GroupNews – September 2019

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

In this edition:

• Employment insurance premium rate announcement for 2020
• Canada Labour Code amendments respecting leaves come into force
• Nova Scotia establishes regulator for audiologists and speech-language pathologists
• Newfoundland and Labrador regulations amend requirements for nurses
• Report analyzes Canada’s rising public drug plan costs

Benefit plan management

Employment insurance premium rate announcement for 2020

Following the forecasts and estimates released in the 2020 Actuarial Report on the Employment Insurance Premium Rate, the Canada Employment Insurance Commission has announced the updated EI rates.

For 2020, the EI rate is set at $1.58 per $100 of insurable earnings – slightly lower than the 2019 rate of $1.62. EI premium rates for Quebec residents (who are covered under the Quebec Parental Insurance Plan) will be $1.20 per $100 of insurable earnings for employees and $1.68 per $100 of insurable earnings for employers, down from $1.25 and $1.75 respectively.

Maximum insurable earnings for 2020 will increase to $54,200 from $53,100 in 2019.

Impact: Both employer and employee EI costs in 2020 are expected to be lower as the EI rate reduction will have a greater impact than the increased maximum insurable earnings.

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Legal and legislative updates

Canada Labour Code amendments respecting leaves come into force

On September 1, 2019, amendments to the Canada Labour Code (Code) respecting leaves of absence came into force. The amendments are intended to improve labour standards with respect to work-life balance and provide federally regulated employees with additional job security. Several of the amendments were first proposed in Bill C-63, the Budget Implementation Act, 2017, No. 2 (Bill C-63), and Bill C-86, the Budget Implementation Act, 2018, No. 2 (Bill C-86).

Among the changes are the elimination of minimum eligibility periods for benefits, including:

• Holiday pay;
• Maternity and parental leave;
• Leave in the case of serious illness; and
• Leave in the case of the death or disappearance of a child.

The amendments also introduce several new leaves of absence for employees. Bill C-63, which received Royal Assent on December 14, 2017, includes the following amendments:

Leave for victims of family violence: The leave allows employees to seek medical attention for themselves or their child, to obtain services from an organization that provides services to victims of family violence, to obtain psychological or other professional counselling, to relocate temporarily or permanently, to seek legal or law enforcement assistance or to prepare for, or participate in, any civil or criminal proceeding, or to take any measures prescribed by regulation.

Employees who are victims of family violence, or who are parents of a child who is a victim of family violence, are entitled to a leave of up to 10 days in every calendar year. After three consecutive months of employment, the first five days of leave are paid at the employee’s regular rate of wages.

Leave for traditional Aboriginal practices: The leave allows employees to engage in defined traditional Aboriginal practices such as hunting, fishing, harvesting or other prescribed practices. Employees are entitled to up to five days per calendar year. The leave is restricted to Aboriginal persons (defined as Indian, Inuit or Métis) who have completed at least three consecutive months of continuous service.

Extended bereavement leave: Bereavement leave entitlement is extended to add two additional unpaid days to the existing three days of paid leave. The entitlement to leave begins on the day on which the death of the immediate family member occurs, up to six weeks after the latest of the days on which any funeral, burial or memorial service occurs.

Changes in Bill C-86, which received Royal Assent on December 13, 2018, include:

Personal leave: Personal leave is granted for treating illness or injury, carrying out responsibilities related to the health or care of any family member, carrying out responsibilities related to the education of any family member who is under 18 years of age, addressing any urgent matter concerning themselves or their family members, attending their citizenship ceremony, or any other reason prescribed by regulation. Employees will be entitled to a personal leave of up to five days in every calendar year. After three months of continuous employment, the first three days of leave are to be paid at the employee’s regular rate of wages.

Court or jury duty leave: Employees are entitled to a leave to attend court to serve as a witness, act as a juror, or participate in the jury selection process. There is no limitation on the length of such leave. Previously, this requirement existed under provincial legislation only.

Medical leave: Medical leave will replace the current “sick leave” and current sick leave provisions will be classified as medical leave. Employees are entitled to a medical leave of absence, regardless of the length of their service. The leave may be taken for up to 17 weeks as a result of personal illness or injury, organ or tissue donation, or medical appointments during working hours.

In addition, changes to Shared Parental and Maternity leave came into force in March 2019 that increased the aggregate amount of leave available. Where multiple employees are taking parental leave in respect of the same birth or adoption, the aggregate amount of leave has increased by eight weeks for a total of up to 71 weeks. Where multiple employees are taking both maternity and parental leave in respect of the same birth, the aggregate amount of leave has also increased by eight weeks, up to a total of 86 weeks.

Impact: The proposed changes will have a major impact on federally regulated employers and employees and offer further support and flexibility for employees who require time off from work. Employers will have to review employee contracts and policies in order to ensure compliance with the new requirements.

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Legal and legislative updates

Nova Scotia establishes regulator for audiologists and speech-language pathologists

The government of Nova Scotia has announced plans to license audiologists and speech-language pathologists in the province, beginning November 5, 2019. Nova Scotia Regulation 120/2019 sets out a number of regulations regarding the registration, licensing, and professional accountability of audiologists and speech-language pathologists in the province and establishes the Nova Scotia College of Audiologists and Speech-Language Pathologists as the governing body with the authority to set standards of practice and professional conduct, investigate complaints, and discipline members.

