Canada

In Canada, employees want healthcare coverage, but more specifically the prescription drug coverage that forms part of an employee’s healthcare cover. In Canada this is called ‘extended healthcare.’ Having prescription drug coverage in an extended healthcare plan means your employees have better access to affordable prescriptions.

 

Asinta Partner
Jacquie Fritsch

Cowan Insurance Group

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Country Insight

In Toronto, go to The Taste of the Danforth the second week of August, one of the world’s largest street festivals held in the Greektown area over a three day period.

The reasons for this? Over the past 20 years in Canada, federally covered social security programs shifted a substantial portion of the cost of prescription benefits to the private sector. In addition, media coverage increased Canadians’ demands for the newest and latest pharmaceuticals.

After health cover, Canadian employees rank these four benefits in this order of importance: Disability, Retirement, Death, and Wellness Programs.

Its also important to note that Canadians have a life expectancy of 82 years, (Canada is ranked 13th in the world for life expectancy), 1 in 5 Canadians suffer from a mental illness in a year and 40% of those are under age 40.

Trending Now

For 2016, employers should keep an eye on the Ontario Registered Retirement Savings Plan (ORPP). The Ontario provincial government is making it mandatory for employers to contribute 1.9%, calculated on an employee’s earnings, to their employees’ social security pension funds. At the same time, it is compulsory for employees to contribute 1.9% to the funds as well.

Some in Canada are characterizing this as a “payroll” tax but it is truly a pension contribution. Since some employers already have a retirement plan in place for their employees, and make a 3-5% employer-funded contribution to those plans, they are asking the government if they can be exempt from this requirement. Employers are concerned about the affordability of the additional 1.9% contribution proposed. The government says “maybe” but still need to determine the exemption standards.

The beginning of the ORPP phase-in for employers starts January 1, 2016, beginning with the largest employers. The rest is to be phased in over a 2 year period. At this point, employers are to begin making the 1.9% contribution to employees’ social security funds, but since the guidelines and rules are still up in the air, employers are unsure if they must participate.

Average Cost For Employer Sponsored Benefits

For a typical employer-sponsored benefits package, which includes medical, optical, dental, AD&D (Accident Death & Dismemberment), and possibly disability, the cost is 5,000- 7,000 Canadian Dollars per annum or about 420-580 Canadian Dollars per month.

Advice To Employers

In Canada, be creative. Traditional benefit plans don’t meet the market’s competitive talent recruitment needs. Canadian demographics have shifted so much that there are now two polarized populations in the work force; one older and one much younger. This means that in the same company you can have two populations with very different priorities. As such, when you design your Canadian benefits plan, if you base your decisions on another company’s or competitor’s plan, you may not be implementing benefits that matter to one half of your employees, or even worse, to none of your employees

Surprising Fact

You need to offer supplemental benefits. The perception outside of Canada is that employees receive all their health and welfare benefits via public provision such as federal and provincial programs or ”Universal Healthcare.”

Furthermore, Canada has a robust legal requirement regarding disability coverage. If an employer offers disability coverage, by law their Canadian insurance carrier must provide the same level of disability coverage to all enrollees. This is designed so employers cannot exclude specific conditions under their disability cover (such as mental illness). There can be no discrimination of cover levels by an employer.

Are employers required by law to provide a disability benefit? No, but 85% of employers with more than 100 employees do offer a group benefits plan which generally includes medical, dental, optical, life, AD&D, and disability. So it’s not actually a domestic legal requirement to offer it, but it is certainly a competitive requirement.

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