By Queenie Yeung and Brent Delveaux

“Age is an issue of mind over matter. If you don’t mind, it doesn’t matter” – Mark Twain

But it matters with benefit plans.

We are an aging population, a reality that is not going to change any time soon.  2011 was the year the first of the “baby boomer” generation turned 65.  We are also living longer than ever, with life expectancy in Canada now exceeding 80 years old.

In Canada, you can no longer force an employee to retire because of age but benefit plans are still permitted to terminate due to age. For example, benefits such as life insurance and long term disability incorporate an age limitation and coverage ceases when an employee reaches that age. Depending on the insurance contract, health and dental benefits can also have a termination age.

An Employer’s decision
As an employer, what do you do if you have older employees who want to keep working and stay on the benefit plan? You could ask your insurer to increase or eliminate the termination age for most benefits, but is this the right decision for your organization?

When designing benefit plans, we encourage employers to survey their work environment and closely examine their work culture, the conventions and standard practices of the industry or market they are in, and the company’s geographical location.

For example, if the company operates in an industry where it is hard to find employees, they may need to entice employees to continue working past the regular retirement age by continuing their benefits.

Taking the Proper Precautions
Regardless of the decision, we encourage employers to be cautious about leaving the termination age open ended. Healthcare costs rise significantly with age, so leaving termination age open ended may make your plan vulnerable. There may be employees who will choose to stay employed and not retire because they have large recurring medical claims that they cannot afford on their own.

Steps We Recommend in Your Planning
Working with your benefits consultant to map out your plan offerings is imperative as there are many items to consider:

1. Determine your corporate philosophy on maintaining older employees on the benefit plan.
2. Survey your work environment including work culture, industry standards and geographical location to determine the necessity of offering benefits beyond a particular age.
3. Determine the cost to the organization. Is it affordable?
4. Determine if the decision is to eliminate or extend the termination age of certain benefits, and will this apply to all employees or only particular classification of employees. Employers must treat all employees of a particular class in the same manner.
5. Find out if the insurance company you are with allows for the elimination or extension of termination age. Make sure your insurance company is in agreement before offering this to your employees.

This is a difficult subject and it will affect all employers at some point in time. No one wants an employee to experience financial hardship, but a multitude of factors must be reviewed to ensure that all of the pros and cons are considered. To properly lay out a plan for a company’s benefit offerings may seem cumbersome, but it is the best way to ensure that your benefit plan is both beneficial to your employees and sustainable in the long run.

Queenie Yeung is a client service representative with TRG Group Benefits. 

Brent Delveaux is a benefits consultant and principal with TRG Group Benefits.