40 th. Canadian Benefits Guide Edition

Transcription

1 About Aon Aon plc (NYSE:AON) is a leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefi ts consulting fi rm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon s global and principle partnership with Manchester United Aon Hewitt Inc. All Rights Reserved. The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Aon Hewitt Canadian Benefits Guide 2016 aon.com 40 th Edition Risk. Reinsurance. Human Resources. Risk. Reinsurance. Human Resources.

2 Foreword It is our privilege to present you with the 40 th edition of our Canadian Benefits Guide. As Canada s leading integrated human capital consulting and outsourcing firm, Aon Hewitt partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance. This reference tool provides comprehensive information on the main provisions of legislation affecting government and private benefits programs. Throughout the year, you are invited to consult aon.com/canada for the latest updates on this information. For a comprehensive in-depth look at how these issues affect your business, as well as leading industry advice, we invite you to contact Aon Hewitt Canada. Aon Hewitt February 2016 Electronic version available at canadianbenefitsguide.ca Ce guide est également publié en français Aon Hewitt Inc. All Rights Reserved. This copyright applies to commentary and indexes and other matters added to this publication. No part of this publication covered by the publisher s copyright may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. This guide should not be relied upon as rendering legal, accounting or other professional advice. If professional assistance is required, please contact your consultant or other professional advisors. V

3 Table of Contents Old Age Security 1 1. Old Age Security (OAS) 2. Guaranteed Income Supplement (GIS) 3. The Allowance and Allowance for the Survivor 4. Old Age Security Monthly Benefits Government Sponsored Pension Plans 3 1. General a. Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) b. Ontario Retirement Pension Plan (ORPP) 2. CPP/QPP Retirement Pension 3. CPP/QPP Survivor Benefits 4. CPP/QPP Disability Benefits 5. CPP/QPP Maximum Monthly Benefits 6. Summary Data CPP, QPP and OAS Pension Plans 8 1. General 2. Minimum Provisions for Pension Plans 3. Target Benefit Pension Plans Tax Assistance for Retirement Savings General 2. Pension Adjustment (PA) 3. Past Service Pension Adjustment (PSPA) 4. Pension Adjustment Reversal (PAR) 5. Registered Pension Plans (RPPs) 6. Deferred Profit Sharing Plans (DPSPs) and Registered Retirement Savings Plans (RRSPs) 7. Retiring Allowances 8. Tax-Free Savings Accounts (TFSAs) 9. Pooled Registered Pension Plans Public Health Insurance Plans Hospital Insurance 2. Out-of-Province Coverage 3. Out-of-Country Coverage 4. Health Care 5. Financing 6. Drug Insurance Plans 7. Supplementary Benefit Practitioners Coverage Group Insurance Plans Taxation 2. Taxes 3. Medical Expense Tax Credit 4. Employment Insurance Premium Reduction Workers Compensation General 2. Benefits 3. Funding Employment Insurance General 2. Basic Provisions and Premium Rates 3. Eligibility Criteria 4. Regular Benefit 5. Special Benefits 6. High Income Claimant 7. Coordination 8. Employer Premium Reductions VI III

4 Old Age Security 1. Old Age Security (OAS) Any person (other than an incarcerated person) age 65 or older is entitled to the full OAS pension after 40 years of residence in Canada following age 18. The age of eligibility to commence the OAS pension will be gradually increased from age 65 to 67, between the years 2023 and A partial prorated pension may be payable after 10 years of residence. Since July 2013, individuals can voluntarily defer payment of the OAS pension by up to five years past the age of eligibility, and subsequently receive a higher actuarially adjusted pension. Pensioners with an individual net income above $73,756 must repay part or all of the maximum OAS pension amount. The repayment amounts are normally deducted from the monthly payments before they are issued. The full OAS pension is eliminated when a pensioner s net income is $119,398 or above. The table at the end of the Canada Pension Plan/Quebec Pension Plan section provides the maximum OAS monthly pensions since OAS benefits are extended to spouses. For the purposes of this section, the term spouse includes common-law partners and same-sex partners. 2. Guaranteed Income Supplement (GIS) To be eligible for the GIS, a person must receive the OAS pension and meet certain income and residency criteria. The GIS is reduced by a portion of income, excluding the OAS pension and other defined income amounts. The reduction formula differs for a person with a spouse, taking their combined income into account. 3. The Allowance and Allowance for the Survivor An Allowance may be provided to the spouse of an OAS pensioner. Any person age 60 to 64 whose spouse has died may be eligible for an Allowance for the Survivor. The age range for eligibility to commence the Allowance and the Allowance for the Survivor will be gradually increased from ages to between the years 2023 and The Allowance and the Allowance for the Survivor are subject to certain residency criteria. The maximum Allowance is equal to the OAS pension and the GIS at the married recipient s rate. The Allowance is reduced by a portion of the couple s combined income, excluding the OAS pension and other defined income amounts. The Allowance for the Survivor is also reduced by a portion of the survivor s income. 1

