Jackson And Associates
Current Trends

Group Benefits

Update on Salary Increases in 2021

A survey by Normandin Beaudry indicates that approximately 7% of companies plan to freeze salaries in 2021. In a survey done in the summer of 2020 more than 20% of companies surveyed planned a freeze however the projection for this year is still higher than the pre-pandemic results when just 3% of companies had opted out of salary increases.

The size of the company also is a factor as 16% of organizations with 50 to 100 employees expect a freeze this year, that number jumps to 30% among companies with less than 50 employees. Similarly, the overall average increase is expected to be 2.6% and that, too, varies by company size as, for companies with 50 to 100 employees, their budgets are aligned with the 2.6% national average but slightly higher for organizations with fewer than 50 employees at 2.8%

Drug Claims Continue to Drive Benefit Plan Costs

A new report by Innovative Medicines Canada indicates chronic disease and increased drug claims are key factors in driving up the cost of private health plans.

Treatment for chronic diseases accounted for 68% of drug plan claims costs and 79% of that benefit’s growth. Claim costs grew at a 5.3% compound annual growth rate between 2016 to 2019 with 53% of this growth driven by increased utilization rather than increased costs per claim. Non-speciality drugs costing less than $10,000 annually accounted for 71% of total private drug plan costs and 41% of the growth.

The report also looked at insurance company risk management processes, premium-setting processes and risk pooling methodology to determine that these additional changes to plan sponsors account for up to 20% of the total benefits plan cost.

Changes to the Quebec Public Prescription Drug Plan

Effective January 1, 2021, the Regie de L’Assurance du Quebec (RAMQ) announced adjustments for the Public Prescription Drug Insurance Plan and the highlights are as follows:

  • The annual out-of-pocket maximum for members remains unchanged at $1,144
  • The monthly deductible increases from $21.75 to $22.25
  • The co-pay decreases from 37% to 35%
  • The monthly out-of-pocket maximum remains unchanged at $95.31
  • The premium remains unchanged at $648

For employer-sponsored plans that cover Quebec residents, this will have the following impact:

  1. For plans with reimbursement levels, e.g. 80% of eligible expenses, the reimbursement level will increase to 100% once a plan member reaches the annual out-of-pocket maximum listed above, and
  2. The plan’s co-pay must be equal to or better than the RAMQ co-pay listed above

This is not a new policy but merely an update on new provisions so your benefit contracts should already have similar wording.

Drug Pricing Amendment Delayed

Health Canada is delaying the implementation of patented medicine regulations from January 1, 2021 to July 1, 2021. The postponement is intended to give pharmaceutical manufacturers more time to adjust to new reporting requirements while dealing with challenges brought on by the COVID-19 pandemic. The Patented Medicine Prices Review Board (PMPRB) regulates the maximum price of patented drugs in Canada and is introducing this new pricing framework (the process started five years ago) which is the first major reform since the PMPRB was established in 1987.

The pricing framework will change in two main ways:

  1. A new basket of comparator countries will be used to benchmark costs. Two countries, the U,S. and Switzerland, will be dropped from the current basket of seven as their drug prices are among the highest in the world. The comparator countries will increase to include those closer to Canada economically and they are Australia, Belgium, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden and the United Kingdom. Manufacturers will have until January 1, 2022, to adjust prices on medications already available in Canada based on this new basket.
  2. New measures for high-cost drugs for new medicines that are expected to exceed a certain annual treatment cost and/or a defined annual market size of $ 50 million. These drugs will be subject to an additional maximum rebated price (MRP) ceiling that will take into account therapeutic criteria, pharmacoeconomic value and market size. The MRP may also take into account confidential discounts and rebates provided by manufacturers to payers.

Canada will be the first country in the world to incorporate these factors. The Canadian Life and Health Insurance Association (CLHIA), whose membership includes 99% of the life & health insurance business in Canada, have estimated that these new regulations are “expected to save Canadian employers hundreds of millions of dollars”.