Impact: The licensing of audiologists and speech-language pathologists enables the province to set and hold professionals to common standards of conduct and competence. It also provides the public with a reasonable expectation regarding service and competence throughout the province. Regulating the profession will also allow for increased portability for professionals from other provinces – currently, only Nova Scotia and Prince Edward Island do not license audiologists and speech-language pathologists.

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Legal and legislative updates

Newfoundland and Labrador regulations amend requirements
for nurses

On August 27, 2019, the government of Newfoundland and Labrador published amendments to the Registered Nurses Regulations that amend requirements for nurse practitioner licensure in the province.

The amendments remove the requirements that nurse practitioners who are not employees of a regional health authority, but who provide care to a patient, be required to submit a declaration stating their arrangement with a physician for the purpose of consultation with respect to the care of a patient. The nurse practitioner is also required to note the name and address of the physician, the date the arrangement was entered into with the physician, and that the care of the patient in question may be transferred to the physician if required.

Impact: Removing the requirement that nurse practitioners enter into an arrangement with a physician before offering consultation services and health care to patients may allow nurse practitioners to provide care to a wider range of patients in a more timely manner.

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Research

Report analyzes Canada’s rising public drug plan costs

The Patented Medicine Prices Review Board (PMPRB) released a report on drug spending for public plans in Canada. The Annual Public Drug Plan Expenditure Report (Report), based on data from the National Prescription Drug Utilization Information System (NPDUIS), including information on the provinces and territories, except Quebec, the Northwest Territories and Nunavut, reveals that prescription drug expenditures by public drug plans grew by 7.4% or $11.4 billion in 2017/18. This is significant when compared to a 1.9% increase in drug costs from 2016/17. Drug costs, which represented 80% of prescription drug expenditures in 2017/18, grew at a rate of 8.3%, while dispensing costs, which accounted for the remaining 20% of expenditures, grew by 3.8%. Between 2014/15 and 2017/18 the total prescription drug costs for public drug plans increased by $2 billion.

The Report also analyzes the cost pressures driving changes in prescription drug expenditures in public drug plans across the country. The increase of higher-cost drugs, renewed pressure from direct-acting antiviral (DAA) drugs for hepatitis C, and the implementation of Ontario’s OHIP+ program, with limited savings from generic and biosimilar substitution, were the primary drivers for the increase in drug costs, according to the Report.

The use of higher-cost medicines and a renewed pressure from direct-acting antiviral drugs (DAA) for hepatitis C accounted for a significant 7.1% increase on drug costs in 2017/18. The patented market segment saw a 19.3% rise in costs for medicines exceeding $10,000 in annual treatment costs. While these high-cost drugs were used by less than 2% of public drug plan beneficiaries, they accounted for more than 30% of the total drug costs in 2017/18. The entry of DAA drugs and the expanded treatment criteria to include patients who were previously ineligible for coverage for hepatitis C in many public plans led to an increase in the number of active beneficiaries from 7,563 in 2016/17 to 11,920 in 2017/18 resulting in an increase of $205 million in overall costs.

The implementation of Ontario’s OHIP+ program, which provided prescription drug coverage to children and youth aged 24 and under regardless of family income, effective January 1, 2018, also influenced the overall increase in costs. With more than 1 million active beneficiaries filling approximately 3 million prescriptions for reimbursement by the OHIP+ program in the last quarter of 2017/18, the implementation of the OHIP+ program resulted in an increase in the non-senior beneficiary population in the Ontario public drug plan, from 30% to 48%. OHIP+ accounted for a 2.5% increase in total prescription drug expenditures for Ontario, representing an increase of 1.4% for all NPDUIS public drug plans for the entire fiscal year. Without OHIP+, the 8.3% total drug cost growth in all NPDUIS public drug plans would have been 6.8%. The expansion of the Ontario public drug plan to include OHIP+ is only partially reflected in the results of this report, as it was implemented in the last quarter of the 2017/18 fiscal year (January 1, 2018 to March 31, 2018). The program has since been redesigned to provide drug coverage exclusively to children and youth not covered by a private plan beginning on April 1, 2019.

To help offset the growth in drug costs, public drug plans did experience savings from price reductions (-1.1% or -$90 million), and from generic and biosimilar substitution (-1.3% or -$107 million) although their impact steadily declined from -9.2% in 2012/13 to -2.4% in 2017/18. These cost savings of $197 million were relatively uniform across the jurisdictions, and noticeably below the savings realized in previous years.

Impact: While these statistics are related to public drug plans, private plans are similarly impacted. The use of high-cost medicines continues to put pressure on private drug plan costs. The agreements with the pan-Canadian Pharmaceutical Alliance (pCPA) that reduced the price of some of the most commonly prescribed generic medicines to approximately 10% to 18% of their equivalent brand name product in 2018 were not reflected in this report and may provide further cost savings to drug plans.

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