5 4. Old Age Security Monthly Benefits January April July October January Old Age Security Pension (age 65 and over) $ $ $ $ $ Allowance (age 60 to 64) Regular $1, $1, $1, $1, $ Survivor $1, $1, $1, $1, $1, Guaranteed Income Supplement Single $ $ $ $ $ Spouse of a Non-OAS pensioner $ $ $ $ $ an OAS pensioner $ $ $ $ $ an Allowance Recipient $ $ $ $ $ Increase Over Previous Period 1 0.0% 0.0% 0.2% 0.9% 0.1% 1 OAS, GIS and the Allowance are adjusted quarterly to reflect any increase in the Consumer Price Index (CPI). Government Sponsored Pension Plans 1. General a. Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) Both the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP) came into effect January 1, Employee contributions to the CPP are 4.95% and to the QPP are 5.325% of earnings in excess of the basic exemption, up to the Year s Maximum Pensionable Earnings (YMPE) which is currently $54,900. The basic exemption is $3,500 and is expected to remain frozen at this level indefinitely. The employer contribution is equal to the employee contribution. The contribution rate of a self-employed person is twice the employee rate. Monthly benefits are taxable and are adjusted annually to reflect the increase in the CPI. CPP and QPP pensions already in payment have been increased by 1.2% on January 1, Contribution Rate Employee or Employer Maximum Contribution Employee or Employer Selfemployed Selfemployed CPP 4.95% 9.90% $2, $5, QPP % 10.65% $2, $5, Since 2012, the contribution rate for the QPP has been increased by 0.15% a year, reaching 10.80% in As of 2018, an automatic mechanism will be established to align the contribution rate with the steady-state rate. b. Ontario Retirement Pension Plan (ORPP) The planned implementation date for the Ontario Retirement Pension Plan (ORPP) is January 1, The ORPP will be a government-run pension plan similar to the CPP/QPP. The ORPP will not apply to those individuals in a comparable workplace pension plan. Employers will be enrolled in stages and the first benefits will be paid in Like the CPP/QPP, the ORPP will be funded by equal co-contributions from both employers and employees. Contributions would be phased in, reaching 1.9 % each from employers and employees by

6 2. CPP/QPP Retirement Pension To be eligible for a retirement pension, a person must have contributed for the minimum required period: once for CPP and 12 months for QPP. The retirement pension is equal to about 25% of the contributor s average monthly pensionable earnings adjusted to reflect the average YMPE over the last five years. A contributor may receive a CPP and QPP pension from age 60, regardless of employment. QPP and CPP contributions are required if a person receives a pension while working prior to age 65. A person receiving a CPP pension who works after attaining age 65 will continue to contribute unless the person elects not to contribute by completing a specific election form. Under the QPP, a person receiving a pension is required to contribute while working on or after age 65. Pensions are increased as a result of such additional contributions being made after pension commencement. Under both CPP and QPP, the pension may also be deferred at the contributor s option, but payments must commence before age 70. A pension commencing after age 65 is increased by 0.7% for each month between 65 and the actual pension date. Under the CPP 1, a pension commencing prior to age 65 is decreased by 0.56% for each month between the actual pension date and age CPP/QPP Disability Benefits Contributors suffering from a severe disability of prolonged duration are eligible for disability benefits under the CPP, provided they have earned at least 10% of the YMPE in at least four of the last six years, or provided they have contributed to the CPP for twenty-five calendar years or more including in at least three of the last six years. Under the QPP, disabled contributors are eligible for disability benefits provided they have contributed in two of the last three years, in five of the last ten years or in half of the years in the contributory period, subject to a minimum of two years. Disability benefits are payable monthly from the fourth month following the month in which the contributor becomes disabled. Under the CPP, the retirement pension following disability will be based on the average YMPE at the date of disability, adjusted for inflation up to retirement (which is normally less than the increase in the YMPE). Under the QPP, the retirement pension will be reduced for each month during which a disability pension is paid after attaining age 60 (the monthly reduction is equivalent to the one applicable at retirement before age 65). 5. CPP/QPP Maximum Monthly Benefits 3. CPP/QPP Survivor Benefits Except in certain specific circumstances, survivors are eligible for benefits provided contributions were made by the deceased contributor for the lesser of one-third of the years in the contributory period (subject to a minimum of three years) or ten years. The amount of pension payable to a surviving spouse or common-law partner depends on the age and situation of the surviving spouse or common-law partner and is payable for life. Both the CPP and QPP extend benefits to same-sex spouses or common-law partners. CPP $ QPP $ Retirement pension starting at age 65 1, , Disability pension for the contributor for a contributor s child 1, , Orphan s pension In addition to the pension of the surviving spouse or common-law partner, benefits payable on the death of an eligible contributor include a lump sum death benefit and an orphan s pension. Since 1998, the lump sum death benefit under the CPP has been limited to six months of retirement benefits to a maximum of $2,500. Under the QPP, the lump sum death benefit is fixed at $2, Surviving spouse s pension 2 Under age 45 without dependent children with dependent children disabled (with or without dependent children) Age 45 to The monthly reduction applicable to pensions that commence prior to age 65 will gradually increase to a level of 0.6% by Under the QPP, this increase only applies to contributors born in 1954 or after and varies depending on the amount of the pension. 2 Effective January 1, 2013, if a contributor doesn t satisfy the eligibility criteria for survivor benefits under the QPP but has contributed at least $500 and never received a retirement or disability pension under the QPP, a lump sum death benefit corresponding to the amount of contributions paid, up to $2,500, is payable. Age 55 to Age 65 and over Since January 1, 2013, individuals under age 65 receiving a QPP retirement pension are eligible to receive an additional amount ($ per month in 2016) if they become disabled after retirement and meet the following eligibility criteria: the contributor is 60 years of age or over and has paid contributions for at least four of the last six years. 2 Special rules apply when this pension is combined with a disability or a retirement pension. 3 The pension is reduced by 1/120 times the number of months between the age of the surviving spouse and age 45; no pension is payable before age 35. 5

