Over the last few months, the Government of Canada has made some significant changes impacting benefits and employee life and health trust (ELHT) plans. It is important for labour and management trustees, public service trustees, professional advisors and corporate plan sponsors to keep up to date on these legislative updates. The new legislation and regulations made by the Government of Canada seek to provide comprehensive guidelines and clarification plans need for the benefit of individuals across the country. The Cross-Country Benefit Check-Up session kicked off the 2023 Canadian Legal and Legislative Update in Nashville, May 17-18. Led by Megan Kaneen, Partner at Lawson Lundell LLP, and Michael Mazzuca, Managing Partner at Koskie Minsky LLP, this session provided an overview of the key legislative and regulatory updates.
Here are four takeaways from the session.
1. The EI Sickness Benefits
Effective December 18, 2022, early intervention (EI) sickness benefits increased from 15 weeks to 26 weeks, with no changes to STD/LTD plans mandated. This increase in EI benefits is the result of the broader EI reforms, a two-year consultation process in which the Government of Canada had the goal to build an EI program that is more flexible, fairer and better suited to the needs of Canadian workers. Megan Kaneen stated that the federal government has advised that there will be no immediate impact on the premium reduction program. With this being said, plan sponsors should keep an eye out for further developments to EI programs expected later this year.
2. Canada Dental Benefit
One of the major updates Kaneen and Mazzuca offered during their session was on the Canada Dental Benefit plan. The government-funded dental care program is to be expanded beyond children. Currently, this program is available to children under 12 with no access to a private dental insurance plan and families earning less than $90,000 per year.
The Canada Dental Benefit will also be expanded to provide dental coverage for uninsured Canadians with annual family income of $90,000 per year. Other changes include:
- No co-pays if family income is less than $70,000 per year.
- Coverage to begin by end of 2023.
- The benefit is to be administered by Health Canada, with support from a third-party benefits administrator.
Plans may be affected by new reporting requirements for employers and employer pension plans to report dental coverage offered to their employees and plan members. The new legislation will compel lawyers to report dental coverage offered to employees on T4/T4A income tax forms. According to the speakers, this new reporting requirement is to ensure the Dental Care Plan is given to Canadians that don’t have access to private plans.
The last comment shared by Kaneen was that the Québec government has said it wants to opt out of the federal dental program and has asked for compensation. Kaneen questioned if other provinces will follow suit.
3. National Strategy for Drugs for Rare Diseases
On March 22, 2023, the Minister of Health announced measures in support of the National Strategy for Drugs for Rare Diseases by investing up to $1.5 billion over three years. This would be Canada’s first national strategy for drugs for rare diseases. This strategy will help increase access and affordability of drugs for rare diseases to improve the lives of individuals in Canada.
It is expected that $1.4 billion of the total investment will go to provinces and territories through bilateral agreements over a period of three years. This funding will help provinces and territories to jointly determine a small set of new, emerging drugs that would be cost-shared and covered in a consistent way across Canada. $33 million over three years will go to Indigenous Services Canada’s Non-Insured Health Benefits Program.
4. ELHT Update
As it was announced in the 2018 federal budget, December 31, 2022 marked the end of the four-year conversion process from health and welfare trusts (HWT) to employee life and health trusts (ELHT). Kaneen shared that plans that did not convert will be treated by the CRA as inter vivos trusts and will lose tax advantages associated with HWTs/ELHTs.
Important items to note from the CRA Views 2021-0915921E5 shared by Kaneen:
- Non-collectively bargained multi-employer plan where participating employers contract separately with trustees for health benefits to be provided to respective employees.
- Collectively, employees of participating employers are beneficiaries.
- Benefits vary among participating employers.
- A participating employer may offer different classes of benefits/coverage levels.
- ELHTs must have at least one class of beneficiaries that represents at least 25% of all beneficiaries of the trust who are employees of participating employers.
- “Class of beneficiaries” is defined as a group of beneficiaries with identical rights or interests under the trust.
- There was a concern that no group covered by a single set of benefits made up 25% of the trust.
- CRA noted that a “right” includes an entitlement to designated employee benefits.
- CRA has also stated that where employees of several participating employers have the same rights under the trust (but not necessarily the same benefit entitlements or coverage), such employees can form a “class” as long as benefit entitlements are reasonably similar—Need not be identical benefits.
Visit our InfoQuick on Legislative Updates under the Canada category for more information.
Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.