Spring group benefits update – tax news and news on public plans
(06/19/2017) An information notice from the government of Saskatchewan informs that the application date for the sales tax on insurance premiums has been delayed by one month, from July 1 to August 1, 2017.
In recent weeks, the federal government and several provincial governments tabled their budgets for the coming year.
Some of the measures announced by the Quebec government and the Saskatchewan government will impact group benefits plans:
- Quebec budget: temporary contribution relative to compensation tax maintained
- Saskatchewan budget: sales tax applied to insurance premiums
In addition, Quebec’s basic prescription drug insurance plan announced two cost control measures that apply to drugs reimbursed by the plan.
Compensation tax and capital tax are payable by insurance companies that include these taxes in their administrative fees and, consequently, in the premium rates for group benefits plans.
For several years now, the Quebec government has been imposing on financial institutions a temporary contribution rate of 0.48% for the compensation tax on insurance premiums. It had previously been announced that, effective April 1, 2017, this tax would be reduced to 0.30%. In its budget tabled on March 28, 2017, the government announced that this tax would be maintained at its current level of 0.48% until March 31, 2022. It would then be reduced to 0.30% from April 1, 2022 to March 31, 2024, the date on which it would be eliminated. Because group benefits plan premiums already include a tax of 0.48%, this announcement should not result in an increase in premium rates.
In its budget tabled on March 22, 2017, the Saskatchewan government announced an increase in provincial sales tax from 5% to 6% effective midnight on March 22, 2017. This tax applies to, among other things, group benefits coverage underwritten according to a self-insured financial arrangement, including health care spending accounts and wellness accounts (or physical activity accounts).
As of July 1, 2017, Saskatchewan’s provincial sales tax will also apply to group benefits premiums for insured plans. Insured plan sponsors can therefore expect a 6% increase in group benefits costs.
Two restrictive measures are added to Quebec’s basic prescription drug insurance plan since April 21, 2017:
Insured individuals who have hypoglycaemia issues must regularly measure their blood glucose levels. The new measures introduced for individuals insured under Quebec’s basic prescription drug insurance plan will limit the number of test strips reimbursed annually to insured individuals according to their clinical situation. For example, an annual limit of 3,000 test strips will apply to an insured individual with diabetes treated with insulin, whereas an annual limit of 200 test strips will apply to an insured individual with diabetes treated through lifestyle changes.
Quebec’s basic prescription drug insurance plan was the only Canadian public prescription drug insurance plan that did not already have cost control measures in place for test strips.
PPIs are drugs used to treat gastrointestinal problems. Popular drugs like PantolocTM and NexiumTM belong to this class of drugs.
Accessibility to PPIs will be limited to 90 days of treatment per year. Exceptions could be created for certain specific medical conditions.
These measures confirm the government’s intention to have greater control over the costs of Quebec’s basic prescription drug insurance plan. Similar measures will no doubt become available to private drug plan sponsors in the coming months.
The Normandin Beaudry experts are familiar with insurers’ offers and can guide you in implementing an optimal strategy for managing your drug insurance costs.
Please feel free to contact us for additional information.