7 6 6. Summary Data CPP, QPP and OAS CPP and QPP numbers are identical unless indicated otherwise. Year s Maximum Pensionable Earnings (YMPE) Maximum Monthly Retirement Pension at age 65 Change in CPI 2 (December to December) Annual Basic Annual Maximum Rate of Indexation Maximum OAS Year Exemption Employee Contributions 1 CPP/QPP Pension Monthly Pension 3 $ $ % $ $ % % $ , , , , , , , , , , , , , ,400 1, ,700 1, ,100 1, ,700 1, ,500 1, ,500 1, ,800 2, ,400 2, ,800 2, ,900 2, ,500 2, ,700 2, ,900 2, ,500 3, ,200 3, ,400 3, ,400 3, ,900 3, ,400 3, ,800 3, ,900 3, , ,400 3, , ,600 3, , ,300 3, , ,100 3, , ,900 3, , ,500 3, , ,100 3, , ,100 3, , ,700 3, , ,900 3, , ,300 3, , ,200 3, , ,300 3, , ,100 3, , ,100 3, , , ,500 3, , , ,600 3, , , ,900 3, , , Employer contributions are equal to employee contributions 2 CPI 2002 = As of January 1 st 4 As at December 31 st (previously reported amount as at January1 st ) 5 QPP 1973 = $5,900; $700; $93.60; $92.36; 3.0 % 6 QPP = $ QPP = $ QPP = 0.0% 9 QPP = 2.3% 10 QPP = $ QPP 2012 = 5.025%, $2, QPP 2013 = 5.10%, $2, QPP 2014 = 5.175%, $2, QPP 2015 = 5.25%, $2, QPP 2016 = 5.325%, $2, Not available at the time of publication 7

8 Pension Plans 1. General Pension plans must comply with pension legislation in effect in the Canadian jurisdiction(s) in which plan members are employed. A pension plan must be registered in the province where the greatest number of members are employed. Pension legislation adopted by the federal government applies to federally-regulated organizations, such as banks, communication and inter-provincial transportation companies, as well as to employees in the Yukon, Northwest Territories and Nunavut. Pension plans must also comply with the Income Tax Act and Regulations (see the Tax Assistance for Retirement Savings section). Appropriate implementation of governance principles for pension plans has also become very important. Furthermore, supplemental pension plans, which provide a retirement income over and above tax limits, are becoming more prevalent. These plans generally are not subject to the legislation discussed in this section. 2. Minimum Provisions for Pension Plans Jurisdiction Membership Death Vesting and Benefits2 Service Earnings 1 Hours 1 Locking in Requirements 2 Before Retirement 3 After Retirement 4 Federal 2 years 35% YMPE Immediate vesting. Locking in requires 2 years membership 100% (to beneficiary or estate if no spouse) British Columbia 2 years 35% YMPE Immediate 100% (to beneficiary or estate if no spouse) Alberta 2 years 35% YMPE Immediate 100% (to beneficiary or estate if no spouse) Saskatchewan 2 years 35% YMPE years service 100% 5 (to beneficiary or estate if no spouse) 60% 60% 60% 60% 1 For part-time employees only except in British Columbia, Alberta and Quebec. The 35% of YMPE and 700 hours thresholds apply in each of the 2 consecutive calendar years immediately preceding membership, except in Quebec where they apply in the previous calendar year only. 2 Current standards are shown. Different standards may apply in respect of pre-reform periods. 3 The surviving spouse is entitled to a percentage of the actuarial present value of the vested pension payable as a lump sum or pension. Legislation may require locking in. In most jurisdictions, common-law partners have the same rights as spouses. 4 Pension payable to surviving spouse equal to a percentage of adjusted pension. In most jurisdictions, common-law partners have the same rights as spouses. 5 60% pension to the surviving spouse if member eligible for early retirement. 8 9

