Group Benefits

Drug Costs for Plan Sponsors Increasing

According to a report by the Patented Medicine Prices Review Board, prescription drug expenditures in private drug plans grew at an annual compound rate of 7.1% between 2018 and 2023.

In 2023 alone, drug expenditures increased by 12.9%, returning to the pre-pandemic annual growth trend.

Drug costs accounted for 88% of the expenditures and increased by 14.1% from 2022 to 2023, while dispensing costs, representing the remaining 12%, grew by 4.5%. The primary driver was the increased use of higher cost medicines which averaged 6.3% annually from 2018 to 2023 and peaked at 9.2% in 2023.

Private insurers covered 88% of total prescription costs, leaving plan members responsible for the remaining 12%.

By 2023, medicines costing more than $10,000 annually accounted for a third of total drugs costs but were used by only 1.5% of claimants and those costing more than $25,000 annually accounted for a sixth of total drug costs but were used by only 0.4% of total claimants.

For plan sponsors, there is the ongoing quandary of balancing adequacy in the drug plan formulary with affordability for the entire plan. We do suggest effective communication on how to be a “smart consumer” for the plan members is a good strategy especially as it relates to those pharmacies that offer lower costs for drugs and dispensing fees.

Increasing Trend to Prioritizing Inclusive Benefits

Based on a Willis Towers Watson survey, Canadian employers are increasingly focusing on coverage for women’s health and gender affirmation in their group benefit plans.

The survey polled more than 100 employers and found 49% of organizations reported women’s health as a high priority. For example, 39% of employers said fertility drugs are a top priority and 70% indicated they already cover them.

Of those polled, 44% indicated they offer gender affirmation care which has doubled since 2024. Also in the poll results was an indication 80% of employers agreed obesity has a significant impact on employee health and well-being and 26% indicated they’re prioritizing obesity medications in their benefit strategies.

Canadian Employees under constant stress – Survey

According to Telus Health’s latest mental-health index, 40% of Canadian employees state they feel constantly stressed out.

The survey polled approximately 3,000 employees and found anxiety continued to be lowest mental-health score, followed by isolation, depression, work productivity, optimism and financial risk.

About 28% of workers reported feeling angrier and more distrustful of others and more than 36% of respondents were assessed as having a high mental-health risk.

More than 56% of participants cited cost as a reason for delaying or avoiding mental-health care while 33% stated they’d prefer better support for their well-being over a 10% increase in salary.

In many organizations the group benefit plan does provide support, including Employee & Family Assistance Plans, however plan members do not understand their coverage so a communication strategy that explains current coverage, which is typically at no cost to the employee, can help reduce these issues.

Majority of Canadian Employers plan to benchmark their benefit plans

According to a new survey by Mercer/Marsh Benefits, 91% of Canadian employers are planning to benchmark their benefit plans against market practices to remain competitive, with 49% prioritizing this for next year and 42% within the next three years.

The survey polled approximately 350 Canadian employers across Canada and also found 88% of organizations plan to develop a cost containment strategy to keep plans affordable sometime over the next one to three years.

For mental-health, 84% of employers stated they offer virtual therapy while 83% offer a traditional employee assistance plan.

Different industry sectors offer different suite of benefits and any benchmarking exercise needs to ensure their information is relevant within their sector and geographical area.

Group Savings

Financial Stress is Leading Concern for Workers aged 40 to 60

According to new research conducted for the Healthcare of Ontario Pension Plan (HOOPP), financial well-being is the primary source of stress for workers aged 40 to 60 with 58% listing it as their top concern. Health issues followed at 39%, 37% cited worries about relationships or family matters and 37% identified work or school-related stress.

The study surveyed more than 2800 participants with 60% of respondents stating they thought about their financial situation daily or weekly. The study highlighted the role of pensions in reducing financial stress.

Corona Pandemic impacted employee’s retirement planning strategies

The global shutdown caused by coronavirus gave Canadians unanticipated savings that led to a period of stronger retirement savings contributions according the Schulich School of Business at York University. The trend described was only seen in 2020 and 2021 with contributions for retirement vehicles like registered retirement savings plans declining after that period.

According to Statistics Canada, in 2023, 11.3 million tax filers in Canada contributed to a RRSP or tax-free savings account (TFSA), with median annual contributions of $3,420 and $6,500 respectively. This same report also found that employee contributions to Defined Contribution plans grew 5% from 2019 to 2020 and individual retirement plan contributions grew 10% while contributions by employers actually fell 12%.

A separate report from Statistics Canada found participation in TFSAs is rising while participation in RRSPs has stagnated.

Savings plans need to be designed to meet the needs of the workplace which is increasingly multi-generational so consideration needs to be given to a variety of plans that can accommodate both tax effective savings for both the short and longer term.

Legislative

Dental Fee Guides for 2025

Canadian dental associations have published their annual fee guides which are used to set rates for the Dental benefit. Most fee increases are lower than last year.

Employer Options during Temporary Layoffs & Terminations

There are two tools available to an employer that wishes to make use of the Employment Insurance (EI) program to help retain its employees and provide them financial stability during a period of economic slowdown.

1. Supplemental Unemployment Benefit (SUB) Plan
   

   A registered SUB plan allows an employer to “top up” regular EI benefits to enable an employee to receive up to 95% of their normal weekly earnings. Without a SUB plan, any top-up payments received reduce the amount of EI benefits payable to the employee.

   A SUB plan must be registered with Service Canada and must meet certain conditions to be approved.

2. EI Work-Sharing Program
   

   This program allows eligible employees to access EI benefits while working a temporarily reduced work week as the employer recovers from a period of economic downturn.

   The program, which is designed to prevent layoffs and help maintain a skilled workforce, requires the cooperation of the employer, participating employees and Service Canada.

As both of these plan need to be registered with Service Canada, there will be some planning required to ensure appropriate time for applications to be filed as well as allowances for approval. There are some key steps in each application and please contact us for additional information or if there are any questions.

Bill 229 & Long-Term Illness Leaves

The Ontario government has announced a June 19, 2025 date for the coming into force of an amendment under Bill 229. The amendment entitles an employee with at least 13 consecutive weeks of service to an unpaid leave of up to 27 weeks if the employee is unable to work due to a serious medical condition.

There are specific provisions in this amendment that outline both requirements to qualify, extension of the period off work and a recurring claim.

Employers must comply by June 19, 2025 so HR policies and handbooks should be updated.

Nova Scotia HST Reduction

Nova Scotia is reducing their HST from 15% to 14% effective April 1, 2025. The federal government, which administers Nova Scotia’s HST, published the regulatory amendments on March 26, 2025, which include transitional rules that clarify the treatment of certain transactions that straddle the April 1 effective date.

Employers with pension plans should review the details of these transitional rules.

National Pharmacare program now being implemented in select provinces

The following provinces and territories have signed agreements and confirmed implementation timelines.

At this time, we are not aware of any benefit providers that are changing coverage under the employer sponsored plan. However, where public Pharmacare provides full coverage for a medication, it’s important that the benefit provider coordinate with the public plan. Pharmacists in these selected provinces and territories are responsible for billing the public plan for these drugs first.

We recommend employers ensure these changes and accompanying processes for claim payments are communicated to their plan members.