The Canadian Life & Health Insurance Association (CLHIA) is calling on British Columbia to reduce and eventually eliminate the tax consumers pay on health and disability premiums. It is also advocating for the province to better support workplace benefits plans while advancing causes like support for mental health and dental care for those who are not covered by benefits. It also called on the province to allow increased investment in infrastructure that will support the transition to a low-carbon economy.
The comments were part of the CLHIA’s pre-budget submission made to the British Columbia Select Standing Committee on Finance & Government Services on June 24.
In the submission, the CLHIA points out that 3.6-million people in British Columbia have supplementary health insurance through workplace health benefits plans. They add that $3.5-billion in health insurance benefits were paid in 2020 alone, $1.2-billion of which covered prescription medicines and $33-million went to coverage for rare disease drugs.
Although it says the industry strongly supports the federal Patented Medicine Review Board (PMPRB) reforms being implemented in July, is says the industry remains concerned about the cost of drugs for rare diseases. “Between 2012 and 2019 they increased by 32 per cent, more than six times the rate for all prescription medicines,” they write, calling on the province to develop a rare disease strategy.
In dental care, the association writes that the current system works well for many, but includes gaps that leave some without coverage. “We applaud the federal government on its stated intention to provide dental care to those without dental coverage. It is important that the new program provide access for those without coverage but does not result in fewer Canadians accessing dental benefits through their workplace plan,” they state. “Workplace benefit plans already coordinate with provinces and territories and could easily adapt to enhance programs.”
Notably, the association is also calling on the province to reconsider its stance on automatic enrollment in workplace savings plans, saying automatic escalation is interpreted as an adverse amendment to a pension plan, adding administrative complexity for sponsors. “These barriers prevent employees from using automatic features that enable them to receive an employer match and save for retirement. It also calls on the province’s government to monitor parallel federal measures to introduce Variable Payment Life Annuities (VPLAs) and Advanced Life Deferred Annuities (ALDAs) as new retirement income decumulation options and for the province to in turn encourage the federal government to permit standalone VPLAs. “The current measures do not take into consideration many other retirees who are members of smaller defined contribution or pooled registered pension plans that lack scale for a standalone VPLA solution.”
Finally, the association points out that British Columbia imposes a two per cent tax on life, health and disability insurance premiums: “Life insurers – and consequently insured British Columbians – paid close to $134-million in premium taxes in 2020. That premium tax is outdated – it predates corporate income taxes and imposes a supplemental tax burden nearly three times the $49-million in corporate income taxes levied on life and health insurance companies in British Columbia in 2020. These taxes directly increase the cost of purchasing insurance for individual policyholders and employers offering group plans,” they write. “We believe that discouraging individual responsibility for these benefits by taxing the purchase of life insurance coverage is not sound public policy.”