9 2. Minimum Provisions for Pension Plans (cont'd) Jurisdiction Membership Death Vesting and Benefits2 Service Earnings 1 Hours 1 Locking in Requirements 2 Before Retirement 3 After Retirement 4 Manitoba 2 years (compulsory) 35% YMPE Immediate 100% (to beneficiary or estate if no spouse) Ontario 2 years 35% YMPE 700 Immediate 6 100% (to beneficiary or estate if no spouse) Quebec January 1 st after satisfying earnings or hours requirements 35% YMPE 700 Immediate 100% (to beneficiary or estate if no spouse) New Brunswick 2 years 35% YMPE 5 years service or 2 years membership after % (to beneficiary or estate if no spouse) Nova Scotia 2 years 35% YMPE 700 Immediate 100% 60% Prince Edward Island 7 2 years 35% YMPE years membership 60% 8 60% Newfoundland and Labrador 2 years 35% YMPE 2 years membership 100% 9 (to beneficiary or estate if no spouse) 60% 60% 60% 60% 60% 1 For part-time employees only except in British Columbia, Alberta and Quebec. The 35% of YMPE and 700 hours thresholds apply in each of the 2 consecutive calendar years immediately preceding membership, except in Quebec where they apply in the previous calendar year only. 2 Current standards are shown. Different standards may apply in respect of pre-reform periods. 3 The surviving spouse is entitled to a percentage of the actuarial present value of the vested pension payable as a lump sum or pension. Legislation may require locking in. In most jurisdictions, common-law partners have the same rights as spouses. 4 Pension payable to surviving spouse equal to a percentage of adjusted pension. In most jurisdictions, common-law partners have the same rights as spouses. 5 The plan must specify which of the legislated earnings and hours thresholds apply. 6 Grow-in rights apply to most involuntarily terminated members with age plus service or membership totalling 55 points or more at termination. 7 Bill 12 was introduced on November 21, 2012 to repeal a previous version of the Pension Benefits Act (1990) which was never proclaimed in force. 8 If no spouse, a return of member contributions, if any, with interest, to beneficiary or estate. 9 60% pension to the surviving spouse if member eligible for early retirement

10 3. Target Benefit Pension Plans Target benefit plans are rapidly becoming an integral part of the recognized solution set for addressing the sustainability of pension plans. Legislation to provide for target benefit plans is emerging across the country. These plans involve fixed employer and member contributions (e.g., a percentage of pensionable payroll) or are set within a limited range). Plan benefits are expressed using benefit formulas and are payable throughout the retiree s life. However, the amount of the targeted benefit is not guaranteed. The payment of benefits depends on regular tests showing that the benefits are affordable. Benefits covering both past service and future service may be adjusted to ensure the financial balance of the plan is maintained. The commitment of the plan sponsor(s) to the plan is their contribution. Once the funding rate is established and contributions are made, sponsors no longer have any direct interest in the plan fund. All assets of the fund belong to members, collectively. The target benefit plan aims for a balance between benefits and funding, which increases the likelihood that the plan will be capable of paying the targeted benefits. Critical to a target benefit plan is the benefits/funding policy. This policy contains pre-determined rules stipulating trigger events (level of reserves and critical points) that cause benefit reductions or increases. In large part, these rules focus on the preservation of inter-generational equity between plan members. For more information about target benefit pension plans, including New Brunswick s shared risk pension plans, visit targetbenefits.ca. Tax Assistance for Retirement Savings 1. General In Canada, access to retirement savings is provided by overall limits on tax-assisted retirement savings. 2. Pension Adjustment (PA) Since 1990, employers who sponsor registered pension plans (RPPs) or deferred profit sharing plans (DPSPs) must report the pension adjustment (PA) amount on the T4/T4A slips of each employee who accumulates benefits under these plans. The PA reduces the maximum allowed RRSP contributions for the following year. Each year, the PA is generally calculated as follows: for Defined Benefit provisions of an RPP: from 1990 to 1996 PA = (9 accrued benefit) - $1,000 since 1997 PA = (9 accrued benefit) - $600 where the accrued benefit is equal to the pension earned during the current year, based on that year s pensionable earnings for Money Purchase provisions of an RPP: PA = employee contributions + employer contributions + allocated amounts for a DPSP: PA = employer contributions + allocated amounts 12 13

