Are the current circumstances forcing you to temporarily layoff some of your employees? Or terminate their employment relationship? Do you know what will happen with their insurance coverage during this time? Are they required to maintain it? Who will be paying the premiums? The answers to such questions may differ depending on the applicable provisions of your insurance contract. Find out here what you need to know to properly manage these situations.
SPECIFIC TO QUEBEC: PRESCRIPTION DRUGS
Under Quebec’s prescription drug insurance legislation, employees are required to retain at least the drug insurance benefit of their group plan whenever possible. This means that if the policy allows for the continuation of one or several benefits during an absence, drug coverage must be maintained (subject to the right to opt out in order to be covered under the spouse’s policy). The only case where absent employees may exempt themselves from this requirement and must switch to the Quebec public health insurance plan (RAMQ) is when there is no possibility of retaining coverage, as explained below.
ARE THERE RESTRICTIONS ON THE BENEFITS OFFERED?
There is no legislation governing the benefits that must be maintained during this type of absence (except for prescription drug coverage, as explained above). It is the contract between the employer and the insurer that determines what is offered during such times. If continuation is desired, the contract will set out which benefits can or cannot be maintained. Typically, short- and long-term disability coverage cannot continue, or may be maintained for 31 days only.
PLANNING AND DOCUMENTING
It is important to advise the insurer or the administrator prior to the employee’s layoff. A best practice consists in giving employees a letter confirming which benefits will be extended and the consequences on their coverage, particularly in cases where disability insurance is not extended. Should the employee become disabled while on layoff, this confirmation will save you the trouble you would have if there were no clear documentary evidence that the employee was not covered while on layoff. Please contact your AGA Advisor to get a model letter that we designed to assist you with this procedure.
HOW TO COLLECT PREMIUM?
Frequently, employees are asked to pay 100% of the cost of benefits maintained during their temporary layoff. There are 2 ways to collect the employee’s share of insurance premiums: with postdated cheques or by accumulating the amounts and deducting them upon the employee’s return to work. Under the current circumstances, the second approach could prove beneficial when the time comes to recall the employee in the midst of a manpower shortage.
REFUSAL TO PAY PREMIUMS
What can you do when an employee refuses to pay the cost of the maintained coverage? Whether or not such coverage is 100% paid by the employee, nothing forces the employer to bear the full cost.
The employer must write a first letter reminding the employee that he/she owes money, and that insurance coverage will be terminated if no payment is received within 30 days (legally prescribed minimum notice period for interrupting the prescription drug coverage for non-payment).
If such payment is not received within the required time, the employer should send a second letter confirming that coverage has ended due to non-payment.
In the case of employees who were not exempted from your plan’s drug insurance coverage, you must also notify them that they are violating the prescription drug insurance legislation and they will have to pay in full all their drug expenses. They will not be entitled to join the RAMQ public drug insurance plan, as they are not eligible because they have access to a private group plan. AGA can also provide you with a model letter you could use in this type of situation.
TERMINATION OF EMPLOYMENT RELATIONSHIP
Faced with the current uncertainty, some employers may contemplate terminating the employment relationship, as they would like to avoid paying the premiums during the layoff period. However, this approach could have major impacts:
- Your employees will be left with no insurance during this time of crisis.
- They will likely have to register with the Quebec public drug insurance plan, if applicable, and pay the related premiums.
- Upon rehiring, depending on the contract provisions, proof of insurability could be required for re-enrolment, and pre-existing condition clauses would normally apply.
To make an informed decision for you and your employees and to select the right approach based on your contract, do not hesitate to contact your AGA Advisor.
WHAT HAPPENS IF THE EMPLOYEE BECOMES DISABLED WHILE ABSENT?
If disability insurance coverage was maintained and the employee is unable to work at his/her scheduled return to work date, the date of disability will be deemed to be the scheduled return to work date. The short-term disability elimination period will start at that date and benefits will follow. If disability insurance coverage was not maintained, no benefits will be payable and such coverage will only be reinstated upon the employee’s return to full-time work.
If you have additional questions or would like some clarifications, do not hesitate to consult our dedicated webpage on the coronavirus.
Martin Bédard holds a Bachelor Degree from Université Laval, where he was captain of the Rouge et Or football team when they won their first Vanier Cup, and an Executive MBA from Queen’s University. He has close to 20 years of experience in group insurance on the insurer side. With his background as a senior manager responsible both for business development and for strategic planning, product development and client experience, he is keen on doing more for each client as part of the Quebec City office team.