Continued Impact of COVID-19 on Benefits

  1. The Ontario government has reinstated the OHIP coverage for out-of-country (OOC) emergency hospital, health facility and doctor services retroactive to January 1, 2020, to the same reimbursement levels and coverage criteria that existed prior to the cancellation. Some insurance companies have re-established their recovery process with OHIP for that portion of a claim that’s eligible under their plan. If you have coverage with one of those insurers, they will require Ontario residents to complete the provincial third-party agreement form (M5500) in addition to the statement of claim out-of-country expense form (M5432-HO) for all eligible OOC emergency medical expenses.
  2. Contract wording has been changed for some insurance policies to allow coverage for employees on temporary lay-off to maintain their coverage, except for disability, for a longer period (a standard was three months and this has been extended to six months). If the leave period ends and the employee(s) still cannot return to work but you maintain the employment relationship, then you can start a new “temporary layoff plan”.
  3. Coverage for over-age students (typically to age 25 and, in Quebec, age 26) has been extended under some insurance contracts to the end of the winter term. For students returning to school in September 2021, some contracts also allow coverage to continue through the summer months.
  4. Travel insurance coverage has been amended by some insurers in a number of areas including coverage for COVID-19 cannot be purchased after departure, the cost of a COVID-19 test before boarding the plane to Canada will not be covered, costs associated when quarantined in Canada are excluded and restrictions on trip cancellation insurance has been restricted

These changes do vary and you should review this with your provider to ensure appropriate coverage is in place once we do get to travel again.

Group Savings

Solid Returns for Pension Plans in 2020

According to a report from the Royal Bank of Canada’s Investor & Treasury Services, Canadian defined benefit plans realized market returns in 2020 of 9.2%. This overall average was heavily influenced by strong returns in the final quarter of the year.

Canadian equities returned just over 4% for the year but 9.4% in the last quarter, the benchmark TSX Composite Index returned 5.6% for the year and 9% for the quarter, the technology sector returned 80.7%, materials was at 21.2%, consumer discretionary at 17.1%, however, energy was negative 26.6%. Additionally, domestic bonds returned 11.1%. Foreign equities were the top-performing asset class in 2020, returning 12.6%.


The Ontario government has extended the “deemed” Infectious Disease Emergency Leave (IDEL) to July 3rd, 2021. This will impact employees in three ways:

  1. The Employment Standards Act (ESA) rules around constructive dismissal resume and the employee can be constructively dismissed, even for COVID-19 related reasons. The benefit coverage would be terminated at that time.
  2. The ESA rules around temporary lay-offs resume and the temporary lay-off clock resets. Employees who cannot return to work will be considered on temporary lay-off at that time. Depending on your insurance provider, the benefits may continue (31 days is a standard for disability and, as noted above under Group Benefits, six months for other coverage)
  3. Employees can apply for regular IDEL (not “deemed”) if they meet the criteria. As this would be considered an ESA leave, regular benefits, with the exception of disability, would continue.

This program has been extended previously and we will continue to monitor developments.

Compliance Report for AODA Extended

The Accessibility for Ontarians with Disabilities Act, 2005 (AODA) is a legislative framework that aims to develop, implement and enforce accessibility standards “in order to achieve accessibility for Ontarians with disabilities with respect to goods, services, facilities, accommodation, employment, buildings, structures and premises on or before January 1, 2025”.

As mentioned in an earlier Current Trends, private sector and not-for-profit organizations in Ontario with 20+ employees were previously required to submit an AODA compliance report by December 31,2020 however this deadline has been extended to June 30, 2021.

For additional information on how your organization can complete and submit the report, please contact us.

Increase in EI Maximum Insurable Earnings

The Employment Insurance (EI) maximum insurable earnings increased effective January 1. 2021 which could impact on short term disability plan wording and if that plan has been registered with EI to reduce employer contributions.

The changes are:

  • The maximum insurable earnings will increase to $56,300 from $54,200
  • The maximum weekly EI benefit will increase to $595 from $573

If the benefit amount in your group contract is defined and is higher then $595 or states the benefit is equal to the EI amount, then the change has no impact. If the benefit is listed and is less than $595, the short-term disability plan will no longer be eligible for the Employment Insurance premium reduction program.

Dental Fee Guide Changes for 2021

Fee guides for Dental services are established by regional associations and do change annually. The increases listed are an “average of changes for all dental services” that include Basic, Preventive, Major Restorative and Orthodontic. The adjustments for specific services do vary and, to establish how the fee adjustments impact your plan, you should review the actual claims experience by service to determine how these changes may be incorporated into any renewal discussions with the insurance company.

  • Province
  • Alberta
  • British Columbia
  • Manitoba
  • NFLD/Labrador
  • NWT/Nunavut
  • Nova Scotia
  • Ontario
  • Prince Edward Island
  • Saskatchewan
  • Quebec
  • Percentage Increase
  • 0%
  • 3.96%
  • 4.19%
  • 5%
  • 3%
  • 3.39%
  • 4.60%
  • 2.61%
  • 4.20%
  • 3.23
  • Effective Date
  • January 1, 2021
  • February 1, 2021
  • January 1, 2021
  • January 1, 2021
  • January 1, 2021
  • January 1, 2021
  • January 1, 2021
  • January 1, 2021
  • January 1, 2021
  • January 1, 2021