Making up five per cent of the total labour force, Statistics Canada shows that nearly one million people employed are aged 65 or older. For those with access to the employee group plan through their employer, here are some reminders common to the policies.
Disability coverage
On many plans which include long term disability (LTD), the termination age is 65.
Premium for this coverage normally stops about four months prior to the employee’s 65th birthday. This aligns with the elimination period for accessing the coverage. The reason for this is because if that employee were to make a disability claim, they would not satisfy the elimination period prior to turning 65 and coverage ending.
Short-term disability (STD) very often has a different termination age, confirm with the policy booklet. In some cases, the STD will end with the LTD at age 65, or carry on to age 70 and in some cases, the insurer will offer STD so long as the employee is gainfully employed and actively at work.
For those policies which include Critical Illness, check the policy details as this coverage normally terminates at age 65.
Life Insurance
On the employee’s 65th birthday (or the month of the birthday) the life insurance in vast majority of group insurance policies will reduce by 50%. The most common termination age is 70 or 75 on older policies. Many policies have updated to a termination age of 85, providing the employee is actively at work. Always confirm your coverage via the insurance contract.
Dependent life insurance will usually align with the life insurance termination age. Confirm with the policy documents.
Clear communication is essential. Make sure the corporate policy is also kept up to date with this information specific to the coverage being offered, reduced, or terminated.
Extended Health & Dental
Provincially there are “senior’s programs” in place to accommodate the basic needs of pharmacy, health, vision and dental care for those 65 and older. The employee must apply for this coverage is it is not an automatic enrolment.
The group plan will be second payer to the provincial coverage. This means for those making claims in these areas, the insurer and/or benefit provider expects that the provincial coverage to pay first and they will “top-up” the difference. For instance, if a prescription is listed on the provincial formulary and covered at 70%, the benefit plan will reimburse the additional 30%. However, if the prescription prescribed to the employee is not covered under the provincial formulary, then the group benefit plan will pay the claim as defined in the policy as they would do for those not covered under the senior’s program.
Many times, employees aged 65 and older who are not prompted to enroll in the provincial plans, only find out they MUST enroll when the first claim after age 65 is declined.
Note, there are some provincial senior’s programs which only include coverage for those in the household who are aged 65. This is where the coordination of the provincial and group coverage is essential. If their spouse is not yet 65, they will have no access to the provincial senior’s coverage.
Many health and dental plans will include a termination age to match the life insurance, while there are those insurers will extend coverage indefinitely so long as the employee gainfully employed and actively at work.
Canada Pension Plan (CPP)
The Canada Pension Plan allows employees working beyond age 60 to begin receiving benefits without having to retire. As well employees over 65 can defer this benefit until age 70. This will not only affect payroll but may also impact disability benefits. Details on government provided benefits should be sought from source.
Old Age Security (OAS)
The Old Age Security program provides payment to people ages 65 and older who meet the legal status and residence requirements.
The benefit is considered taxable income, so employees and employers may need to be aware of this. Details on government provided benefits should be sought from source.
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Note: this was written without the aid of Artificial Intelligence (AI)
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