The Voice of Multi-Employer Plan Interests in Canada

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March 12, 2015

 

Ms. J. Seibel

Lawyer

Legal Branch

Government of Saskatchewan

Financial and Consumer Affairs Authority

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Mr. J. Hall, Senior Crown Counsel

Ministry of Justice and Attorney General

Government of Saskatchewan

Public Law

Legislative Services

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Dear Jan and Jim,

Re: Amendments to Saskatchewan Insurance Act, Bill 177

On behalf of our members, MEBCO appreciates the time you took to meet with our Board member Sid

Matthews, on February 26th. We welcome this opportunity to follow up with you regarding MEBCO’s

comments on Bill 177, which will amend the Insurance Act. We understand that the regulations are not

available and that there are many details to be resolved. We understand the government’s desire to

quickly pass Bill 177 and to consult with relevant parties on the regulations. We also understand, and

agree with, the consumer‐safety focus of the amendments to the Insurance Act.

 

MEBCO’s concerns centre around the possibility that the amended Insurance Act will not permit plans to

provide benefits on a self‐funded basis – ie requiring that all benefits be insured.

MEBCO was established in 1992 to represent the interests of Canadian multi‐employer pension and

benefit plans (MEPs). We consult with provincial and federal governments regarding proposed or

existing legislation and policies affecting these plans.

MEBCO is a federal no‐share capital corporation, operating on a not‐for‐profit basis.

MEBCO is representative of all persons and disciplines involved in MEPs, including trustees (union,

independent, professional and employer), professional third party administrators, non profit or “inhouse”

plan administrators, professionals including actuaries, benefit consultants, lawyers, investment

managers, investment counsel and chartered public accountants. MEBCO is administered by a Board of

Directors consisting of representatives from each of the above groups. The Board of Directors serve

MEBCO on a volunteer basis, and are responsible for identifying issues that impact MEPs, developing a

strategy to address those issues, and then carrying out the strategy. MEBCO’s member‐plans provide

comprehensive health coverage to over 1,000,000 Canadians.

While we appreciate that the government’s initiative is meant to assure the security of benefits payable

to employees, we believe that this assurance is available through other methods than insurance.

Insurance is a viable option for some plans. However, many of MEBCO’s members are able to provide

benefits on a self‐funded basis. Self‐funded means that the benefit is protected by the assets of the

underlying trust fund.

Trust funds are administered by boards of trustees. Trustees manage trusts as fiduciaries which means

that the trustees’ actions are carried out solely in the best interests of plan beneficiaries. Trustees are

responsible for understanding and developing policies and procedures to mitigate the benefit plan’s

risks, including longevity risk, contribution risk, operational risk and investment risk.

Managing benefits in a fiduciary capacity requires that the trustees establish adequate procedures for

the payment of benefits in accordance with the plan’s rules. Trustees may retain professional advisory

services for claims adjudication and payment. Further, fiduciary responsibility requires that trustees

establish and maintain adequate reserves for benefits payable to members, particularly disabled

members. Plans that provide benefits on a self‐funded basis normally retain an actuary for the purpose

of calculating reserves. These plans may, or may not, engage the services of an insurer for some

services.

An Insurance Act amendment requiring that benefits be provided on an insured basis will disrupt already

established, well managed, self‐funded MEPs. Mandatory insurance arrangements result in higher costs

for plans that are successfully self‐funding these benefits. Introducing mandatory insurance detracts

from the authority of trustees and will result in lower benefits to plan members because MEPs have

fixed contributions. A reduction in health care or other benefits (for example lower disability benefits,

reduced medical coverage including prescription drugs) is inconsistent with protection of Canadians. In

particular, private sector MEPs are managing to provide these benefits, keeping citizens from relying on

government plans. Mandatory insurance of disability or any benefits will also have a disruptive effect on

the operations of health and welfare plans.

We have concerns about the potential desire and ability of the insurance industry to be able to replicate

existing coverage in an economical manner. Further, MEPs provide coverage to members in industries

that can have significantly different employment arrangements than exist with single employers. MEPs

represented by MEBCO are funded by many employers, sometimes hundreds of employers. Funding by

several employers mitigates the funding risk and possible consumer exposure present in a single

employer plan.

We have concerns about whether legislated insurance coverage could be adequately structured to

address these unique needs (e.g., industry risk, portability of coverage, rehabilitation arrangements,

return to work requirements, retraining, high service requirements etc.).

We propose that multi‐employer plans be exempt from legislated insurance contracts if the plan:

∙ Actuarially determines reserves annually

∙ Annually determines the contribution requirements to fund the benefits

∙ Audits the fund annually

∙ Communicates in plain language that benefits are not insured and may be reduced.

MEBCO has depth of knowledge in this area since many of our members are multi‐employer health and

welfare plans that have successfully and efficiently provided self‐funded benefits for many decades. We

would be pleased to provide more information as you continue your deliberations on this matter.

Best regards

Robert Blakely,

President

Joining MEBCO

Five reasons why your MEBCO membership is critical
Your MEBCO membership guarantees that multi-employer plan interests will be considered whenever change is on the horizon. With your support, MEBCO will continue to be a strong and effective voice. Join today!
  1. The threat to multi-employer plans is real.
    The legislative framework is constantly changing, and cost-management and cost reduction are at the top of every agenda.
  2. Legislative changes can be significant.
    Recent proposed changes have threatened to offload costs onto plans, restrict plan coverage, and have compromised the viability of some plans
  3. Multi-employer plans are worth protecting.
    Multi-employer plans play a vital role in providing health services and retirement plans to over 1 million workers and their families in industries typified by small companies and a mobile work force.
  4. Multi-employer plans need a united lobby.
    Multi-employer plans carry a low profile due to the fact that the coverage is thinly spread over many employer groups and mobile workers.
  5. MEBCO is committed to protecting your interests.
    When governments propose changes, MEBCO is the single, clear voice at the table representing the unique interests of multi-employer plans.