McGowan - Articles

Same Sex Marriage

Employers that haven’t adapted the eligibility rules of their benefits plan to include same-sex partners are breaking the law. Why? Despite the fact that the recent same-sex marriage bill remains unsettled, technically, your company already should be in compliance with current provincial and federal law.

While many employers are complying with the law, there are likely some that haven’t kept up with legislative changes that took effect in the late 1990s and 2000.

Let’s take a look at the history.
Over the course of the last four years, federal and provincial legislation has put same-sex couples on an equal footing with opposite-sex common-law partners.

In fact, it’s been the influence of the provincial courts in British Columbia, Ontario and Quebec that has created the groundswell of interest and need for change.

In Ontario, the initial step to address the needs of the changing human rights environment dates back to the late 1970s. But it was a handful of crucial cases in the 1990s, which were handled through the Ontario Human Rights Commission that paved the way for real change. In the fall of 1999, the Ontario government passed legislation granting same-sex couples in the province the same rights and obligations as common-law spouses.

It was Bill C-23, the Modernization of Benefits and Obligations Act, which was passed by the Government of Canada in 2000, which forced further changes in the system on a federal level. This legislation extends same-sex couples the same rights and obligations applied to common-law heterosexual couples. More than 60 federal statutes in areas such as pensions, mortgages, immigration and taxation were affected.

Although insurance carriers have been adapting their policies to include same-sex partners for more than 15 years, Bill C-23 prompted insurers, like Manulife Financial, to amend their standard policies across Canada to recognize a plan member’s same-sex partner as an eligible dependent spouse.

Bill C-23 did not address the traditional definition of “marriage”. This left room for further political debate. That brings us to the current status of legalizing same-sex marriages.

Earlier this year, the British Columbia and Ontario Court’s of Appeals gave gay and lesbian couples the right to marry. That led to the federal debate.

Following the highly publicized parliamentary vote in September, a federal bill legalizing same-sex marriages was sent to the Supreme Court of Canada for a non-binding legal opinion on whether it passes constitutional muster. It is not expected to be introduced until at least the fall of 2004.

What does this mean to employers?
Today, employers should have the same eligibility rules for same-sex couples as heterosexual common-law partners. For example, if the benefits plan provides eligibility to common-law partners after a couple has been living together for a year, the same rule should apply to same-sex couples.

If the definition of a “marriage” is changed to allow same-sex partners to marry, then ultimately, employers that provide “family” and/or “dependent” coverage will have to provide immediate eligibility to all married couples regardless of sexual orientation.

How are employer’s costs affected?
Beyond the legal issues, employers have been worried about the financial impact of extending benefits to same-sex couples.
Resistance to change over the last ten years has stemmed from the perception that the sponsoring companies costs could significantly increase. This perception has been largely unfounded.

While there is no collective data reported on numbers of same-sex couples that enrol in their employer’s plans, here are some of the statistics that might suggest it is marginal at best:

  • Approximately 70 per cent of plan members in a typical or average employer sponsored plan have family or dependant status and the remaining 30 per cent have single status. Therefore, a possible increase in enrollment would only come from the 30 per cent employee base with single status.
  • In the 2001 Census, Statistics Canada counted approximately 34,200 same-sex common-law couples across Canada, which represented only .5 per cent of all couples. 
  • Human Immunodeficiency Virus (HIV), which was originally only associated with gay men, has caused concern about the potential health-related costs for group benefit plans. However, it doesn’t appear to have generated the cost increases that were initially feared. 

  • Health Canada estimates 50,000 people in Canada are living with HIV. While the numbers have increased, new drug therapies have increased the life expectancy with those living with AIDs. Further, government-sponsored programs often cover the drugs that are used to control the disease.

What Next?
Clients of McGowan Insurance Services are contractually covered for same-sex partner eligibility under the standard contract of their respective insurance company. However, if your company hasn’t realigned its human resources policies to include same-sex partners, it should be doing the following:

  • Carefully review your human resources practices, policies and procedures to ensure compliance with legislation.
  • Assess the language and messages used in all benefits plan communications to employees and modify the information as appropriate.
  • Amend your benefit plans to clarify the definition of spouse to include same-sex couples.

