Imagine having your private health insurance – dental, vision, prescription drug, life, travel and disability coverage – suddenly terminated by your employer at the age of 65 while 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 65 and her employer was happy with her work performance. Even so, her employee health-benefits plan disappeared with her 65th birthday. "It was costly," Maureen recalls. "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 an isolated one. Many employee benefit policies in Canada are null and void past 65, regardless of a person's employment status. That's because many employer plans still use 65 as a criterion for ending insurance contracts instead of basing coverage on active versus retired status.
In 2015, according to Statistics Canada, more than 400,000 full-time and almost 300,000 part-time Canadians were working past 65. This is up almost 300 per cent from 1990.
A recent survey of 170 Canadian employers indicates that about 25 per cent of employers no longer provide health and dental coverage for active employees past the age of 65, 40 per cent stop providing short-term disability and unreduced life insurance and 87 per cent cease offering their long-term disability coverages.
The survey also indicates that only about one-third of employers have developed any formal policies regarding employee health coverage past 65. In other words, many health and employment policies have not kept up with the changing demographic reality. And it's not against the law.
Currently, many of the various provincial human-rights codes in place do not protect employee benefits beyond the age of 65. In contrast, more than 35 years ago the United States shifted all employee rules and regulations for health benefits to include employees up to the age of 70. Clearly, Canada has got some catching up to do.
The Ontario Human Rights Commission has recommended legislative changes to stop discrimination of benefits for active employees at 65. But we're still waiting.
Some unions have challenged the termination of benefits at 65 through mediation or included it as part of their contract negotiations. Other groups and individuals have challenged the termination of benefits at 65 at human-rights tribunal hearings. In one recent case, the 65 limit was allowed by the Human Rights Tribunal of Ontario and this case is now proceeding with a constitutional challenge of the Ontario Human Rights Code itself under the Charter of Rights and Freedoms.
In the meantime, the commission encourages employers and unions to comply with the spirit of our current legislation, but without legislative change there's no impetus for change.
Many people might think cost is the barrier for providing full coverage to aging employees – but payouts for employee health and dental benefits actually decrease beyond 65. Pharmaceutical costs in particular decrease on average 45 per cent after the age of 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 their active employees with the disability benefit limited to 12 or 24 months instead of stopping it altogether.
Ideally, our publicly funded health care would provide full insurance for all our citizens at all ages. But that's not the reality and it doesn't appear to be coming any time soon.
From an employer perspective, keeping employees healthy and productive is one of the key goals of having a health plan in the first place. So what are we really saving when employee health benefits are cut off prematurely for senior staff?
It's time for governments to protect employee health benefits for our aging workers.
John Have is fellow with the Canadian Institute of Actuaries and president at Have Associates. Robert L. Brown is an expert adviser with EvidenceNetwork.ca and a past president of the Canadian Institute of Actuaries.