Extended Health Benefits for Employees Who Live in Canada

When people consider living in Canada, 'free healthcare' commonly comes to mind. If you have employees in Canada, you may wonder what free healthcare covers. You may also be interested in learning about the extended health care (EHC) benefits you can provide to your workers. This blog will teach you about extended health care benefits available in Canada.

Private Health Programs Must Align with Public Health

Contrary to the belief that healthcare in Canada is free, the government doesn't cover most popular health & dental expenses. According to the Canada Health Act’s public health program, provinces must cover:

• hospitals
• prescriptions administered in a hospital
• doctors & specialists, and more.

Provinces don’t cover:

• most prescriptions
• paramedical services
• dental
• vision for most residents or
• other benefits.

So, most companies offer employer-sponsored benefits to help employees pay for these extra eligible expenses.  

Remember two important rules:

1. In Canada, private plans must align with provincial ones and do not cover services already provided by the government. Hence, you won't find employee benefits plans covering doctors or specialists.
2. Government coverage is always the primary payor, particularly for out-of-country emergencies. This means coverage will always come first from the government and then from private insurance, just as employer-sponsored benefit plans.

Each of Canada's provinces and territories manages its healthcare, so consult their guides to understand their public health coverage.

List of Employee Health and Dental Benefits in Canada

In Canada, almost every employer-sponsored health benefits plan includes seven categories of health care coverage.

1. Prescription Drugs

To be eligible under a prescription drug program, drugs must:

• be a prescription from a doctor or specialist, and 
• have a drug identification number, or DIN, issued by Health Canada. 

Insurance generally does not cover the following medications, even when prescribed: 

• drugs for sexual dysfunction
• anti-smoking
• natural health products
• drugs for cosmetic purposes

Prescription Drug Costs

Prescription costs consist of two parts: the ingredient cost and the dispensing fee. The pharmacist charges a dispensing fee for preparing the prescription.

As dispensing fees vary significantly between pharmacies, employees can choose the least expensive ones. This helps them keep the costs of their claims down, which can lower their premiums. Employers can encourage this behaviour by offering preferred provider networks and online pharmacies as options.

Reimbursement Options

Two types of reimbursement methods are available for employees:

1. The old-school reimbursement system is where the employee pays the cost upfront and later submits the claim.
2. The pay-direct drug card is a type of card in which the employee pays their share of the cost directly to the pharmacist, and the remaining balance is settled at the point of sale.

Pay-direct plans are more cost-effective and efficient for the insurer. Additionally, they are easier for employees as they do not have to organize and submit their claims.

Prescription Drug Formularies

Employer-sponsored plans include many different drug formularies. In the past, a plan would pay for brand-name drugs, no questions asked. 

However, the most common formula nowadays is mandatory generic. Under this structure, the drug plan will pay for the cost of the generic drug only, except in two scenarios: 

1. The patent on the brand name has not yet expired, so the generic has not yet entered the market or
2. An employee needs the brand-name prescription because of a medically valid reason.

Under a mandatory generic plan, the employee still has the option to take the brand-name drug. However, they must pay the difference between the generic and the brand-name drug.

2. Hospital Accommodation

Extended healthcare coverage is a top-up to the provincial government's four-bed ward coverage. Most plans cover the cost of semi-private rooms, but you may have to pay extra for a private room out of your pocket.

The exception is the maternity ward. In many hospitals, the basic maternity ward rooms are semi-private. In that case, the extended health insurance plan would upgrade the employee to a private room if available.

3. Paramedical Practitioners

Insurance plan for paramedical practitioners is a highly-valued benefit for many employees. Paramedical practitioners include:

Physiotherapists, Registered massage therapists, Acupuncturists, Osteopaths, Chiropractors, Podiatrists, Chiropodists, Naturopaths, Speech therapists, Psychologists.

As an employer, you can structure the practitioner types, but this EHC coverage includes a set list of practitioners. Most plans have an annual maximum per practitioner type, per family member. But now, to save money, some plans group together different types of healthcare providers. For example, you pay $1,000 annually for physiotherapists, massage therapists, and chiropractors.

Remember:

A practitioner must have a license from the association in the province where they work to be included in the coverage. Revenue Canada must recognize the association as valid to qualify for reimbursement.

4. Vision Care

Vision benefits typically consist of two tiers: 

• coverage for eye exams 
• separate benefit for prescription glasses, contact lenses, or laser eye surgery 

Although eye exams are commonly insured, analyzing the ROI on vision wear should be done. Some industries and demographics require coverage for competitive reasons; however, premiums paid over the benefit period can meet or exceed the actual value of the benefit. There may be alternate options to fund this coverage that result in more flexibility and ROI.

5. Other Medical Services & Supplies

Medical Services and supplies are crucial parts of a typical benefits plan, yet they are among the least-used portions. This coverage is essential for those who require medical services and supplies.

The coverage typically includes a standard list of insured items. However, don't presume it's not insured if you or your employees need something missing from the list. Always consult with your advisor and insurer.

6. Out-of-Country Emergency

Out-of-country coverage is always second-payor to the provincial plan.

The provincial plan will still cover the costs if an employee requires hospital treatment in another country. The coverage will be the same as if the treatment were done in Canada. However, they will not pay more than they would have if the employee were treated in Canada. This is where out-of-country coverage takes over.  

Policies will pay for unexpected emergency treatment but exclude treatment for pre-existing conditions (as outlined in your contract.) Most out-of-country coverage also includes travel assistance and coverage for referral treatment, whether in Canada or outside.

7. Dental Care

Dental care can be expensive, and the cost can vary depending on the dentist. Employees should ask whether the dentist charges according to the province's fee guide to avoid overpaying for dental services.

Three levels of dental coverage exist in Canada:

• Basic Services and Supplementary Services
• Major Restorative
• Orthodontics

Coverage percentages vary from 50% to 100%, depending on the level of dental insurance. The dental or extended plans may also include dental accident coverage.

Permanent full-time and some part-time workers are eligible for extended health coverage

Employers usually enroll permanent, full-time employees in the employer-sponsored health benefits plan. However, part-time employees and contract workers may also have coverage. Talk to your advisor and insurer to see the flexibility available when designing the plan's eligibility criteria.

Commonly, the health plan extends coverage to employees' dependent spouses and dependent children.

Conclusion

Although EHC benefits are not mandatory benefits, offering them is crucial for employers with Canadian teams, filling the gaps left by public healthcare. These benefits ensure comprehensive coverage for prescriptions, dental, vision, and paramedical services, enhancing employee well-being and satisfaction. Understanding these plans' coverage, eligibility, and integration is essential for building a supportive and healthy workplace in Canada.