As specialized employee benefits advisors in Canada, we are excited to share our insights on the upcoming trends shaping our industry in 2024. We have observed several positive and enduring employee benefits trends, including flexible working schedules, a diverse and inclusive corporate culture, extended family leave and many more. However, there are a few trends that stand out as particularly significant.
Just like in previous years, employers in 2024 will continue to face the challenge of balancing the need to control costs in their employee benefits programs while attracting new talent and retaining existing employees. Given the current inflation and economic challenges, the focus will be on enhancing the value of these programs without placing additional burdens on employers' costs and employees' purchasing power through changes in cost sharing.
The Canadian Government Changes That May Affect Employer-Sponsored Benefits Plans
The new adjustments to the Canadian Dental Care Plan (CDCP)
Through a deal with the Liberal and NDP governments, a National Dental Plan (CDCP) was implemented in 2023. However, its impact on employer-sponsored programs has been non-existent thus far due to the stringent qualification criteria.
In December of 2023, the government unveiled forthcoming adjustments to the program, signalling potential implications for up to 9 million Canadians. Eligibility hinges on a household income below $90,000 and the applicant cannot have access to other dental insurance, such as employer-sponsored programs, including a Health Care Spending Account. Phased access to the program will first be rolled out to seniors aged 87 and up, gradually opening to all Canadians 18 and older by some time in 2025.
Furthermore, there appears to be an enhancement of services covered under the CDCP. It is noteworthy, however, a co-pay structure of 60% - 40% will remain for all income levels but the lowest. The impact in 2024 will likely remain low until at least 2025 when more Canadians will have access to the program, and we will have a better understanding of how dental professionals will adapt to the program.
One important point for employers to note is that beginning with the 2023 tax year, organizations will be required to report a Dental Program participation on an employee’s T4. Under the new rules, standalone Health Care Spending Accounts are to be included in the reporting.
Canada Pharmacare gets delayed
Another key component in the Liberal - NDP Deal is a National Prescription Drug Program termed Canada Pharmacare. At this point, there are no details on this program and what impact it may or may not have on employer-sponsored programs. The government is running out of time to pass this legislation however, under the agreement, this act was to be passed by the end of 2023.
A new Canadian Pension Plan (CPP) contributions level
Lastly, CPP will go through its second round of changes starting in 2024, most notably implementing the “second CPP contributions” level for higher income earners.
Tax updates for 2024
The government has introduced a series of tax changes, ranging from Canadian business succession planning to alterations in the Alternative Minimum Tax (AMT) rules. In the article 2024 Tax Updates: Navigating Key Changes for Employers and Employees, we explore some key updates and their implications for businesses and individuals as we head into 2024.
Mental Health Awareness
Mental health has become a prominent subject in recent years and will continue to be a priority for many employers. According to a report by the Center for Addiction and Mental Health (CAMH), approximately 500,000 Canadians are absent from work each week due to mental illness. The repercussions of poor mental health extend beyond job performance and productivity, often requiring employees to seek care for various physical health conditions such as heart disease, diabetes, respiratory issues, and musculoskeletal disorders. Treating employees with both mental health disorders and other physical conditions incurs costs 2 to 3 times higher than those without co-occurring illnesses. Prevention and early detection of a mental illness is key. Incorporating a toolkit for employees’ mental health into your corporate culture remains the major goal and an expanding trend for 2024.
Employees’ Financial Well-Being
Moreover, research indicates that Canadian workers are currently facing heightened levels of financial stress, directly impacting their job performance and absenteeism. Employers can contribute to alleviating this financial stress by expanding their wellness programs to incorporate components focused on Financial Education and Empowerment.
Flexible Benefits and Personalization
Today’s workforce demands more personalization and customization than ever before, not just in work schedules and remote work options but in their benefits programs as well. The conventional one-size-fits-all benefits program has now become the exception rather than the norm. Employers have the opportunity to modernize their benefits programs by adding virtual healthcare and wellness services and utilizing Apps and other digital platforms to provide personalized health recommendations. Integrating a Health Care Spending Account is an ideal way to enhance the flexibility of a benefits program without adding additional risk that may jeopardize the affordability of the program in the future.
Increasing Cost For Commonly Prescribed Drugs
The transition from Biologics to Biosimilars has resulted in substantial savings, and this pattern is expected to persist with the introduction of new Biosimilars to the market. However, in 2023 and continuing into 2024, these savings are being counterbalanced by a rise in both the quantity (number of claims) and costs associated with more prevalent prescribed drugs for common conditions like Diabetes, Depression, and Asthma.
There has been notable growth in the number of employees filing claims for Diabetes across all age groups. Additionally, there is an increase in the number of prescriptions of higher-cost drugs such as Ozempic, Libre, and Jardiance ($1,100 - $3,600 a year) for treating this condition. A similar pattern is observed in the treatment of Asthma, where claims have returned to pre-pandemic levels, and the prescription of more expensive drugs like Symbicort, Breo Ellipta, and Advair ($660 - $1,300 a year) has become commonplace.
Lastly, claims for prescription drugs to treat depression have surged, particularly in the younger age category. Trintellix, a higher-cost drug used to address this condition, can amount to up to $1,200 annually. Ultimately, the continued prevalence of these higher-cost drugs to treat common illnesses is anticipated to impact benefit programs in 2024.
Pharmacogenetic testing (testing to determine how a person will respond to certain prescription medications) is a useful tool that can help reduce costs by pairing the right prescription with the right dosage sooner. This can help shorten the length of a disability claim and/or lessen the adverse effects (poor health, drug waste, etc.) a wrong prescription or dosage could have on an employee.
Embracing the Future: AI's Role in Employee Benefits
In examining current employee benefits trends, a prominent development is the use of Artificial Intelligence (AI) in employee benefits administration. AI is more than just a buzzword; it's a practical tool revolutionizing the management of employee benefits. AI is optimizing HR processes. Tasks like payroll, benefits onboarding, and employee education are becoming more efficient and engaging through automation and interactive technologies. The use of predictive analytics for customizing benefit plans and evaluating retirement risks represents a significant advancement. Yet, with such innovation comes substantial responsibility.
Cost concerns will likely remain a rising employee benefits trend and a top priority in 2024, especially with the financial challenges both employers and employees face. Employers will be best served to enhance their programs by incorporating personalization and customization features such as Health Care Spending Accounts, virtual health and wellness platforms and pharmacogenetic testing if they haven’t already done so.