GroupNews – November 2021

Eckler’s GroupNews monthly newsletter provides commentary on the issues affecting Canadian group benefit plans.

In this edition:

• Changes to refundable tax credit for treatment of infertility in Quebec
• Quebec Drug Insurance Pooling Corporation releases pooling terms and conditions for 2022
• Ontario announces changes to the Workplace Safety and Insurance Board
• Highlights of the 2021 Benefits Canada Healthcare Survey
• Public Sector Accounting Board proposes changes related to discount rates for employee benefits

Benefit plan management

Changes to refundable tax credit for treatment of infertility in Quebec

The Quebec government has released details regarding changes to the refundable tax credit for the treatment of infertility. Originally introduced in March 2000 to ease the financial burden infertile couples faced and after several changes over the past two decades, the government introduced Bill 73,
An Act to amend various provisions relating to assisted procreation
(Bill 73) in March 2021. Bill 73 came into effect November 15, 2021, and provides coverage under the Quebec Health Insurance Plan for up to six artificial inseminations and a single IVF cycle, subject to certain conditions.

Details of changes include:

• The removal of certain eligibility requirements, including age limits for women seeking treatment, and allowing for unlimited IVF cycles to be completed;
• Subject to guidelines provided by the Collège des médecins, increasing the number of embryos that may be transferred from one to two; and
• The addition of artificial insemination treatments to the list of eligible expenses for the refundable tax credit.

Impact: The changes to the refundable tax credit will allow more couples to access infertility treatments. Quebec residents who are eligible must prove eligibility under the RAMQ with some services related to infertility treatments still  at the patient’s expense.

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Benefit plan management

Quebec Drug Insurance Pooling Corporation releases pooling terms and conditions for 2022

Every year, group insurers in Quebec must participate in an industry-wide pooling plan that protects sponsors of private-sector benefit plans against the financial impact of large drug cost claims. Based on pooling results for previous years, the Quebec Drug Insurance Pooling Corporation (“Corporation”), which is responsible for managing the pooling plan, sets the pooling parameters for the upcoming year.

The following table compares the 2021 and 2022 maximum threshold per certificate and annual factors⁽¹⁾:

⁽¹⁾ Annual factors represent the annual pooling cost expectations, as set out by the Corporation based on previous experience and upcoming high-cost drugs. Insurers are not required to charge those amounts, but plan sponsors should refer to those factors when assessing if they are paying a reasonable fee for their pooling protection in Quebec.

Impact: There will be some increases to pooling thresholds per group size for groups over 125 members in 2022 . Also, several fluctuations in the annual factors with and without dependents should be noted. On average, a moderate increase of 4.4% will be applied for annual factors without dependents, with a few group sizes seeing the annual factors reduce by 2.5% to 2.9%. For annual factors with dependents, a significant increase in pooling costs is expected, leading to an average increase in annual factors of 30%. This increase for certificates with dependents is mainly explained by a new SCAMQ study that led to a different ratio between coverage with and without dependents. Insurers are starting to factor in those changes in expected pooling costs for the upcoming 2022 renewals, so plan sponsors can expect an increase in required drug pooling costs.

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Legal and legislative news

Ontario announces changes to the Workplace Safety and Insurance Board

The Government of Ontario is proposing a number of changes to the Workplace Safety and Insurance Board (WSIB) in the province. The following changes are intended to save employers hundreds of millions of dollars that can be reinvested back into the economy, according to the announcement made by the Minister of Labour, Training and Skills. Below is a summary.

• On October 25, the Ontario government introduced Bill 27, Working for Workers Act (Bill 27). If passed, Bill 27 would allow a significant portion of the WSIB’s current reserve to be distributed to safe employers. It would allow the WSIB to return excess funds to employers once the surplus reaches 115%, and require the WSIB to return excess funds once the surplus reaches 125%.
• The WSIB is cutting premium rates paid by employers by $168 million in 2022 which represents an average premium reduction of 5%.
• To reduce administrative costs and improve efficiency, the government is proposing a change to allow the WSIB to work directly with the Canada Revenue Agency to help streamline the remittance process for businesses.
• Closures in low-wage sectors due to the pandemic have resulted in a spike in Ontario’s Average Industrial Wage. As a result, the ceiling for worker benefits would have increased by 9.45%. To prevent some businesses from having to pay thousands of dollars a year in additional premiums, Ontario is capping the growth of premiums to an increase of 3.2% through a regulation under the Workplace Safety and Amendment Act.

