Employee Benefits Bulletin
July 2009
The Importance of Substance Abuse Policies
In our last newsletter, we talked about the impact of substance abuse in the workplace. In this issue, we’re going to address some of the key policies and agreements that can help managers, supervisors and human resource professionals cope with this growing challenge. There are four types of documents we recommend: 1. Substance Abuse Policy 2. Fitness-to-Work Checklist 3. Last-Chance Agreement 4 Substance Abuse Agreement As part of the substance abuse policy, you may also want to consider crafting an accommodation policy. The accommodation policy outlines the steps your organization will take to help an employee, such as time off to attend a treatment program.
2. Fitness-to-Work Checklist
Implemented by: The employer
Employers have a duty to ensure a safe workplace. The fitness-to-work checklist is a tool that can help determine whether an employee is impaired due to substance abuse, or a health-related issue. The fitness-to-work assessment is done in private and is voluntary for the employee. We recommend having a worker representative present. Dr. Graeme Magor, an Occupational Health Physician and Certified Health Physician, warns against “playing doctor.” “You’re not diagnosing the employee. You are just trying to make a baseline decision about their fitness to work, regardless of cause, and keep a record of it,” said Magor, who is also a Medical Consultant for Cowan.
1. Substance Abuse Policy
Implemented by: The employer
The substance abuse policy is part of the larger set of workplace policies you have in place for your organization. It’s important the substance abuse policy state its purpose and objectives, as well as the scope, the roles and responsibilities of both the employer and employee, the consequences of a violation, and the available resources for managers and employees.
What’s inside
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- The Importance of Substance Abuse Policies (cont’d from page 1) - Proposed CPP Changes
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- Ontario Takes Action on Drug Rebate Scheme - Proposed CPP Changes (cont’d from page 2)
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- Newsletter Q&A - Don’t Miss the Deadline For Registering Over-Age Students
We care about what you care about.
The Importance of Substance Abuse Policies (cont’d from page 1)
3. Last Chance Agreement
Implemented by: The employer
The last-chance agreement is an additional document that is drafted on a case-by-case basis between the employer and employee. It should reflect the circumstances of a particular situation with regard to what is expected of an employee, and the consequences should they fail to follow the prescribed action. Some employers may be hesitant to place employees on contract, but a signed contract can be a much-needed motivator for employees, says Laurene Wittich, Health and Disability Management Supervisor at Cowan. “By putting them on contract, you give employees the motivation to regularly attend essential treatment and access support services,” says Wittich.
Agreement
4. Substance Abuse
Implemented by: Third-party adjudicator
Substance abuse is a sensitive issue. Employees have a right to dignity and privacy, and a confidential substance abuse agreement between an employee and a third-party adjudicator, like Cowan, is a good way to assure an employee that their medical and case information will not be shared with their employer. As well, it can help managers and supervisors who may not understand their roles and boundaries. Dr. Magor warns against becoming a “helper” or “facilitator” to the employee, because at some point, “you may need to become a disciplinarian, and that can be awkward.” Human resources will be advised there is an agreement in place, but no details
Services Available Through Cowan
• Co-development and roll out of fitness-to-work and substance abuse policies and procedures • Presentations to HR, supervisors (roles & boundaries) and employees • Individual substance abuse referrals: agreements, surveillance, reporting • Consultation regarding management of scenarios as they occur
will be provided. If there is a breach of the contract, the employer will be notified, but again, they will not be privy to the exact details of the specific breach. There are many legal and ethical issues to consider when drafting these policies. If you have any questions, please contact your Cowan consultant, or Teresa Norris-Lue, Vice President of Benefits for Cowan: 1-866-912-6926 ext. 51304; teresa.norris-lue@cowangroup.ca.
Proposed CPP Changes
In May, proposed changes to Canada Pension Plan (CPP) benefits were announced following discussions between Federal Finance Minister Jim Flaherty and his provincial and territorial counterparts. Here are the highlights of the proposed changes: • Starting in 2012, Canadians as young as 60 could start drawing on their CPP retirement pension benefits without having to leave their jobs or reducing their work hours or earnings. Currently, Canadians who opt to retire early, between the ages of 60 - 64, are required to either quit their jobs, or reduce their earnings for at least two months. There are currently no restrictions for Canadians aged 65 and older, who are allowed to work and collect their CPP retirement pension. • For Canadians who choose to draw CPP benefits before age 65, the amount of reduction in CPP retirement pension would be gradually increased to 0.6% (from 0.5%) per month for each month that the pension is taken before age 65. Therefore, under the proposed new rules, anyone who takes advantage of early draw at age 60 would collect CPP at a reduction of 36%, compared to the current rate of 30%. Implementation would be done over a five-year period, starting in 2012. • CPP retirement pension recipients under the age of 65 would be required to contribute to the CPP while continuing to work. Employers would also be required to contribute during this time. This would be voluntary for anyone over the age of 65. These contributions would result in increased retirement benefits, including persons already receiving the maximum pension amounts. • For Canadians who choose to draw CPP benefits after age 65, the CPP retirement pension amount would be gradually increased to 0.7% (from 0.5%) per month for each month that the pension is taken after a recipient’s 65th birthday, up to age 70. For example, someone who waits until age 70 to draw CPP would collect the benefits with an
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Ontario Takes Action on Drug Rebate Scheme
