs with low approval ratings under the EAP) will have had to have been assessed and denied coverage for all EAP drugs beginning on July 1, 2018 before the medication will be covered under a private plan.

It is difficult to predict what impact OHIP+ will have on claims due to a number of factors related to demographics and claim patterns (the provincial government has stated over 950,000 prescriptions have been covered in the first three weeks of January) but insurers are taking the position that any changes to rates will be applied on renewal for insured groups and through claims experience for Administrative Services Only groups.

Bill 148 – Impact On Leave Policies

The Ontario government also introduced Bill 148 on November 22, 2017, under the Fair Workplaces, Better Jobs initiative. This amended both the Employment Standards Act and the Labour Relations Act by expanding personal emergency leave (PEL) to 10 days per year for all employees. Previously, PEL only applied to employers with 50 or more employees and in addition, to the 10 PEL days prescribed, Bill 148 also requires that 2 of the 10 days be paid. Practically speaking, this means that all employees (with at least 1 week's service) will have a statutory right to 2 paid sick days (or 2 paid sick days based on a family illness). The Ontario government does offer guidance on what constitutes an emergency and general guidelines are as follows:

• An employee can take leave due to illness, injury or medical emergency,
• An employee can take time off to care for immediate family members and extended family members who are dependents, and
• For the death of an immediate or extended family member

Notably, an employer cannot request a doctor's note in order for the employee to take advantage of PEL days. Instead, an employer can only request "evidence reasonable in the circumstances". This will not generally impact an employer's right to request a doctor's note for return to work or accommodation purposes.

In Alberta, a new provision was introduced January 1, 2018 with a new provision for 5 days of unpaid leave per year. Prince Edward Island mandates a single paid sick day provided the employee has been with the employer for at least five years. Yukon has 12 days of unpaid sick leave per year while the Northwest Territories and New Brunswick provide 5 days. Manitoba and Nova Scotia both provide for 3 days of unpaid family leave, which includes personal illness and family responsibilities. Quebec provides up to 10 days for obligations relating to the health, custody or education of a child, the child of a spouse as well as the health of a close relative. British Columbia, Saskatchewan and Nunavut have nothing in the category of short-term emergency leave.

Employers should ensure their policies for Personal Leave and short term absences are updated to reflect these changes.

Terminating Employment While On Disability

This is a question that commonly arises when it comes to employees who have been away from work and in receipt of long term disability benefits for an extended period of time. Generally, and subject to applicable statutory entitlements respecting termination pay and severance, it is permissible to terminate an employee who’s unable to work due to disability based on frustration of contract (in situations involving non-unionized employees).

An employer seeking to terminate a disabled employee will need to establish the individual is incapable of performing the essential duties of the position, with or without modifications to accommodate restrictions; is unable to perform any other productive work; and has no reasonable prospect of returning to work. Typically, this aligns with the standard change in definition of disability which occurs after two years of continuous disability under most insured long term disability benefits.

As for other benefits, such as health and dental plans, the prevailing view is that they do not vest at the point an employee becomes disabled and continuation of coverage is dependent on each employer’s policy with one to two years from the date the disability claim started being the most common.