Imagine having your private health insurance – dental, vision, prescription drug, life, travel and disability coverage – terminated by your employer when you reach age 65, even thought you’re still working for them and just when you may really need it.
That’s what happened to Maureen, a senior executive at a large and profitable computer company. She wasn’t quite ready to retire. She still enjoyed her work and was really good at it, so she was happy to keep working well past age 65 and her employer was happy with her performance. Even so, her employee health benefits plan disappeared with her 65th birthday.
“It was costly,” recalls Maureen. “Suddenly, I was on the hook for all those things I was used to getting covered by insurance. I’d been with the company for decades but that didn’t seem to matter.”
Maureen’s case is not isolated.
Many employee benefit policies in Canada are null and void past age 65, regardless of a person’s employment status. Many employer plans still use 65 as a criterion for ending insurance contracts instead of basing coverage on active versus retired status.
In the past, it was unusual for individuals to work past 65. But with the baby boom cohort, it’s now common for employees to work full- or part-time well past their 65th birthday. Some work because they enjoy it, some for economic reasons (not enough saved for retirement).
In 2015, according to Statistics Canada, more than 400,000 full-time and almost 300,000 part-time Canadians were working past age 65. This is up almost 300 per cent from 1990.
One survey of 170 Canadian employers indicates that about 25 per cent no longer provide health and dental coverage for active employees past 65, 40 per cent stop providing short-term disability and unreduced life insurance, and 87 per cent cease offering long-term disability coverage.
The survey also indicates that only about one-third of employers have any formal policies regarding employee health coverage past 65. In other words, many health and employment policies have not kept up with changing demographics. And it’s not against the law.
Many provincial human rights codes don’t protect employee benefits beyond age 65. In contrast, for more than 35 years, American regulations have required that employees up to age 70 still qualify for health benefits. Clearly, Canada has some catching up to do.
The Ontario Human Rights Commission has recommended legislative changes to stop discrimination of benefits for active employees at age 65. These changes would extend benefits to older employees. But we’re still waiting.
Some unions have challenged the termination of benefits at age 65 through mediation or included it as part of their contract negotiations. Others have challenged the termination of benefits at 65 at human rights tribunal hearings. In one recent case, the 65 age limit was allowed by the Ontario Human Rights tribunal. The case now faces a challenge of the constitutionally of the Ontario Code under Canada’s Charter of Rights and Freedoms.
In the meantime, the commission encourages employers and unions to comply with the spirit of the legislation. But without legislative change, there’s no impetus.
You might think cost is the barrier for providing full coverage to aging employees. But payouts for employee health and dental benefits actually decrease with age beyond 65. Pharmaceutical costs in particular decrease on average 45 per cent after 65. Why? Because many provincial plans kick in at that age and some, though rarely all, of the costs are covered by publicly-funded health care.
While life insurance and long-term disability insurance costs do increase with age, insurance companies will accommodate any employer who wants to continue some coverage beyond 65 for active employees with the disability benefit limited to 12 or 24 months instead of stopping it altogether.
Ideally, publicly-funded health care would provide full dental, vision, drug, health, disability and travel insurance for all citizens. But that doesn’t appear to be coming any time soon.
Having access to employer health insurance plans is a safeguard that should not be denied based on age.
For employers, keeping employees healthy and productive is one of the key goals of having a health plan. So what are we really saving when employee health benefits are cut for staff who are seniors?
It’s time for governments to protect employee health benefits for aging workers.
Robert L. Brown is a fellow with the Canadian Institute of Actuaries. He was professor of Actuarial Science at the University of Waterloo for 39 years and a past-president of the Canadian Institute of Actuaries.
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As an experienced benefit plan consultant I am happy to refute the authors and to tell your readers that workers over 65 are usually, if not always, entitled to continued health benefits past age 65.
In our Atlantic-Canada-based practice, we have no problems arranging employee health and dental to age 80, even 85.
Some of our retiree health plans are even extended for the employee’s entire life; and for the lifetime of a surviving spouse as well.
Perhaps the main learning from this exchange is that if any Canadian is told their employee health benefits stop at age 65, they should ask their employer to change that. Any knowledgeable broker/consultant can arrange a group plan that will respond favourably, and economically.
In the bigger national picture, however, workers over 65 are among the lucky ones, since they still have jobs, and many employers still offer health benefits.
The unlucky ones are those who do not have stable work and health benefits, or who work for an employer that does not offer health benefits.
For those who must pay cash or credit at the health provider, a prescription drug purchase is not affordable, which means their health is eventually at risk, and they will likely be accessing public health resources, resulting in a Catch-22 of worse health and higher societal costs that could have been prevented by a low-cost medication.
One in 10 Canadians face this situation. Hopefully soon there will be a made-in-Canada solution for this made-in-Canada problem.