GroupNews – August 2022
Benefit plan management
Update on treatment for cystic fibrosis
In last month’s issue of GroupNews, we reported on expanded access to Trikafta, the latest treatment option for cystic fibrosis. Since that update, several provinces including New Brunswick, Nova Scotia, Prince Edward Island, Manitoba and Saskatchewan have subsequently expanded coverage to include residents ages six and older.
Trikafta costs approximately $300,000 per year per patient. It can treat up to 90% of Canadians with cystic fibrosis by addressing the underlying causes of the disease and potentially preventing irreversible damage.
Impact: With the recent recommendation by the Canadian Agency for Drugs and Technologies in Health (CADTH) and the Institut national d’excellence en santé et en services sociaux (INESSS) in Quebec, it is expected that all remaining provinces will expand coverage of Trikafta for patients as young as six years old in the coming months, which will help to remove significant pressure on private plans, including health pooling charges. If expanded to Quebec, additional cost pressures may be experienced by employers in that province, where private plans must provide drugs covered under the public plan, Régie de l’assurance maladie du Québec (RAMQ). Trikafta can be covered under RAMQ if the appropriate exception drug criteria are met.
Benefit plan management
Nova Scotia announces changes related to gender-affirming surgery
On July 20, 2022, the government of Nova Scotia announced it is removing barriers and cutting wait times for gender-affirming surgery for Nova Scotia residents. Gender-affirming surgery has been a provincially insured benefit in Nova Scotia since 2014.
Previously, residents applying for gender-affirming surgery in the province had to include a letter of support from a Nova Scotia specialist confirming that post-operative care was available before surgery was approved. Given that it could take between six and 18 months to make an appointment with a specialist to approve care, removing the requirement for a letter is expected to reduce wait times by up to half of the time. Letters will still be required if the surgery takes place outside of the province.
The province also announced that additional healthcare providers with specific skills in gender-affirming care will be allowed to complete the required psychosocial assessment letter and sign the application. Prior to July 20, residents could only receive the assessment letter after meeting with a mental health clinician specifically trained in gender-affirming care.
Impact: The changes to the requirements for gender-affirming surgery will make it easier for residents to access care through reduced wait times. Reducing wait times and barriers to surgery could ease the physical and mental difficulties residents face and result in less time off work.
Legal and legislative news
British Columbia Court of Appeal dismisses appeal in Cambie case
On July 15, 2022, the British Columbia Court of Appeal (Court) dismissed an appeal in Cambie Surgeries Corporation v. British Columbia (Attorney General) (Cambie), upholding provincial healthcare laws. The Court determined that the lower court was correct to deny a constitutional challenge to provincial legislation that prevents patients from accessing private healthcare services when wait times for services in the public healthcare system are too long.
The case was first heard in November 2018 and claimed that the BC Medicare Protection Act limits on private charges infringed on patients’ constitutional rights under the Canadian Charter of Rights and Freedoms when patients were prevented from obtaining medically necessary services more quickly at a private clinic. The decision was upheld by the British Columbia Supreme Court in a decision released in September 2020.
In the latest judgement, the Court determined that while long waits for treatment could deny some patients their Charter rights, the Medicare Protection Act limits are meant to ensure equitable provision of healthcare and prevent the creation of a two-tier system where access to treatment depends on wealth.
Impact: It is expected that the plaintiffs will appeal the decision of the Court to the Supreme Court of Canada. Any decision by the Supreme Court of Canada could have significant country-wide implications for the delivery of publicly and privately funded healthcare. The most recent decision protects the public healthcare system in British Columbia and guarantees that access to necessary medical care is not impacted by an individual’s ability to pay.
Actuaries’ corner
Providing long-term disability benefits after age 65
Retirement at or before age 65 was the norm until 2012 when the federal government became the last jurisdiction in Canada to abolish mandatory retirement. Increasing longevity, combined with changing working patterns (such as entering the workforce at later ages), means we can expect a greater proportion of people to work past the age of 65. Those choosing to work past age 65 will want to ensure that they keep the same compensation package as employees under age 65 doing the same work.
Plan sponsors have generally resisted extending benefits to actively working employees beyond age 65 as they fear the cost of doing so would be too expensive. Of the benefits typically offered by plan sponsors, continuing long-term disability benefits after age 65 is more challenging than continuing health or dental benefits; however, in some cases it may not be as cost prohibitive as expected.
While greater numbers of people become disabled at older ages, and as a result, the “gross” cost (before any offsets) of providing disability benefits increases as members age, most disability benefits can be offset by other disability or pension payments the member receives. Benefits can be reduced by CPP disability, for example, or pension payments from an employer-sponsored defined benefit (DB) pension plan. Both can significantly reduce the net cost of providing disability benefits after age 65. In fact, depending on the DB plan design, it may be possible for the majority, or even all, of the post-age-65 disability benefit costs to be covered by such offsets for longer-serving members.
Plan sponsors might also consider implementing the following to ensure that costs are sustainable:
- set a limited benefit period, for example, two or five years, should an employee become disabled at age 60 or older
- reduce disability coverage amounts provided after age 65
- implement a plan design that provides disability coverage that increases with years of service
If a plan sponsor determines that disability benefits will no longer cease at age 65, they will also need to decide on a revised age at which benefits will terminate. Given that employees are required to start drawing their pension benefits at age 71, this could be one possible age considered as reasonable for disability benefits to cease.
Impact: The impact of extending disability beyond age 65 will differ significantly by a plan sponsor and is highly dependent on factors such as plan demographics, and whether or not the employer sponsors a DB plan that can be integrated with active employee disability benefits. Plan sponsors should seek actuarial advice to consider if, and how, the provision of disability benefits beyond age 65 would be sustainable.
This publication has been prepared by the GroupNews editorial board for general information and does not constitute professional advice. The information contained herein is based on currently available sources and analysis. The data used may be from third-party sources that Eckler has not independently verified, validated, or audited. They make no representations or warranties with respect to the accuracy of the information, nor whether it is suitable for the purposes to which it is put by users. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.
Current editorial board members are: Charlene Milton, Philippe Laplante, and Nick Gubbay.