11 3. Past Service Pension Adjustment (PSPA) PSPAs (applicable to Defined Benefit RPPs only) are generally the result of improvements to pension benefits with respect to periods of past service after 1989 (benefit formula improvements, recognition of additional service, etc.). The PSPA is equivalent to the deemed value of additional pension benefits and reduces RRSP contribution room, thereby ensuring that the overall limit on tax-assisted retirement savings is maintained. The PSPA is generally calculated as the recalculated PA for the year, after improvement, minus the original PA for that year, before improvement. The PSPA is totalled for each year to which the improvement applies. Special rules and conditions apply in certain cases, for example where an RPP has been amended to change the plan s maximum pension limit to mirror the maximum pension limit permitted under legislation. 4. Pension Adjustment Reversal (PAR) Upon termination of membership where a lump sum payment of the total value of a member s benefits is made from an RPP, a pension adjustment reversal (PAR) amount must be calculated. For Defined Benefit RPPs, the PAR calculation usually corresponds to the sum of the declared PAs, minus the lump sum payment from the plan at termination of membership. In this calculation, only the portion of the lump sum payment for service after 1989 is considered since PAs were only introduced in For Money Purchase RPPs, the PAR usually corresponds to the sum of non-vested employer contributions without interest. It also includes any amount allocated to the member s account that is not vested at the time of termination of membership. Special rules apply in certain cases, in particular those involving a transfer agreement, past service buybacks or a transfer of entitlements. No PAR is reported in the event of death or for deferred pensions or pensions-in-pay. The reporting of a PAR (positive amount) increases the plan member s RRSP contribution room for the year in which the termination benefits are paid, by an amount equal to the PAR. This new contribution room is added to any contribution room the member already has and may be carried over to another year. 5. Registered Pension Plans (RPPs) Money Purchase RPP [RPP (MP)] The total limit for deductible contributions applicable to the sum of employee contributions (required and voluntary) and employer contributions (including DPSP contributions) is equal to 18% of annual earnings, subject to an annual maximum (see the Maximum Contribution table). Defined Benefit RPP [RPP (DB)] Subject to certain restrictions, employer contributions made on the recommendation of an actuary are deductible without any maximum, provided that the defined benefits do not exceed the maximum benefits allowed. For pension adjustment purposes, the maximum benefit that can be accrued for 2016 is 2% of earnings or the current defined benefit limit ($2,890.00), whichever is less. The defined benefit limit is one-ninth of the money purchase limit for the year (see the Maximum Contribution table). For past service buybacks regarding periods prior to 1990, the maximum benefit is generally reduced to two-thirds of the defined benefit limit ($1, in 2016). Except where specific authorization from the fiscal authority is obtained, employee contributions may not exceed the lesser of either 9% of annual earnings or the sum of $1,000 plus of the PA (50% of the PA if the plan provides a minimum benefit equal to double the employee contributions with interest upon termination of employment). Combination RPP (DB + MP) The maximum contribution for the MP provision is reduced by the PA for the DB provision. 6. Deferred Profit Sharing Plans (DPSPs) and Registered Retirement Savings Plans (RRSPs) Employee contributions to DPSPs are not permitted. Employer contributions are limited to 18% of the employee s annual earnings, subject to an annual maximum (see the Maximum Contribution table). The limit for deductible contributions to an RRSP is 18% of earned income in the preceding year, subject to an annual maximum (see the Maximum Contribution table). However, if a taxpayer was a member of an RPP or a DPSP in the preceding year, the limit for deductible RRSP contributions in the current year is reduced by: the PA of the preceding year; the PSPA exempted from certification of the preceding year, if any; and the certifiable PSPA certified by the Canada Revenue Agency in the current year, if any

