The federal budget remained fairly silent on employer-provided benefits and healthcare provisions, but one quiet note in the document could play into future considerations for employers that self-insure their disability plans.
The feds indicated that they plan to introduce legislation requiring federally regulated private sector employers to insure their long-term disability (LTD) plans, in order to protect employees should the employer go bankrupt. Given that insurance legislation tends to be provincial, applying such a rule to all employers across Canada would be difficult, if not impossible. But that doesn’t mean the provinces couldn’t step in with their own requirements.
“What’s going to be interesting is how the provinces pick up on this and whether or not they change provincial legislation to align with it,” said Brian Lindenberg, a senior partner with Mercer in Calgary.
Lindenberg said that Alberta started to go down this road a few years ago, assessing whether employers should be required to insure LTD plans. But in the end, the province didn’t carry through with it.
The Canadian Life and Health Insurance Association (CLHIA) says the feds’ move is a positive one and that the provinces should consider getting on board.
“This is extremely meaningful for Canadian employees who work for companies under federal jurisdiction,” said Frank Swedlove, president of the CLHIA, in a statement. “Insuring LTD plans is the only way to fully protect those who become disabled if their employer goes bankrupt. We believe the provinces should adopt similar legislation so all workers are protected.”
Lindenberg said that since the vast majority of Canadian LTD programs are insured, many employers may not have to consider the impact of such legislation. But for plans that self-insure the disability piece, there could be additional costs if such legislation were to be applied provincially.
However, given that the federal budget didn’t address when such legislation would take effect or even be drafted, Canada will have to wait and see how it plays out—and if the provinces take notice.
“The devil will be in the details,” said Lindenberg.