Impact: These changes are a positive development that will create increased savings for employers who contribute to the WSIB fund.

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Research

Highlights of the 2021 Benefits Canada Healthcare Survey

The 2021 Benefits Canada Healthcare Survey, previously the Sanofi Healthcare Survey, asked 1,000 plan members and 524 plan sponsors in Canada about their opinions and preferences for their health benefit plans and their personal health. Below are highlights of the survey which was conducted in May and June of this year.

Opinion on benefit plans

This year’s survey highlighted a downward trend in employee satisfaction with their benefit plan as 47% of employees reported having an excellent or very good benefits plan in 2021, compared to 59% in 2006. The report also suggests that employers with a culture that supports wellness have employees who are the most satisfied with their jobs with 92% agreeing that their employer really cares about their health and well-being.

 Chronic diseases in the workplace

Employers highly underestimate the presence of chronic conditions in the workplace, including chronic pain and chronic mental health challenges. While only 34% of employer plan sponsors estimate having a chronic condition in their workforce, 72% of employees report experiencing chronic pain or a chronic condition.

Employees with chronic conditions report the ability to work from home during the COVID-19 pandemic has made it easier to manage their symptoms with 34% of plan members reporting that remote working during the pandemic helped them to miss less work. Working from home was particularly beneficial for those with arthritis.

Mental health

The survey found mental health conditions were the top chronic condition reported by plan members, with 21% reporting a diagnosis of depression, anxiety or other mental health condition. Compared to other chronic conditions reported above, members with a mental health issue are less likely to say working from home decreases the amount of work they miss due to their condition. Plan sponsors expect that mental health claims will have the largest impact on plan costs across all benefits in the next 5 years and report they will make more investments in mental health (43% in 2019 to 51% in 2021).

Health of employees during COVID-19

Employees report that working from home during COVID-19 has made them less healthy, with 13% saying their health was poor in the past year—a significant increase from the 8% reported in last year’s survey. Employees reported unhealthy behaviours such as being less physically active, poor eating habits, increased alcohol consumption and increased use of recreational drugs. The survey also showed that high and extreme levels of stress are on the rise across multiple categories including personal finances (36%), workload (34%), personal relationships (31%), health concerns including COVID-19 (31%) and work-life balance (30%).

Impact: The survey serves as a useful tool to encourage discussion and provide guidance to stakeholders on decisions to be made about the future of health plans.

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Actuaries’ corner

Public Sector Accounting Board proposes changes related to discount rates for employee benefits

In July 2021, Canada’s Public Sector Accounting Board (PSAB) released an Exposure Draft of “Employee Benefits, Proposed Section PS 3251”. This new proposed section would replace the current Sections PS 3250 and PS 3255 and will be of interest to any entities sponsoring non-pension post-employment/post-retirement benefits (e.g., retiree health and life, long-term disability, accumulating sick leave) that prepare their financial statements under Canadian public sector accounting rules.

The main features of the exposure draft include:

• the removal of existing deferral and amortization of actuarial gains and losses; and
• changes to the discount rate determination for unfunded or partially funded plans.

Another aspect that may be of interest to non-pension post-employment/post-retirement benefit plan sponsors, in particular, is the potential change to how benefit costs are attributed to periods of service.

Under the proposed PS 3251, actuarial gains and losses would be recognized in the accumulated other component of net assets at the end of each reporting period, except in special cases, and therefore not included in future annual charges to income as is currently permitted.

For sponsors of unfunded or partially funded post-employment/post-retirement benefits, the discount rate used in the valuation of liabilities can change to be based on provincial bond yields versus the entity’s cost of borrowing, which is how the discount rate is determined under the current standard.

Impact: Under most accounting standards, an individual employee’s post-employment/post-retirement benefit cost is allocated to prior periods (the accrued benefit obligation) and future periods (the annual current service cost). Changes to how benefit costs are attributed to periods of service could impact the determination of the accrued benefit obligation reflected in the statement of financial position and the current service cost component of annual surplus or deficit in the statement of operations.

Plan sponsors reporting under Canadian public sector accounting rules were invited to provide feedback before November 25, 2021. Plan sponsors may also wish to contact their actuaries to discuss any potential impacts of the proposed new accounting standard.

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