Rising costs, court challenges and legislative changes are three trends employers should track to manage employee health care benefits in the coming year. These three areas will continue to drive employee health care policies for employers. Awareness and planning in these areas will help employers to contain costs and avoid discrimination charges regarding provision of benefits.
Costly drugs: Access to biologic and biosimilar drugs
This class of drugs, although no longer new continues to be explored and used more frequently. Biologics are drugs made from human or animal proteins and often need to be injected, monitored closely and adjusted frequently. They also often cost upwards of $500/month and are used to treat chronic conditions such as psoriasis or arthritis with treatments for a variety of other chronic conditions in development. Biosimilars are like a generic version of the original biological but may not have identical results in all clients. Benefits Canada offers an overview of biolgic and biosimilar drugs.
Costs of biologics and other specialty drugs need to be considered by your company in a sensitive manner. Many benefit plan sponsors are making suggestions to employers about how to balance employee preferences for full drug coverage plans and employer need for sustainable benefit plans. Sunlife offers some tips for employer/employee communication regarding the new drugs.
Age related benefit discrimination challenges
Many employers currently offer different benefits to full-time and part-time employees which is permissible under the Employment Standards Act. Some employers also offer different levels of benefits or half benefits to employees who are older than the age of 65. According to the Employment Standards Act (Ontario) discrimination regarding age for employment status only applies to the ages between 18 – 65 so this also seemed to be permissible (there are similar provisions in other Canadian jurisdictions).
However since mandatory retirement at age 65 was eliminated (in 2006 in Ontario and in other Canadian jurisdictions), many more people are finding it either necessary or appealing to work past the age of 65. Subsequently there has been a recent challenge to benefits coverage entitlement based on age discrimination that will proceed through the hearing process in 2014. The outcome could have expensive implications for employers with an aging workforce. First Reference HRinfodesk offers an overview of the case.
Application of the employer provisions of the Obama “Affordable Care Act”
Under Obama care our neighbor to the South is restructuring employer specific benefit provisions. The legislation related to employers is not currently enforced but will be implemented over the next year to ensure equal healthcare coverage to all levels of employees. US employers will not be able to provide a better benefit package to top executives, highly compensated individuals or to the management class than they do to other employees. The healthcare plans will no longer be permitted to discriminate regarding either eligibility for benefits or regarding the provision of better benefits. The New York Times recently discussed the complexity and impact of the new legislation.
Will this impact Canada? The Canadian healthcare environment is different than in the US because of our Medicare system. In the US many more people are fully ensured only through their employers. With the new provisions related to employers being implemented over the next few years, US companies may cut back benefit plans to contain costs. Canadian subsidiaries and divisions could be similarly impacted. Benefits Canada discusses the influence the changes could have in Canada. Would the Canadian government ever consider legislating against healthcare plans that discriminate in favour of highly compensated individuals? It may depend which political party wins the October 2015 elections!
Cost containment, costly drugs and court or government ordered non-discriminatory benefits coverage seem to be the three competing directions for the future of benefits provisions. Balancing these complicated issues while still using benefits to attract and retain top employees will continue to be a challenging part of preparing a competitive compensation package.
Marcia Scheffler, M.A.
CHRP Candidate
@MarciaScheffler
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