12 Unused RRSP contribution room may be carried forward when actual contributions are lower than the limit. RRSP contributions in excess of the deductible limit are restricted to $2,000. A penalty applies to any additional amount in excess of this limit. Maximum Contribution Year RPP (MP) ($) RRSP ($) DPSP ($) ,450 22,000 11, ,970 22,450 11, ,820 22,970 11, ,270 23,820 12, ,930 24,270 12, ,370 24,930 12, ,010 25,370 13, Indexed 26,010 Indexed 7. Retiring Allowances Tax-exempt transfers of retiring allowances to an RRSP are permitted, subject to a maximum of $2,000 per year of service prior to 1996, plus $1,500 per year of service prior to 1989 with respect to which no benefits were vested to the employee under the employer s RPP or DPSP. The amounts are not prorated for partial years, and the permitted transfer does not affect the RRSP contribution room otherwise available to the individual. 8. Tax-Free Savings Accounts (TFSAs) The Tax Free Savings Account (TSFA) is a savings vehicle which became effective on January 1, No income tax is payable on either investment earnings under or withdrawals from a TFSA. Contributions to a TFSA are not tax deductible. The initial annual contribution limit was $5,000. However, due to the annual contribution limit being indexed based on cumulative annual inflation rates and rounded to the nearest $500, the TSFA contribution limit was increased to $5,500 in On June 23, 2015, Bill C-59, Economic Action Plan 2015 Act, No. 1 received royal assent and increased the TFSA contribution limit to $10,000, effective for 2015 and subsequent taxation years, but this new limit was not to be indexed. However, on December 9, 2015, the newly elected federal government introduced Bill C-2, An Act to amend the Income Tax Act. This bill purports to amend the Income Tax Act to reduce the annual contribution limit for TFSAs from $10,000 to its previous level with indexation ($5,500 for 2016) starting January 1, Although this bill was not passed before this effective date, the Canada Revenue Agency (CRA) has indicated that, consistent with its standard practice, the CRA will administer this decrease in the limit on the basis of the announcement. 9. Pooled Registered Pension Plans The Income Tax Act and Regulations provide for Pooled Registered Pension Plans (PRPPs), which are simplified defined contribution pension plans. PRPPs are intended to be a low-cost option available to small employers, employees and the self-employed. Currently, this option is available to: Federally regulated plan sponsors and employees (including those in the Yukon, Northwest Territories and Nunavut); Quebec salaried and self-employed workers under the Voluntary Retirement Savings Plan (VRSP). British Columbia, Alberta, Saskatchewan, Ontario and Nova Scotia have pending legislation to permit PRPPs, while other jurisdictions are still considering the option. Generally, subject to applicable legislation: Employers are not required to offer a PRPP to employees (except in Quebec 1 ); If a PRPP is provided to employees: employers are not required to contribute; employees can choose their contribution rate; contributions are subject to RRSP contribution room; and enrolment is automatic for eligible employees unless they opt out. 1 Quebec employers with at least five eligible employees (The employees must be 18 or over and have at least one year of uninterrupted service), who do not offer a Registered Pension Plan (RPP), a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP) will be required to offer a VRSP. Deadlines for implementing a VRSP Numbers of employees Dates 20 or more eligible employees December 31, to 19 eligible employees December 31, to 9 eligible employees The date determined by the government, which cannot be prior to 1 January

13 Public Health Insurance Plans 1. Hospital Insurance Every province and territory in Canada provides a universal hospital insurance program. Generally, provincial programs cover ward accommodation, drugs, nursing care, use of operating rooms, anesthetic facilities, laboratory and diagnostic services in a hospital, and emergency services provided on an outpatient basis. The cost of a private or semi-private room varies by province and is summarized in the table below. Daily Hospital Charges Province Semi-Private Private British Columbia Charges can vary; market rates apply. Alberta 1 $ $ Saskatchewan Charges can vary; market rates apply. Manitoba 1 $ Ontario Charges can vary; market rates apply. 2. Out-of-Province Coverage All provinces and territories participate in reciprocal agreements in which residents are covered for most medically necessary services, provided that these services are insured by the province or territory in which the individual is treated. Some restrictions may apply. Under a federal-provincial agreement, the cost of out-of-province care provided in Canada is reimbursed according to the fee schedule effective in the province where the person is treated. Quebec is part of these agreements, except with respect to professional expenses; these are reimbursed according to the fee schedule effective in Quebec. Claims are billed directly to the provincial medical plan (if a personal health care card is presented at the time of service). In some provinces, physicians may not accept a health card from another province. In this case, a person must pay for physician services and be reimbursed by their own provincial medical plan. 3. Out-of-Country Coverage For Canadian residents traveling outside Canada, costs for services rendered by eligible out-of-country hospitals and health care facilities will only be reimbursed for medically necessary emergency services. Some restrictions may apply. The costs of insured services may be considerably higher outside Canada and patients will be responsible for paying the difference between the fee charged and the amount covered by their own provincial medical plan. The following is a summary of the limits and restrictions applicable in each province for emergency hospitalization outside Canada. Quebec 1, 2 $61.18 to $86.32 $98.86 to $ New Brunswick Nova Scotia Charges can vary; market rates apply. Charges can vary; market rates apply. Prince Edward Island 3 Newfoundland and $ $ Labrador 1 1 Amounts regulated by legislation. 2 In Quebec, the yearly increase is in line with the indexation of QPP benefits. 3 Rates under review at the time of publication