The bottom line is that a progressive employer acknowledges and plans for the new realities facing the workplace. By staying on top of the needs and issues of your employees, you can proactively address your human resources policies.

If you have specific questions on your organization’s internal policies and procedures, contact Don McGowan at (416) 805-9999.

Privacy: An Employee’s Right

and organizations involved in federal works and undertakings or federally regulated sectors for almost three years. Since January 1, 2004, it applies to all of Ontario’s private sector (including not-for-profit organizations). Provincial privacy legislation has also been passed in the provinces of Quebec and British Columbia, and is pending in Alberta. Although Ontario is currently exploring options, no such legislation is currently proposed.

What is Personal Information?
Under the Act, personal information is broadly defined as information (data) – oral, written or electronic – about an identifiable individual. Personal information includes, but is not limited to, the following:

  • Name, address, telephone number and home e-mail address
  • Age, gender, family and marital status
  • Identification numbers (i.e. Social Insurance Number)
  • Financial and employment information
  • Credit rating, payment records
  • Previous insurance and claims experience
  • Medical and health information

What is not considered Personal Information?

The name, title, business address or business telephone number of an employee of an organization (business card information) is not considered personal information. Any data that has been collected which has all the personal identifiers removed, making it impossible to determine the identity of the person to whom it relates, is also not considered personal information.

What are the compliance requirements?
The privacy code is based on ten principles of fair information practices. They form the ground rules for the collection, use and disclosure of personal information. The ten principles are:

  • Accountability. An organization is responsible for personal information under its control and must designate a person who is accountable for compliance with the principles.
  • Identifying Purposes. The reason for collecting personal information must be identified at or before the time the information is gathered.
  • Consent. A person must have knowledge and consent of the collection, use or disclosure of personal information.
  • Limiting Collection. The collection of personal information must be limited to the purposes identified by the organization. Information should be collected by fair and lawful means.
  • Limiting Use, Disclosure and Retention. Personal information must be used for purposes defined, except with consent of the individual or as required by law. Personal information should only be kept as long as required to fulfil the defined purpose.
  • Accuracy. Personal information should be as accurate, complete and up-to-date as possible.
  • Safeguards. Personal information must be protected by security safeguards appropriate to the sensitivity of the information.
  • Openness. Policies and practices relating to the management of personal information should be readily available.
  • Individual Access. At an individual’s request, they should be informed of the existence, use, and disclosure of their personal information and should be given access to that information. Individuals should be able to challenge the accuracy and completeness of the information and have it amended as appropriate.
  • Challenging Compliance. An individual is able to address a challenge concerning compliance with the above principles to the designated people accountable for the organization’s compliance.

What is required of private sector companies?

Companies should be familiar with the legislation and the requirements of Schedule 1 – which covers the 10 principles. As well, your company should have an internal process for compliance of the privacy principles which should include the following:

  • A designated privacy officer with responsibility for and resources needed to meet these new requirements
  • An internal audit of your privacy practices, including how you collect, store and disclose personal information
  • A privacy policy with procedures for protecting privacy, obtaining consent and addressing complaints
  • Trained staff on the requirements of the privacy policy and procedures
  • On-going internal audit procedures to ensure continued compliance

A Guide for Businesses and Organizations to Canada’s Personal Information Protection and Electronic Documents Act
 is available from the Office of the Privacy Commissioner at:

How With the amount of personal information required by the insurance industry to offer products and services to clients, there is little wonder why the industry has been busy auditing existing practices and preparing for the new requirements under PIPEDA. While many private sector companies have already appointed privacy officers, formalized policies and have procedures in place, some companies may still be in the process of reviewing and updating their practices. To help you, we have summarized some information about privacy and the laws that protect it.

What is Privacy?
The Privacy Commissioner of Canada defines privacy as an individual’s right to maintain control over the uses and circulation of his or her personal information.

