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Normandin Beaudry

Health and dental care insurance offered to employees on extended disability: trends observed

LinkedIn

There, in black and white

NB bulletin Vol. 16 N. 10, June 2013

In 2012, we surveyed 90 Quebec and Canadian organizations on practices concerning health and dental care coverage offered to employees on extended disability leave. Below is a summary of the main findings concerning the maintenance or termination of coverage, followed by a comparison of practices against minimum legal requirements.

Maintenance of coverage

The results of our survey show that four out of five organizations maintain health and dental care insurance coverage for employees on extended disability.

For 62% of respondents, organizational values were cited as the main reason for the decision to maintain coverage. Other reasons given include collective agreements (28% of respondents) and the recognition of increased needs for insurance during a disability (17% of respondents).

Although the vast majority of respondents maintain health care and dental care coverage in the event of extended disability, there is no guarantee that this trend will continue because one out of ten organizations plans to introduce termination measures in the next two years.

It should also be noted that close to half of the organizations surveyed require employees on extended disability to pay their normal share of premiums during the period of disability. Interestingly, even though we expect more of the organizations that require disabled employees to continue paying premiums to eventually terminate coverage, no clear correlation was observed.

Termination of coverage

Among the organizations that terminate coverage during extended disability, approximately three out of four organizations terminate the employee’s coverage regardless of the position held, whereas one quarter of the organizations suspend this coverage for certain employee groups only. Management employees appear to be less impacted by this measure than other employee groups.

Half of the organizations make the decision to terminate coverage when the employment relationship is severed (generally after two years of disability for unionized groups and when there is no expected return to work for other employee groups). It should be noted that just over one out of ten organizations terminates coverage on a case by case basis for various reasons. Four out of ten organizations terminate coverage after a fixed period of disability (between two and five years of disability). Finally, for seven out of ten organizations, the reasons for terminating coverage are clearly defined and communicated to employees, for example, through the employee handbook or collective agreement.

We tried to establish a link between the size of the organization and the tendency to terminate coverage in the event of extended disability; however, the survey results did not allow us to do so.

Legal minimums

The results of our survey allow us to confirm that Quebec and Canadian organizations generally exceed the minimum labour standards set out in relation to the maintenance of coverage during disability leave.

In Quebec, the Act respecting labour standards stipulates that the employment relationship of a salaried employee with at least three months of continuous service cannot be severed due to accident or illness until after the employee has been absent for 26 weeks during a 12-month period. During this period, the employee’s participation in his/her employer’s group benefits plan must be maintained, subject to the payment of his/her share of premiums if required by the employer. The employer must also continue to pay, at least, its normal share.

Also in Quebec, the Act respecting industrial accidents and occupational diseases stipulates that, in organizations with more than 20 employees, an employee is entitled to be reinstated, in priority, in his/her job if he/she becomes able to work again within two years of the start of his/her period of absence. During this two-year period, the employment relationship and benefits must be maintained, and the employer’s level of contribution will be the same as it had been before the disability occurred.

As regards the labour standards applicable in the other Canadian provinces and territories, most of the provinces have ruled on the period of absence during which the employment relationship cannot be severed. In every case, this period is shorter than that established by Quebec labour standards. When it comes to worker’s compensation, most of the other provinces also stipulate that the employment relationship must be maintained for two years from the start of the period of absence. However, both for labour standards and worker’s compensation, most of the other provinces do not stipulate how long the group benefits coverage must be maintained. Regardless of the reason for the disability, the organizations surveyed do not terminate coverage until the employee has been disabled for a minimum of two years.

Labour standards are not the only things to consider when it comes time to establish a policy on the termination of coverage in the event of extended disability. Canadian human rights legislation prevents discrimination against disabled persons. Moreover, some employees may also have additional rights outlined in their employment contract.

Conclusion

No matter what decision the organization makes in relation to its policy on the maintenance or termination of coverage, it must apply this policy uniformly to all employees and communicate it clearly, for example, through the employee handbook or collective agreement. Also, when there is a fixed period after which coverage is terminated, the policy should not be systematically applied. According to case law, imminent return to work predictors must be considered.
 

 

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