An important question that’s been on the minds of employers over the past year is how the National Pharmacare and Canada Dental Benefit plans could impact their group benefits coverage—if at all. Do these new programs negate the need to provide drug or dental coverage to their teams? Are the plans fully comprehensive, or are they hybrid public-private measures that deliver only partial coverage? Most importantly, what are the compliance requirements?
They’re all relevant questions. When it comes to National Pharmacare, note that little has changed on the file over the past year. The federal New Democratic Party is pushing the governing Liberals to expand coverage and to create a universal, single-payer public drug coverage program, but those plans have been delayed for a range of (largely budgetary) reasons. Legislation to implement the program and to establish a national drug formulary has been pushed into 2024, at the earliest.
What we can say in the meantime is that the fundamental principles behind the Pharmacare program neglect the realities of the current drug coverage system. Inequitable provincial drug coverage is one of many factors impeding universal access to treatment for Canadians, just as medical and drug coverage is increasingly being offloaded to private plans. This is resulting in higher co-payments, reduced coverage and, in some cases, a lack of access to life-saving drugs. Furthermore, private drug plans offer better coverage than their public counterparts. A universal pharmacare program has the potential to erode coverage for those Canadians currently covered by private plans.
Importantly, National Pharmacare—as it is envisioned—does not solve drug affordability issues for those Canadians who can’t afford their current plan deductibles. Eighty per cent of drug claims are currently paid through employer-sponsored plans, while more than 95 per cent of Canadians are eligible for prescription drug coverage through public, private or individual plans.
Even if universal coverage is introduced, the cost will be paid through higher taxes that will impact the bottom line of businesses across Canada. These drug costs will eventually be passed along (and paid by) individual taxpayers.
As noted in a series of ongoing policy statements by Benefits Alliance—a not-for-profit organization representing employee benefit plan advisors and employer benefit plan sponsors nationally (Bridgewell is a proud Benefits Alliance member)—many employer-sponsored pharmaceutical plans provide coverage that well exceed the scope of drugs covered by provincial drug formularies (it’s worth noting that the provinces will ultimately be tasked with implementing and managing a universal pharmacare system). Importantly, Benefits Alliance plan sponsors “… enjoy the freedom of choice between insurers and third-party vendors to allow them to tailor the most appropriate coverage and service experience for their employees and their families.”
Bridgewell supports a hybrid model of drug coverage delivery (where the private and public sector each play a role). As outlined by Benefits Alliance, that model would:
- Continue to allow private drug plans to be the primary payer for medications not funded by Medicare
- Provide a publicly-funded drug coverage safety net for all Canadians via a standard minimum formulary of essential medicines
- Deliver a consistent catastrophic drug program across the country, based on a core drug formulary and standard out-of-pocket costs
- Adopt a modernized approach to the Canada Health Act, so that government-funded programs would reimburse high-cost drugs for all Canadians regardless of the type of patient coverage
- Ensure ‘one price’ for drugs regardless of jurisdiction or payer type
One of the reasons we’re so excited that Bridgewell Financial was accepted as a member of Benefits Alliance this year is the more pronounced voice it gives our team to advocate on your behalf. As your advisors, we believe the best approach on pharmacare is the one tailored to the needs of your organization and your employees—providing access to the drugs they need to stay productive and maintain wellness in their work and home lives, while keeping plans flexible and affordable for employers like you.
We’ll continue to keep you updated on relevant developments pertaining to the federal government’s National Pharmacare strategy—and working with our partners at Benefits Alliance to advocate in your best interests.
An important Canada Dental Benefit compliance update
The Canada Dental Benefit plan provides basic dental coverage to qualifying Canadian households—specifically, those with an annual family income of less than $90,000. Co-pays are waived for households with a family income of less than $70,000.
If you provide dental coverage to your employees, they are not eligible for coverage under the CDCP.
The federal government has introduced a new Canada Dental Benefit reporting obligation that will be mandatory for the 2023 tax year. Employers must declare on annual T4 or T4A slips whether an employee or their dependents were eligible for dental benefit coverage provided by their employer—either through a group benefit plan or a health care spending account—as of December 31st of the tax reporting year. The Canada Revenue Agency says that T4 and T4A slips may be rejected if this information is omitted. Visit the CRA website for more information.
For more on this new Canada Dental Benefit compliance obligation or the federal Pharmacare program, contact us today.
The Bridgewell team