What is PIPEDA?
The Personal Information Protection and Electronic Documents Act (“PIPEDA”) is federally enacted legislation which regulates the private sector’s management of personal information. PIPEDA establishes rules governing the collection, use and disclosure of personal information in the course of commercial activities. The law gives individuals the right to access, challenge and make changes to information an organization may have collected about them.

What is the impact of PIPEDA?
PIPEDA has applied to businesses does McGowan Insurance Services Ltd. and your insurance company address Privacy?
The insurance industry handles extraordinary amounts of personal data and as a result, has actively embraced and responded to the legislation. At McGowan Insurance Services Ltd., we have always been aware of and sensitive to the need to protect confidential employee information in the conduct of our business. Our privacy policies and practices have been reviewed and are in compliance with privacy legislation. We will make our policy available on our website in the next few weeks and will update you when it’s online.

In addition, all of the insurance carriers that McGowan Insurance Services Ltd. has relationships with have developed policies and procedures to comply with current legislation. Due to the contractual relationship McGowan Insurance Services Ltd. has with its insurance companies, our adherence to privacy is also guided and governed by their policies.

If you have any questions about the information that McGowan Insurance Services Ltd. or your insurance company has on file or for more information on your insurance company’s privacy policies, please call Don McGowan, Privacy Officer for McGowan Insurance Services Ltd. at 1-800-749-7549.

* Some of the content in this article was edited from a communiqué sent to clients of O’Connor MacLeod Hanna LLP, an Oakville-based law firm.

Why Should Your Company Plan for a Pandemic?

Why Should Your Company Plan for a Pandemic?
Scientific experts are convinced that a pandemic could happen at any time based on the ability of the flu virus to mutate and historical precedents learned from the 1918 pandemic that took the lives of an estimated 50 million people worldwide.

Beyond the human health concerns, a contingency plan makes good business sense. A solid plan can help minimize the impact of disruptions resulting from a pandemic. In the worst case scenario, employees will stay home, supplies will be limited, and business operations will shut down.

Managing Your Business
One of the best ways employers can plan for a pandemic is to help prepare its employees by giving them guidelines to follow in the event of an outbreak.

How Can Your Company Prepare for a Pandemic?
Forward-thinking companies are starting to equip their employees with information and resources to help them plan for the possibility of an outbreak. Here are some examples of the advice that you can offer your Employees:

  • Employees should maintain a two to three-month supply of essentials at home (e.g. water, food, medicines, and diapers).
  • Employees should minimize trips into the general public during an outbreak situation. If venturing into the community, always use prevention devices (e.g. masks) .
  • Everyone should get an annual flu vaccine to protect against normal flu infections. While this will not protect against avian flu, it can reduce the strain on the health care system and free-up resources to deal with a potential pandemic.

There are four elements to a suggested Pandemic Response Plan:

  • Steps employees can take to protect themselves;
  • Having the supplies needed to help minimize the risk of contracting the virus;
  • Measures a company can take to manage its business during any disruptions; and
  • A pledge to work with customers to minimize interruptions in the supply of products.


What is the Bird Flu?
The deadly H5N1 influenza virus is found in many types of poultry and other bird species. To date, there have been 160 recent cases worldwide where humans have contracted the virus by infected birds. Eighty-five of those have died. As of today, there have been no known cases of human to human spread of the disease. That’s what authorities fear the most.

Is there a Vaccine to Protect against the Bird Flu?
There is currently no vaccine for this disease and it may be several years before a vaccine can be developed.

Are there drugs available to treat the disease?
There is no cure for the avian flu. Tamiflu™ Roche is the best drug available to combat the common flu, however, it has not been proven effective for the bird flu.

How quickly will the disease spread if there is an outbreak?
There is no certainty on the scale of a possible pandemic, however, given that people are most contagious a day before symptoms surface and with the extent of international travel, some predict it could be as quick as a few days to overwhelm the healthcare industry in every country affected.

If you would like some guidance on business interruption planning, please feel free to contact Don McGowan at McGowan Insurance Services Ltd. at 1-800-749-7549.

