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Change is In the Air
January is the most optimistic month, how is 2023 shaping up?
Chris Milton
January 26, 2023
This week we look at the changes at a federal level to Canadian Dental and EI programs. Change being something that has been discussed for a long time, still not fully rolled out... Similar to those New Years resolutions that are likely to have already fizzled out.
Unpacking the Impact of EI changes
The extended EI coverage is clearly a win for lower-income employees without any disability benefits. “For these employees, such as general labourers and people with casual jobs, this is clearly better. But really that’s the only case where this change is favourable,” says Martin Papillon.
The change has no impact on employees with workplace short-term disability (STD) benefits, whether through salary continuation or insurance administered by a third party. These employees are disqualified from receiving EI—which is not a loss, since private STD benefits are typically much richer than the federally funded EI benefit.
However, employees with LTD coverage but without STD coverage stand to lose if employers automatically adjust their LTD to kick in at 27 weeks, after the extended EI coverage ends.
That’s because the EI benefit pays 55 percent of earnings up to a maximum of $638 a week. Those payments are taxed. Whereas LTD benefits typically pay up to 67 percent of earnings, weekly maximums are higher, and payments are usually not taxable.
“Twenty-six weeks is a long time for an employee to live on only 55 percent of earnings. This may lead to the employee drawing on savings, borrowing money or remortgaging their home to make ends meet,” says Sabat.
Moreover, the financial strain may worsen their health and lead to additional illnesses, such as depression. The employee becomes more likely to go on long-term disability or not return to work at all. That likelihood is compounded by the fact that EI does not provide case management support, unlike STD and LTD benefits. “For six months the employee does not get help with treatment options and the return to work will be much harder,” explains Sabat.
As a result, any savings may be short-lived. “Some insurers have said that if the waiting period for LTD is extended to start after the 26 weeks of EI coverage, they may reduce rates a bit. But the number of LTD claims may increase due to the lack of medical management and support during the EI benefit period,” notes Sabat.
CDP & CDCP: A mouthful of change
“Historically, plan sponsors have provided coverage to supplement the coverage provided to Canadians through universal healthcare programs to help secure the health and well-being of their employees and families. At the same time, it is our understanding that private benefits plans will be a much bigger part of a total rewards package for employers, especially with the battle for attraction and retention,” says Sunil Hirjee, Vice-President, Sales and Partner Experience, Ontario, Western and Atlantic Canada, Beneva.
With those factors in mind, integrating private coverage with a universal dental plan could become a conversation among plan sponsors. “But it’s much too soon to go there without specifics on the types of coverage, and keeping in mind the ultimate overlying eligibility criteria, at least at this time, that there is no private coverage in place,” notes Hirjee.
Here are snapshots of the facts so far for the two dental programs. Additional information may have become available since the publication of this article; check with your benefits advisor for updates.
Canada Dental Benefit (CDB)
Implemented December 1, retroactive to October 1, 2022.
Two benefit periods: October 1, 2022 to June 30, 2023, and July 1, 2023 to June 30, 2024.
Tax-free payments for dental expenses for children under 12 years old.
Parents or guardians must apply through Canada Revenue Agency.
Criteria: a child has no access to private coverage; parent/guardian attests the CDB will be used for out-of-pocket dental expenses for the child; documentation (e.g., receipts) may be required.
Payment amounts: $650 per eligible child in a family with adjusted net income under $70,000; $390 when adjusted net income is between $70,000 and $79,999; $260 when adjusted net income is between $80,000 and $89,999.
Initial estimated cost of $938 million; the Parliamentary Budget Office more recently estimated a cost of $703 million.
Part of the federal government’s Cost of Living Relief Act and clearly positioned as a temporary benefit while the government works on the long-term CDCP.
Canadian Dental Care Program (CDCP)
Available to families with household incomes under $90,000 and in place by 2025.
On October 28, Minister of Health Jean-Yves Duclos and Minister of Public Services and Procurement Helena Jaczek jointly issued an Invitation to Qualify (ITQ), step one in the Government of Canada’s process to purchase goods and services.
Suppliers “with a proven capacity in the field of dental coverage administration” had until December 5, 2022, to respond to the ITQ.
The government will choose up to three suppliers that “pre-qualify” for the remainder of the procurement process.The government has estimated that seven to nine million Canadians would be eligible for the CDCP, or about one-fifth of the population.
In its 2020 Cost Estimate for a federal plan for uninsured Canadians, the Parliamentary Budget Office had estimated close to 6.5 million beneficiaries during year one and 6.3 million by 2025. Based on these numbers, it had estimated a one-time upfront cost of $3 billion and an annual ongoing cost of $1.5 billion.
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