September 29, 2020
Block-level insurance contract amendments have received notable attention due to a new drug program that Sun Life Canada is set to introduce this fall.
Sun Life Canada’s new reference drug program will provide plan members with access to drugs within a therapeutic class, but members will only be eligible to receive reimbursement for the eligible cost of a chosen cost-effective medication.
The change is being introduced to plan members via block-level amendments—where a program change is introduced for an entire block of business instead of asking clients on their contract renewal date if they would like opt-in to a change.
Speaking to Benefits Canada on the legal consequences employers may face with block-level amendments, partner and chair of our pensions and employment practice, Mitch Frazer said that once they are rolled out, some employers may be in breach of their collective agreements due to the wording in their union contracts.
“The devil is in the details, because collective agreements will have language dealing with benefits and then there will be a side letter as part of the collective agreement what those benefits are. Some are not detailed at all and some are very detailed,” Mitch said.
Mitch also said that due to the high regulation of the insurance industry, many employers have wording in their contracts that allow them to make changes.
“They’re looking at things from the perspective of running a business, but also trying to be reasonable, as much as people may not see it that way. They are a regulated industry . . . [so] if they’ve got too far beyond what would be reasonable, the government might jump in. . . . There is a balance; it’s not like this is completely unchecked.”
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