Group Benefits

Reminder – Employment Insurance Changes

It was January 2017 when Employment Insurance (EI) reduced the waiting period from two weeks to one week. At that time, the government introduced a four year transition period (from January 1, 2017 to January 2, 2021) to provide employers time to make changes to their short term disability plans to comply with the new rule. During this period, employers can continue to participate in the EI Premium Reduction Program and receive the appropriate reduction in their EI premiums. At the end of this transition period, all employers’ short term disability plans must meet the new standard for the waiting period to continue to receive the premium reduction.

New Agreement in Quebec Impacting Drug Costs

Insurers represented by the Canadian Life and Health Insurance Association (CLHIA account for about 99% of group insurance products in Canada), pharmacists represented by the Association Quebecoise Des Pharmaciens Proprietaires (AQPP represents 2,065 pharmacist owners of the 1,906 pharmacies in Quebec) and third party payers that focus on drug benefit adjudication, have arrived at an agreements that is effective February 1, 2020 and will last for three years.

The intent is to streamline operations and will include:

• Allowing insurers to develop comparison tools on their secure websites so plan members will be able to compare drug prices and find which pharmacies can fill their prescription at the lowest cost
• Plans to create a workforce that includes all three stakeholder groups in the Agreement to deal with high cost specialty drugs

Most insurers intend to have their web sites for plan members updated in February but do check with your provider if they have not already informed you of a date.

Cost Drivers For Drugs

This topic has been topical for over a decade but a recent report by Innovative Medicines Canada sheds light on how these costs vary by a number of factors including age and province. The report stated that half of cost growth in private drug plans was driven by claimants aged 45 to 64, even though that segment accounts for less than half of the overall claimants. The nature and number of medications for this group suggest they would be a good target for chronic disease management programs while the report also indicates that younger age groups could benefit from wellness programs designed to prevent chronic disease.

Regionally, Quebec accounted for the largest proportions of national growth while British Columbia was the other outlier with a growth rate of 13.6%. Ontario’s growth rate was at 1.3%, in part due to the OHIP+ coverage that was in place for part of the year and in spite of being the most populous province. In B.C., Alberta, Saskatchewan and Manitoba, the provincial drug plans cover a greater share of the cost drugs in higher cost categories so cost growth stemmed largely from lower cost drugs for the treatment of chronic diseases. However, the opposite applies to Ontario, Quebec and the Atlantic provinces where private plans pay the large share for higher cost drugs.

Effective Designs For Wellness Programs

In 2019, the Journal of the American Medical Association published a study looking at the effects of workplace wellness programs on employee health and economic outcomes. It concluded that employees who were exposed to these programs experienced “significantly greater rates of some positive health behaviours compared with those who were not exposed”. However, the study also found no significant effects on clinical measures of health, health-care spending or employment outcomes.

There are many providers suggesting they have a wellness plan solution however the key elements of a successful plan are not always included. For example, successful programs include the following characteristics:

• Input from employees on the plan’s design and offerings which can include a focus on specific issues relevant to their industry and workplace
• A plan that has the ability to tailor a solution to an individual’s needs
• A plan that addresses the three areas of overall health – physical, financial and mental
• A plan that provides the employee with metrics so they can measure their progress and also provide the employer with a high-level snapshot of the overall health of the organization
• Access to information, which can include information on steps for a successful outcome or contact with a practitioner (pharmacist, dietician, etc.) or appropriate resource to enable the employee to understand all issues related to their plan
• Technology that supports the individual’s wellness plan and can even provide them with information on other options, e.g. a personal coach

While many recent reports suggest employees are all interested in wellness, there has actually been a decrease in the number of employers who offer a wellness program from 51% in 2017 and a high of 64% in 2013 to 41% in 2018 according to the 2018 Sanofi Canada health-care survey. There is work to be done in this area and, in our opinion, that includes obtaining input from employees on the plan’s design and also developing a link between a wellness program and its impact on cost and the overall benefit spend.

Savings Plans

New in Ontario Pensions

Effective December 2019, the Bill 132 (Better for People, Smarter for Business Act, 2019) came into effect.

One change is that the plan administrator may now apply to the CEO of the Financial Services Regulatory Authority (FSRA) to have the requirement to provide former and retired members biennial statements waived if the administrator is unable to locate the member after making reasonable efforts to do so. Another change is that the administrator can send documents containing personal information electronically if those documents are sent through a secure website and provided the plan members and former members of the pension plan have consented to receive documents in electronic form and the recipient is required to identify themselves prior to accessing the document.

Not part of Bill 132 but effective January 1, 2020, the administrator of a Defined Contribution plan is now permitted, but not required, to offer life income type payments directly from the plan through the establishment of a variable benefits account. The new rules are extensive and include provisions for transfers in and out of the variable benefits account, withdrawals and payment of death benefits among others.

Ontario Raises Threshold For Audits

Effective December 11, 2019, the provincial government changed the threshold for whether pension fund financial statements must be audited from $3 million in assets to $10 million.

That being stated, plans will still be required to file financial statements with FSRA but these statements will not have to be audited. For more information on this new regulation, please refer to https://www.ontario.ca/laws/regulation/r19420.

Legislative and Jurisprudence

Change in British Columbia Plan Premiums

The change is that the monthly rates paid by employers for the province’s medical services plan will be eliminated January 1, 2020. While this is good news, it merely aligns B.C with other provinces as a year prior, the provincial government had introduced an employer health tax of 1.95% for businesses with payroll in excess of $1.5 million while companies with a payroll under $500,000 were exempt from this tax while those in between paid a scaled down rate.

Employment Insurance Premiums Reducing

Effective January 1, 2020, Employment and Social Development Canada says EI premiums will reduce by four cents per hundred for employees to $1.58 per $100 of insurable earnings and by six cents per $100 for employers to $2.21 per $100 of the employee’s insurable earnings. On an annual basis, this will result in a reduction for an employee of $3.86 to $856.36 and for an employer of $5.41 per employee to $1,198.90.

The EI maximum for insurable earnings will increase from $53,100 to $54,200 and, as a result, the maximum weekly benefit will also rise from $562 to $573.

Changes to Alberta’s Drug Program for Seniors

Currently the Alberta Seniors Benefit Drug Program covers non-senior dependents which includes spouses/partners and other dependents under age 65. However, effective March 1st, coverage for dependents will end.

This will shift the responsibility for some drug costs and other health benefits costs to employer sponsored plans but, for now, most insurers are not expecting pricing changes for all clients. It will be important for the plan sponsor to be aware of this at their next renewal.