Extended Health Care (EHC), also known as supplementary or major medical benefits, are an important component of employee benefit plans in Canada. They provide coverage for medical expenses not covered under provincial health insurance plans.

What is Extended Health Care (EHC)?

Extended Health Care plans supplement provincial health insurance by covering additional healthcare services and products. They reimburse expenses like prescription drugs, paramedical services, medical equipment and travel health insurance.

EHC plans help fill the gaps left by provincial health insurance plans and provide employees with enhanced medical coverage. They are an essential part of most employee benefit packages in Canada.

Key Features of Extended Health Care Plans

Here are some of the main features and benefits provided under Extended Health Care plans in Canada:

Prescription Drug Coverage

• Covers cost of prescription drugs and medicines
• Usually includes generic, brand name and over-the-counter drugs
• May use Drug Formulary listing drugs covered under the plan
• Provides option of pay-direct drug cards for direct billing

Paramedical Services

• Covers appointments with healthcare practitioners like physiotherapists, chiropractors, psychologists
• Each service has an annual maximum claim limit (e.g. $500 per year for chiropractor)

Medical Supplies and Equipment

• Covers cost of prescribed medical supplies and equipment
• Includes items like wheelchairs, hospital beds, braces, prosthetics

Out-of-Province/Country Emergency Medical

• Pays for emergency medical treatment while traveling out of province/country
• Typically provides coverage for up to 60 days per trip

Other Health Services

• May cover extra services like ambulance, private nursing, accidental dental insurance, vision care
• Added benefits to expand coverage beyond provincial plans

Premiums and Cost Considerations

EHC premiums are paid by the employer, the employee or shared between both parties. Overall cost depends on factors like:

• Plan design and breadth of coverage
• Demographics of employee group like age, gender
• Claims history and utilization rates
• Provincial healthcare costs and fees
• Premium taxes and administration expenses

With rising healthcare costs, many employers are using strategies like deductibles, co-payments and coverage caps to control EHC premiums.

Tax Treatment of EHC Plans

The tax treatment of Extended Health Care plans depends on who pays the premiums:

• Employer-paid plans: Premiums are a tax-deductible business expense for the employer. Benefits received by employees are non-taxable.
• Employee-paid plans: Premiums paid by the employee are not tax deductible. Benefits received are non-taxable.
• Cost-shared plans: The employer’s share of premiums is tax deductible as a business expense. The employee’s share is paid from after-tax income. Benefits are non-taxable for the employee.

Advantages of Extended Health Care Plans for Employers

Offering Extended Health Care coverage provides important benefits for employers:

• Recruitment and retention: EHC plans are an attractive benefit that helps recruit and retain talented employees.
• Increased productivity: Healthier employees miss less work and are more productive. EHC improves access to healthcare.
• Tax deductions: Premiums paid by the employer are tax deductible as a business expense.
• Customization: EHC plans allow employers to customize coverage based on their budget and employees’ needs.
• Provides supplemental coverage: Fills gaps in provincial plans and provides employees with more complete coverage.

Advantages of Extended Health Care Plans for Employees

Extended Health Care plans also provide advantages to employees such as:

• Lower healthcare costs: Employees save money as the plan covers expenses they would otherwise pay out-of-pocket.
• Access to care: EHC provides faster access to prescription drugs, paramedical services and medical equipment.
• Travel coverage: Out-of-province and out-of-country emergency medical benefits provide important protection while traveling.
• Flexibility: Employees can select coverage tailored to their specific healthcare needs and budget.
• Supplemental coverage: Fills gaps left by provincial group health benefits plans.
• Ease of claims: Many plans provide pay-direct drug cards for easy pharmacy claims payment.

Designing an Extended Health Care Plan

Employers looking to implement Extended Health Care coverage should follow these steps:

Assess Employee Needs

Conduct an employee survey to understand their needs, expectations and priorities for healthcare benefits. This provides insight into what to cover under the EHC plan.

Set Objectives

Determine the objectives and budget for EHC coverage like enhancing recruitment, reducing absenteeism, controlling costs. This guides the overall plan design.

Select Plan Administrator

Choose an insurance carrier or third-party benefits administrator experienced in managing EHC plans. Get proposals from multiple vendors.

Design the Plan

Work with the administrator to design a plan that aligns with employee needs and corporate objectives. Define covered services, deductibles, co-pays, annual limits.

Communicate Details

Inform employees about their new EHC coverage, the services/products covered, how to submit claims, who to contact with questions.

Implement and Review

Put the plan into effect on a specified date. Periodically review utilization data, employee feedback, claims trends to identify any needed modifications.

Case Study:ABC Company EHC Plan Design

ABC Company recently implemented an Extended Health Care plan for their 150 employees. Here are some of the key features:

Covered Services and Supplies:

• Prescription drugs (generic + brand name)
• Paramedical services like massage therapy, physiotherapy ($500 per year per practitioner)
• Medical equipment like wheelchairs, hospital beds
• Out-of-country emergency medical treatment (up to 60 days per trip)
• Ambulance transportation
• Accidental dental treatment

Cost Considerations:

• Annual deductible: $50 per individual, $100 per family
• Co-payment: 80% reimbursement of eligible expenses
• Dispensing fee cap: $10 per prescription
• Premiums: Cost-shared between employer (60%) and employees (40%)

This plan design achieved ABC Company’s goals of providing employees with comprehensive supplemental medical benefits while controlling corporate costs through deductibles, co-pays and plan maximums.

Conclusion

Extended Health Care plans play a vital role in protecting the health and financial well-being of employees. They fill gaps, enhance provincial health coverage, and provide tax-advantaged medical benefits.

With thoughtful design tailored to corporate and employee needs, EHC plans enable employers to attract talent, improve productivity and offer a highly valued benefit. They are an essential component of a competitive employee benefits program.