What a Doug Ford government means for employer-sponsored benefit plans & brokers
The last several months have been rocky for Ontario employers.
Bill 148 became effective on Jan 1 2018, boosting wages, paid time off, and extending job-protected leaves of absence. The federal government floated the idea of taxing health & dental benefits, only to walk back the idea shortly afterwards. A national single-payer pharmacare system continues to have clout, but with a question mark – as we saw with OHIP+ in Ontario, parents and employers were gleeful on Jan 1, asking us, “So how much money are we going to save from our health premiums?”
Insurers predicted that OHIP+ would generate 1% to 5% savings from employer drug spending, which translates into a small fraction of payroll. Back-of-the-napkin math suggests it’s a savings of $7-$35 per employee per year, or 0.01% to 0.07% of a $50,000 wage.
“Oh,” they collectively said, deflated. “That’s all?”
Sorry – but the highest drug spend we see in the under-25 demographic is probably an ADHD drug such as Adderall or Concerta, which can run $2,000/year if taking the brand. And one kid with ADHD is not the reason your drug plan is more expensive in 2018 than 2008.
So what does a PC government in Ontario mean for employer sponsored benefit plans?
Here are my predictions. Please note that these are simply my opinions and that Beneplan is a politically agnostic organization.
- A pause on hiking wages further – We heard whispers from employers in 2017 regarding how much the minimum wage will cost them. “We have to find $5 million in savings this year,” one CFO said. Cuts to benefits was inevitable. While no-one argues that a living wage is important, the reality is that many employers had to find the cash somewhere, and it wasn’t going to be from increasing prices on their customers. Outcome: Less cuts to benefits, but less growth in coverage volumes.
- A push to maintain health & dental benefits as a tax-free benefit – The tax and spend needs of a left-leaning party could have meant political clout behind taxing health and dental benefits. A ‘blue’ government might have a different lens. The tax would have increased employees’ individual bills, which may have led to less spending or more upward pressure on wages. Outcome: Status-quo on taxability.
- No expansion to pharmacare, dental care or other benefits – There is no longer a path to mandating universal drug or dental coverage, as suggested by the NDP. Outcome:Status-quo on expansion of government mandated employee benefits.
- A potential increase in parents returning to work sooner with a child-care tax credit – The cost of child care is one of the strong influencing factors behind whether a parent returns to work after the addition of a new baby. Outcome: Affordable child care may lead to employees returning to work sooner, and therefore more productivity, which may lead to better profits and benefits.
- Less propensity to strengthen the cause of transient workers (i.e. contract, part-time, and temp) – The Liberals had a big push to legitimize the employment standards of temporary workers, or those employed by a “temp agency.” Bill 148 succeeded in strengthening their wages and notice period with respect to termination, but I don’t anticipate the new PC government pushing this agenda any further. Outcome: No more push to provide the same employee benefits to temp workers.
- An increased local hiring push from employers who may have been on the fence about Ontario – We hear from many of our plan sponsors about to expand that they court U.S. states with weaker unions, lower wages, and affordable hydro costs. A business owner who may be chatting with New Jersey may pause and reconsider expanding their Mississauga presence instead. Outcome: More employees in Ontario and a greater volume of claims.