Alberta’s decision to eliminate healthcare premiums in its latest budget creates a potential windfall for plan sponsors with employees in that province, according to a Hewitt Research Advisory.
“This change creates both an opportunity and a decision for employers who pay all or part of healthcare premiums in that province,” says the advisory.
Last week’s Alberta budget eliminated healthcare premiums effective at the beginning of 2009. The province will join seven other provinces and territories (New Brunswick, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Saskatchewan and Yukon) that don’t collect specific health premiums or taxes. Instead, they fund healthcare out of general tax revenue.
Currently, annual health premium rates in Alberta are $528 per individual and $1,056 per family. For a company with 100 employees in Alberta that pays provincial premiums, this could mean a savings of about $100,000 annually.
With this potential savings, Hewitt recommends companies consider enhancing or expanding benefits programs, promoting employee health and wellness, and/or enhancing other elements of the total rewards program.
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The change could also have an impact on post-retirement benefits. Although healthcare premiums have already been eliminated for Albertans over the age of 65, some plan sponsors continue to pay premiums for those retirees under 65.
“These plan sponsors could also experience cost savings and a significant reduction in their post-employment accounting costs,” says the advisory. “Depending on the post-retirement commitments made, funds previously used to pay provincial plan premiums may have to be redirected in some manner for the benefit of retirees.”
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