Impacts of new tax measures on group benefits plan costs

Some provinces have announced new tax measures that could soon affect group benefit plans:

• The increase in Insurance Premiums Tax rates in Alberta; and
• The increase in the Harmonized Sales Tax in New Brunswick.

Insurance Premiums Tax is payable by insurance companies that include this tax in their administration fees and, therefore in premium rates of group benefit plans.

In its provincial budget, the Alberta government announced that this tax rate will be increasing from 2% to 3% on April 1, 2016. If your group benefits plan includes insured individuals residing in Alberta, plan premiums will include an adjustment of about 1% on the portion of the premium associated to the insured population.

You can consult the Special Notice published on November 4, 2015 on the Alberta government website.

Harmonized Sales Tax (HST) applies to group benefits coverage underwritten according to a self-insured financial arrangement, including health care spending accounts and wellness accounts (or physical activity accounts).

In its provincial budget, the New Brunswick government announced that the HST will be increasing from 13% to 15% effective July 1, 2016. This increase will only apply to plans without any element of insurance but that are administered by an insurer or a third-party payer on behalf of the employer.

You can consult the Tax Bulletin published on February 2, 2016 on the New Brunswick government website.

Please feel free to contact us for additional information.