Impact Of Ontario Election Examined

Authored By: Yafa Sakkejha | Publish Date: June 18, 2018

The last several months have been rocky for Ontario employers.

Bill 148 became effective on January 1, boosting wages, paid time off, and extending job-protected leaves of absence. The federal government floated the idea of taxing health and dental benefits, only to walk back the idea shortly afterwards. A national single-payer pharmacare system continues to have clout, but with a question mark. As we saw with OHIP+ in Ontario, parents and employers were gleeful on January 1, asking us, ‘So how much money are we going to save from our health premiums?’

Insurers predicted that OHIP+ would generate one per cent to five per cent savings from employer drug spending, which translates into a small fraction of payroll. Back-of-the-napkin math suggests it’s a savings of $7 to $35 per employee per year, or 0.01 per cent to 0.07 per cent of a $50,000 wage.

‘Oh,’ they collectively said, deflated. ‘That’s all?’

Sorry, but the highest drug spend we see in the under-25 demographic is probably an ADHD drug such as Adderall or Concerta, which can run $2,000/year if taking the brand. And one kid with ADHD is not the reason your drug plan is more expensive in 2018 than 2008.

So what does a PC government in Ontario mean for employer sponsored benefit plans?

Here are my predictions. Please note, that these are simply my opinions and that Beneplan is a politically agnostic organization.

  • A pause on hiking wages further

We heard whispers from employers in 2017 regarding how much the minimum wage will cost them. “We have to find $5 million in savings this year,” one CFO said. Cuts to benefits was inevitable. While no-one argues that a living wage is important, the reality is that many employers had to find the cash somewhere and it wasn’t going to be from increasing prices on their customers. Outcome: Less cuts to benefits, but less growth in coverage volumes.

  • A push to maintain health & dental benefits as a tax-free benefit

The tax and spend needs of a left-leaning party could have meant political clout behind taxing health and dental benefits. A ‘blue’ government might have a different lens. The tax would have increased employees’ individual bills, which may have led to less spending or more upward pressure on wages. Outcome: Status-quo on taxability.

  • No expansion to pharmacare, dental care or other benefits

There is no longer a path to mandating universal drug or dental coverage, as suggested by the NDP. Outcome: Status-quo on expansion of government mandated employee benefits.

  • A potential increase in parents returning to work sooner with a child-care tax credit

The cost of child care is one of the strong influencing factors behind whether a parent returns to work after the addition of a new baby. Outcome: Affordable child care may lead to employees returning to work sooner, and therefore more productivity, which may lead to better profits and benefits.

  • Less propensity to strengthen the cause of transient workers (i.e. contract, part-time, and temp)

The Liberals had a big push to legitimize the employment standards of temporary workers or those employed by a ‘temp agency.’ Bill 148 succeeded in strengthening their wages and notice period with respect to termination, but I don’t anticipate the new PC government pushing this agenda any further. Outcome: No more push to provide the same employee benefits to temp workers.

  • An increased local hiring push from employers who may have been on the fence about Ontario

We hear from many of our plan sponsors about to expand that they court U.S. states with weaker unions, lower wages, and affordable hydro costs. A business owner who may be chatting with New Jersey may pause and reconsider expanding their Mississauga presence instead. Outcome: More employees in Ontario and a greater volume of claims.

Drop me a line if you agree, disagree, or want to weigh in, at yafa@beneplan.ca

Yafa Sakkejha is GM at Beneplan.


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