Group Benefits Advisors Have Disclosure Requirements

Recognizing the importance of consumer trust and confidence, the Canadian Life and Health Insurance Association (CLHIA) undertook to reinforce and enhance the measures already in place to ensure consumers are provided with the information they need to make the best decisions.

These Disclosure requirements are intended to increase clients’ confidence by ensuring that they’re satisfied that their advisors are offering objective advice.

Key Areas for Disclosure
Group benefits advisors should disclose the following information based on the CLHIA’s guidelines:

  • The insurance and financial services companies being represented
  • The nature of the relationship between the advisor and an insurance company (i.e. if the insurance company has any ownership interests in the advisor’s agency)
  • How an advisor is compensated and by whom
  • If the advisor is eligible for additional compensation, including cash or non-monetary compensation (e.g. qualifier conferences)
  • Potential conflicts of interests

An advisor should disclose these five items in writing before a transaction is completed. Advisors should have these disclosure procedures in place this year. As a plan sponsor, keep in mind that you have the right to ask for more information.

McGowan Insurance Services Ltd. ensures that its commission structure is fair and appropriate for the services that it provides its customers. It is our practise to provide a Disclosure statement that we that ask our Clients to review and sign to ensure that they are fully aware of our arrangements with the insurance companies that we have relationships with. If you have any specific questions that you would like to discuss, regarding these Disclosure requirements or any other matter, please don’t hesitate to call Don McGowan at 1-800-749-7549.

What’s Driving Healthcare Costs?

New and improved drugs, an aging population, government cost-cutting in health care, increased out-of-country travel, and employees maximizing their benefits plans are the factors that year after year continue to drive-up the cost of employer-sponsored benefits plans.
Every plan sponsor should stay aware of these factors and understand how they impact the cost of their own plan. Let’s take a closer look at some of the drivers:

Drug Costs
Rising drug costs is the number one factor impacting the cost of employer-sponsored benefits plans. Health care claims can make up 80% of a plan’s costs and year over year the costs are increasing. Better drug therapies continually come onto the market place and with an aging population, more and more people require prescription drugs for chronic and long-term illnesses. There’s no question that Canadians are spending more on drugs than ever before. As found by the Patented Medicine Prices Review Board (PMPRB), the increase can be traced to consumer demand.

Created by the Canadian Government in 1987, PMPRB is a quasi-judicial body set-up to ensure that the prices charged by manufacturers of patented medicines in Canada are not excessive (their mandate does not include prices charged by wholesalers or retailers and pharmacy fees). According to findings by the PMPRB, the price of drugs has actually gone up very little. In 2002, Canadian sales by drug manufacturers reached $13.8 billion which was a 13.9% increase over 2001. In the same period, PMPRB reported that prices of existing patented drugs fell by 1.2%. The prices have remained stable over a number of years therefore indicating a jump in consumption.

In addition to drug utilization, new and improved therapies available on the market are replacing less-costly, traditional therapies and are being prescribed more frequently because of the substantial improvement over older drugs.

Non-Compliance Costs
The other cost associated with drugs is the concept of non-compliance. In other words, when patients do not take medications as prescribed by a physician. For example, a patient who doesn’t finish a prescription; or drops out of a drug regime; or takes the incorrect dosage; or at the wrong time, has a greater chance of not fully recovering or maintaining good health. Cost of non-compliance can result in more drug claims, absenteeism, disability, and even life claims. According to Health Canada, 28% of hospital admissions for Canadians over the age of 50 were caused by non-compliance and drug reactions.

Non-Traditional Therapies
As employees maximize their benefits, more and more are seeking out non-traditional therapies to deal with chronic pain and stress. Non-traditional medicine like chiropractic treatments, naturopathic medicine, massage and physiotherapy are now common place. Private plans are now seeing the maximum claims per employee being used up.

Government Health Care Cuts
The continued government changes to the Canadian health care system have shifted costs over to private health care plans. Hospital stays are now much shorter as patients are sent home earlier. This ultimately transfers the cost of drug therapies traditionally administered in a hospital environment to patients managing the regime at home and expensing the costs to private plans. Other services, such as in-home private nursing care, have increased in demand as a result of shorter stays as well.
Better monitoring of semi-private hospital care claims also needs to be looked at. As more employees access this benefit, more frequent auditing of semi-private hospital room claims to validate length of stay and use will be required.

