Group Benefits

Medical Benefit Costs Rising

The costs of employer medical benefits across Canada are forecast to rise 7.5% in 2023 according to Aon’s 2023 Global Medical Trend report. After the impact of the pandemic on medical costs, claims started to return to pre-pandemic levels.

The top medical conditions driving costs in Canada are autoimmune disease, diabetes and mental health, with the latter continuing to be a result of the long period of COVID-19 and its related illnesses.

Remote & Hybrid Workplaces are the New Norm

A report from the International Foundation of Employee Benefit Plans indicates over half of employers will maintain remote work options in 2023. According to the report, 74% of employers offer hybrid work arrangements, 57% offer flexible work hours and 55% offer remote work arrangements.

This change in the workplace dynamic has resulted in a change in benefits as well. There has been a decline in coffee service, flu shot programs, health risk assessments/screenings and exercise programs. However there has been an increase in benefits that include identity theft insurance, estate planning services, and paid leave to vote as well as a number of family-friendly offerings like paid adoption leave and paid maternity leave.

Salary Budgets Increasing

A new survey by Normandin Beaudry, states 48 per cent of Canadian employers say they’ll be making additional increases to their salary budget for 2023.

The survey polled 440 Canadian employers to find 43 per cent of respondents have set aside 1.2 per cent in additional funds for salary increases. The main reasons cited are market adjustments (76%), retention of strategic or critical roles (60%) and retention of employees at risk of leaving (51%).

This adjustment brings the total average budget increase to 4.7 per cent for salary increases in 2023. Employers in Quebec and Ontario at 5.1 per cent and 4.7 per cent respectively while privately-held businesses and not-for-profit companies at 5.0 per cent and 4.8 per cent respectively are forecasting the highest increases.

Group Savings

New Limits for Savings Plans

Following is a list of the new maximums for savings plans in 2023:

• The limit for Money Purchase Retirement Plans is $ 31,560 up from $ 30,780
• The dollar limit for RRSP contributions is $ 30,780 and expected to go to $ 31,560 in 2024
• The limit for a Deferred Profit Sharing Plan increases to $ 15,780 (always half the Money Purchase Plan amount)
• The new dollar limit for a Tax-Free Savings Account is $ 6,500

Legislative

Dental Fee Guide Changes

Each year, Provincial and Territorial Dental Associations release their fee guides for the upcoming year. It’s important to note that the fees listed are actually an average of the fees for each service so some services that qualify as Basic & Preventive in a group benefit plan may increase at a different rate than the average. To get an accurate view of how the fee guide impacts an employer sponsored Dental plan, one should review the nature of the services being used and how the fee guide for those specific services did change.

At this time, information for all province and territories was not available.

Provincial Drug Plans Switch to Biosimilar Drugs

Provincial governments are adopting biosimilar drugs as an alternative to biologic drugs as part of a focus on realizing savings while maintaining the integrity of the plan’s coverage.

It’s important to understand the difference as biologic drugs are a class of medications made from living cells and found to be more effective in treating certain conditions that include rheumatoid arthritis as one example. Biosimilar drugs are similar versions of the originator biologic at a fraction of the cost and have the same regulatory standards as the biologic drugs.

Recently the Government of Saskatchewan announced a new biosimilar initiative which will require residents to switch from an originator biologic drug to a biosimilar equivalent drug. Saskatchewan will be the seventh Canadian drug plan to implement this initiative and others include British Columbia, Alberta, New Brunswick, Quebec, the Northwest Territories and Nova Scotia.

Both British Columbia and Alberta have expanded the biosimilar drug initiatives and, as a result, impacted plan members will be notified to switch to a biosimilar drug.

The Government of Ontario has announced the launch of a biosimilar initiative to switch patients from eight originator biologic drugs to biosimilar versions of the drugs. These drugs are used for the treatment of conditions such as arthritis, diabetes, inflammatory bowel disease and psoriasis. The Ontario Drug Benefit (ODB) will begin to transition to a Health Canada approved biosimilar version starting March 31 and patients will have until December 29, 2023 to make this switch in order to maintain coverage under the ODB.

Plan sponsors need to review the drug formulary under their group benefit plan to determine what originator biologics are eligible and if there are biosimilar drugs available to replace them. It is important that a biologic drug not be removed from the formulary if a biosimilar is not available and equally important that biosimilar drugs are reimbursed at the plan’s co-insurance and co-pay amounts.