JANUARY/FEBRUARY 2010

Legislative Update

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Recent changes in legislation may impact your group plan. Please contact us if you need additional information on the impact of any of the following changes.

Life Insurance Conversion Options in Quebec
Effective September 10, 2009, Quebec insurance regulations changed with respect to Group Life Insurance conversion eligibility and limits. Employees in Quebec are now allowed to convert up to $400,000 of life insurance, up from the $200,000 limit that still applies to the rest of Canada. Also, a conversion option has been extended to life insurance amounts for the employee’s spouse and dependant children who had coverage under the group plan, provided the dependant was covered for $5,000 or more.

Conversion is allowed when Group Life Insurance coverage terminates, either in full or in part, and must be offered to employees losing coverage. Conversion charges, reflecting the age of the individual converting and the amount of the conversion, are included in the experience of the Life plan, in the same way as is a death claim. This can impact the cost of Life Insurance, although, the impact will be minimal on groups of less than 1,000 lives due to the limited credibility of such experience.

Insurers will not be modifying rates to reflect these legislative changes at this time. If you have employees in Quebec, you should receive an amendment to your contract and, if the insurer produces your booklet, they will revise the relevant wording accordingly.

Quebec Drug Pooling
Quebec requires all drug plans to participate in pooling as directed by the Quebec Drug Insurance Pooling Corporation. This pool was implemented, in conjunction with RAMQ, in order to protect insurers and employers from high drug claim costs and the resulting premium increases. It is intended to ensure the longevity of drug coverage.

Pooling levels and fees are reviewed annually to ensure the pooling remains cost effective and provides appropriate levels of coverage, factoring in drug inflation.

For 2010, the Pooling Levels and Fees are:

These charges, where applicable, will be included in the Health rates for your Quebec employees.

Employment Insurance Changes
Effective January 1, 2010, the maximum insurable earnings for EI will increase from $42,300 to $43,200, making the new maximum weekly benefit $457 per week.

If you participate in the EI premium reduction program, you need to ensure your weekly benefit exceeds the new limit in order to continue to qualify for the reduction. If your plan has a limit in excess of $457 per week or a limit “equal to the EI maximum”, no action is required. If your plan has a fixed limit less than $457 per week, a policy amendment will be required.

In addition, remember to update both your employee and employer EI contributions to reflect the new limit.

2010 CPP/QPP
The 2010 maximum pensionable earnings is $47,200, up from $46,300. The rate remains unchanged at 4.95% while the maximum contribution is $2,163.15 for both employees and employers, up from $2,118.60 in 2009.

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