As life and work demands continue to affect the health and well-being of employees, there is usually an increase in the absenteeism rate at work. Stress, anxiety, depression and other related psychological conditions are the leading causes of short- and long-term disabilities. Statistics Canada says the average worker lost 8.5 days due to illness, disability and personal or family responsibilities in 2001. And the cost to employers is great. Watson Wyatt’s 2002/2003 Staying@Work study conservatively estimates that Canadian companies incur over $16 billion per year in illness and disability costs.

Despite the prominence of this issue, the Staying@Work study shows that most companies are still not addressing the situation as effectively as they could.

Solutions for Controlling Costs
There is no single cost-controlling solution fit for every employer. Each employer must analyze and assess their plans to determine the best strategy to manage costs related to their specific plan. The reality is that employers have to balance just how much they scale back so they continue to offer employees a competitive plan that satisfies their needs. Here are some of the solutions that can be considered after a company has reviewed its plan’s experience and history.

Pay-Direct Drug Programs
Pay-direct drug cards offer employees the convenience of having their drugs claims processed and adjudicated at the pharmacy at the time of purchase. The drug card alleviates barriers for employees who choose not to fill a prescription because they don’t want to incur out-of-pocket expenses. Pay-direct drug programs also improve a member’s ability to adhere to prescription regimens, resulting in effective therapy and/or speedy recovery for plan members.

The advantage to sponsors is improved understanding of plan performance and the ability to manage drug programs more directly with opportunities to make adjustments. Drug cards also enable Drug Utilization Reviews (DURs). DURs provide a drug tracking capability that alerts pharmacists to possible non-compliance such as refilling prescriptions too soon and conflicts in medication.

Formulary Drug Programs
Introducing formularies is an aggressive way to contain drug ingredient costs. Under a formulary, coverage is restricted to a list of drugs chosen for their cost and therapeutic value. Formularies can substitute more expensive drugs for their generic equivalents. By limiting the drugs covered under the plan, costs can certainly be reduced. This type of plan change requires a solid communications plan to employees to ensure the impact of the change is understood.

Absenteeism and Disability Management Programs
It’s not realistic to suggest that every absence can be avoided. But certainly many illnesses and all injuries are preventable. Employers really need to change their approach to managing employee absenteeism on a proactive basis by assessing the problems and implementing a program to actively address it. Companies should rethink their position to reflect a healthy workplace approach — this means:

  • focusing on prevention and illness/disability management;
  • improving awareness of the effect of stress and anxiety on mental health and the impact on performance; and
  • creating workplace cultures that encourage employee engagement.¹

Employee Assistance Programs
Employees may sometimes encounter problems that, while are not necessarily associated with work, have a serious effect on their family, friends, health and work performance. Employee Assistance Programs (EAPs) help employees cope with these situations. EAPs are voluntary, confidential, third-party counselling and referral services offering assistance with everything from stress management to marriage counselling. Although there is clearly a cost to offering EAPs, the costs are marginal compared to offering no support which can have an effect on work performance.

In addition to the solutions highlighted above, there are many other ways to manage the growing costs affecting employer-sponsored benefit plans. If you have questions on any of the information contained in this bulletin or would like to assess your plan and explore the available options to better manage your company’s benefits costs, call Don McGowan at (416) 805-9999.

Sources: Health Canada, PMPRB 2002 Annual Report, Statistics Canada, Watson Wyatt’s Canadian 2002/2003 Staying@Work study, Manulife Financial’s eBenefit News.

1 Watson Wyatt’s Canadian 2002/2003 Staying@Work study

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Disclaimer: The opinions and advice in this e-News Bulletin are provided for the general guidance and benefit of McGowan Insurance Services Ltd. customers based on information we believe to be accurate. We cannot guarantee its accuracy or completeness for individual circumstances. While we strive to provide reliable, informative material herein, we cannot account for all industry conditions and legislative changes that occur.