14 Emergency Out-of-Country Benefits Province Hospital Daily Maximum Payment Outpatient Daily Maximum Payment British Columbia $75 Alberta $100 $50 Saskatchewan $100 $50 Manitoba $280 to $570 1 $100 Ontario $400 2 $50 Quebec $100 $50 New Brunswick $100 $50 Nova Scotia $525 plus physician fees at N.S. rates and 50% of ancillary fees Prince Edward Island $1,218 $309 Newfoundland and $350 (community or regional hospital) $62 Labrador $465 (tertiary or specialized hospital) 4. Health Care Exceptions may exist for particular groups in some jurisdictions that are not covered below. Medical Expenses Provincial plans essentially cover medically required services provided by physicians. Reimbursement (100%) is based on an approved fee schedule. In some provinces, certain paramedical services are also covered. Dental Care In Quebec, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, and Yukon, some dental services for children under a certain age are covered (in some provinces, certain services may only be available if not covered by private insurance). The maximum eligible age varies in each jurisdiction. In British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and New Brunswick, dental coverage for children of low-income families is available. Some plans may cover adults on social assistance and their dependents. Eye Exams In British Columbia, Alberta, Manitoba, Ontario, Quebec and Nova Scotia, provincial plans cover eye exams for children and senior citizens. Saskatchewan covers eye exams for children. New Brunswick covers eye exams for children of low-income families. Yukon provides eye exams for children of low-income families and may provide limited coverage for seniors. 1 Amount varies according to the number of hospital beds. 2 Inpatient services rendered in an operating room, coronary care unit, intensive care unit, neonatal or pediatric special care unit. Otherwise, $200 per day

15 5. Financing Public plans are funded in part or solely by general tax revenues from the different provinces and territories. The following tables summarize funding methods used by some provinces to supplement general tax revenues. Employer Tax Gross Annual Payroll % Manitoba $1,250,000 or less $1,250,001 to $2,500,000 (first $1.25 million exempt) Over $2,500,000 (from first dollar) Ontario $450,000 or less Over $450, Premium Rates British Columbia $75.00 (single) (Monthly) $ (for a family of two) $ (for a family of three or more) Ontario (Yearly) $0.00 phased in at 6%, to a max. of $300 $300 phased in at 6%, to a max. of $450 $450 phased in at 25%, to a max. of $600 $600 phased in at 25%, to a max. of $750 $750 phased in at 25%, to a max. of $900 $900 Individual Taxable Income up to $20,000 $20,001 $25,000 $25,001 $36,000 $36,001 $38,500 $38,501 $48,000 $48,001 $48,600 $48,601 $72,000 $72,001 $72,600 $72,601 $200,000 $200,001 $200,600 from $200,601 and over Quebec 2 $1,000,000 or less 2.70 Quebec Estimated annual net income (R) Health Contribution Newfoundland and Labrador $1,000,001 to $4,999,999 $5,000,000 or more $1,200,000 or less Over $1,200,000 From 2.70 to (Yearly) More than $0 but equal to or less than $18,570 More than $18,570 but equal to or less than $41,265 More than $41,265 but equal to or less than $134,095 $0 The lesser of $100 or 5% X (R-$18,570) The lesser of $200 or $100 + [5% X (R-$41,265)] 1 Applies to eligible employers only. Eligible employers generally include private-sector employers and some Crown corporations; non-eligible employers are generally public-sector employers. Exemption not available for private sector employers gross annual payroll over $5 million. More than $134,095 The lesser of $1,000 or $200 + [4% X (R-$134,095)] 2 Reductions may be available if total payroll is less than $5 million and prescribed conditions are met. All public sector employers pay 4.26%