In April, the Ontario government announced legal action against a number of pharmacies, generic drug companies and wholesalers following an investigation into questionable drug product rebates. The Ontario Ministry of Health and Long-Term Care conducted an audit after finding discrepancies in the reporting of professional allowances (money generic drug manufacturers pay pharmacies for buying their prescription drug products) paid and received. According to a news release from the Ministry: “The audits found that some pharmacies have been purchasing a greater amount of generic drugs than they require, collecting professional allowances on the full amount, and then returning what they don’t need to the wholesaler. The wholesaler then re-sells the product, triggering a second professional allowance payment. This scheme enables professional allowances to be collected multiple times.” As of May, one pharmacy had been charged with receiving excessive rebates, three other pharmacies had been advised they may lose their license, and another 51 were facing further investigation. Fines of $33.8 million had been leveled against the one charged pharmacy as well as seven generic drug manufacturers and four wholesalers. Expect the web to expand as Ontario shares its investigation with other jurisdictions. $145 million. In one case, a manufacturer reportedly paid one retail pharmacy $5 million while the pharmacy reported nothing. The cost to the public system is obvious. With the private sector paying 52% of all generic drug costs in the province, they may be paying more than they should. In the private sector, there are no limits to any rebates. Theoretically, these rebates should result in lower retail pricing if passed on to the end-user. Instead, Canada has some of the highest retail costs for generic drugs in the developed world. That may be due to drug companies paying large rebates to pharmacies who do not pass along the savings to the private sector payers. Consequently, the cost to the private sector could significantly exceed that to the public sector. Without legislation the private sector can’t fight back. Ontario continues to press the investigation into distribution practices for generic medications. Let’s hope this case will prompt all of the provinces to revisit legislation regulating professional fees, rebates and allowances for both public and private drug purchases.
The Impact on Drug Plans
So, just what does this mean for public and private drug plans? Following the passage of the Transparent Drug System for Patients Act, allowances (rebates) were supposed to be capped at 20% of generic drug sales for the Ontario Public Drug Program (OPDP). But using the scheme mentioned above, a retailer can exceed the 20% cap. According to media reports, manufacturers said they paid out $332 million in rebates over six months, while retailers reported receiving just
Proposed CPP Changes (cont’d from page 2)
adjustment of 42%, compared to the current rate of 30%. This change would be implemented over a three-year period, starting in 2011. • Another significant change is the increase in number of drop-out years for the calculation of CPP retirement pension. Currently, 15% of low income years may be dropped-out in the calculation. This amount would increase to 16% in 2012 and 17% in 2014. An Information Paper on the proposed CPP changes can be found at: www.fin.gc.ca. Questions or comments regarding the proposed changes can be emailed to CPP2009@fin.gc.ca until July 31st, 2009.
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Newsletter Q&A:
Q: An acquaintance of mine has had a change to her benefits policy. Under her group policy for Extended Health Care, she receives a specific dollar amount and can disperse it throughout the different services without a maximum in each category. Is this something that we could have the option of doing with our policy? A. Very likely. Most group insurers, and third-party administrators such as Cowan, now offer a Healthcare Spending Account (HSA or HCSA) to mid and larger-sized groups, and sometimes even to smaller groups. The usual design is to use the HSA as a top-up to enhance a traditional health and dental plan. It is much like a bank account for benefits and the employee is credited with a fixed dollar amount, say $500, which the employee can use for any medical expense that meets the same eligibility requirements for the Income Tax personal medical expense credit. It can be used to pay for specific expenses not covered under the basic plan, including deductibles and coinsurance payments. Some plans even substitute the HSA for a basic, traditional-style plan; however, this is not the typical structure. The top-up model is, by far, more common. As long as expenses meet the provisions of the Income Tax Act, the employer-sponsored contributions are not taxable in the hands of the employees and the employer can claim the contribution as a business expense – except for Quebec residents. One of the main reasons that HSAs are so popular is they help hold the cost on benefits. Employer expenses are capped at the HSA maximum per employee and unused allocations must be returned to the employer. Contact your Cowan consultant for more advice on how to use this tax-effective program to enhance your plan, and help keep costs stable.
Don’t Miss the Deadline for Registering Over-Age Students
School enrollment is near, and it’s that time again to ensure current records are updated with your carrier for over-age student dependants eligible to receive benefits. This will ensure they continue to be eligible for coverage. Otherwise coverage will terminate, typically at the end of August – or even earlier in some cases. Dependants are eligible for coverage if they are: • A full-time student, and • Over the age of 21 (19 for some plans) and under the age of 25 (26 in Quebec), and • Dependent on the plan member for maintenance and support. Check your plan administrator’s manual, or online web administration guide for instructions on how to enroll over-age students. If you need help, give your Cowan consultant a call.
This bulletin is produced by the Benefits and Retirement Consulting division of Cowan Insurance Group. We help public and private-sector clients manage their group benefits, retirement and health and disability management plans. We do this by consulting and providing administrative services tailor-made to any size and type of organization.
Cowan Insurance Group
700-1420 Blair Place Ottawa, ON K1J 9L8 Phone: 613-741-3313 Fax: 613-741-7771 Toll free: 1-888-509-7797 705 Fountain Street North PO Box 1510 Cambridge, ON N1R 5T2 Phone: 519-650-6360 Fax: 519-650-6366 Toll Free: 1-866-912-6926 www.cowangroup.ca/july-09