16 6. Drug Insurance Plans Unless otherwise indicated, plans are funded through the general revenues of each province and territory. Most jurisdictions refund drugs on the basis of the least cost alternative and, as a rule, offer a similar or more generous program to welfare recipients and low-income individuals and families. Also, many jurisdictions cover at least part of the cost of high cost drugs, or drugs and supplies used by residents suffering from specific diseases and conditions Jurisdiction Eligibility and Other Characteristics Deductible % Reimb. Maximum Out-of-Pocket Expenses British Columbia Fair PharmaCare Net annual individual/family income: Less than $15,000 None (government assisted) 2% of net income $15,000 - $30,000 2% of net income 3% of net income Over $30,000 3% of net income 4% of net income Fair PharmaCare*: Enhanced Assistance for those born in 1939 or earlier. Net annual individual/family income: Less than $33,000 $33,000 - $50,000 Over $50,000 None 1% of net income 2% of net income 75% 75% 75% 1.25% of net income 2% of net income 3% of net income Alberta Albertans 65 years of age and older and all recipients of the Alberta Widows Pension, and their dependents None $25/prescription Optional coverage for residents under age 65 and their dependents, with a premium: 1 None $25/prescription Taxable Income Single person Less than $20,970 $20,970 or more Premium $44.45/month $63.50/month Taxable Income Family (no children) Less than $33,240 $33,240 or more Premium $82.60/month $118.00/month Taxable Income Family with children Less than $39,250 $39,250 or more Premium $82.60/month $118.00/month 1 Percentage reimbursement varies according to prescription use

17 6. Drug Insurance Plans (Cont d 1) Jurisdiction Eligibility and Other Characteristics Deductible % Reimb. Saskatchewan Seniors Drug Plan For tax year 2015, an individual senior s reported income must be less than $82,353. Maximum Out-of-Pocket Expenses $20 or less/prescription Children s Drug Plan (available to children under 14) $20 or less/prescription Others Can apply through the Drug Plan Special Support Program if family prescription drug costs are greater than 3.4% of total family income. Varies 1 Manitoba Pharmacare Deductible Adjusted Total Family Income Less than $15,000 $15,001 - $21,000 $21,001 - $22,000 $22,001 - $23,000 $23,001 - $24,000 $24,001 - $25,000 $25,001 - $26,000 $26,001 - $27,000 $27,001 - $28,000 $28,001 - $29,000 $29,001 - $40,000 $40,001 - $42,500 $42,501 - $45,000 $45,001 - $47,500 $47,501 - $75,000 $75,001 and greater 2.97% 4.22% 4.26% 4.34% 4.40% 4.44% 4.50% 4.55% 4.60% 4.64% 4.67% 5.07% 5.20% 5.30% 5.37% 6.73% Once the income-based deductible is reached (minimum $100), Pharmacare pays 100% of eligible prescription drug costs. Ontario Trillium program for individuals under age 65 with high drug costs relative to income (second payer). Deductible equals about 3% - 4% of total household income Ontario Drug Benefit Program for seniors Age 65 or over with low income An amount based on income and number of dependents + $2/prescription 100% $2/prescription 100% Age 65 or over others $100/year + a maximum of $6.11/prescription 100% 1 Percentage reimbursement varies according to prescription use

18 6. Drug Insurance Plans (Cont d 2) Jurisdiction Eligibility and Other Characteristics Deductible % Reimb. Quebec 1 New Brunswick Mandatory for all adults from age 18 to 64 unless covered by a private group insurance plan (annual premium of $640 or less, depending on income) Individuals age 65 or over, not receiving any GIS (annual premium of $640 or less, depending on income) Individuals age 65 or over, receiving from 1% to 93% of GIS (annual premium of $640 or less, depending on income) Individuals age 65 or over, receiving from 94% to 100% of GIS (no annual premium) Children under age 18 of persons registered for the public plan or children between age 18 and 25 who are full-time students, without a spouse and living with their parents (no annual premium) Voluntary for residents without private coverage. Gross income - individual $17,884 or less (annual premium $200) $17,885 to 22,346 (annual premium $400) $22,347 to $26,360 (annual premium $800) $26,361 to $50,000 (annual premium $1,400) $50,001 to $75,000 (annual premium $1,600) Over $75,000 (Annual premium $2,000) Gross income - Single with children/couple with or without children) $26,826 or less (annual premium $200 per adult) $26,827 to $33,519 (annual premium $400 per adult) $33,520 to $49,389 (annual premium $800 per adult) $49,390 to $75,000 (annual premium $1,400 per adult) $75,001 to $100,000 (annual premium $1,600 per adult) Over $100,000 (annual premium $2,000 per adult) Age 65 or over, receiving GIS, if no other plan Age 65 or over, if no other plan (income based) Seniors' Blue Cross (optional) $18/month $18/month $18/month $5 max./prescription $10 max./prescription $15 max./prescription $20 max./prescription $25 max./prescription $30 max./prescription $5 max./prescription $10 max./prescription $15 max./prescription $20 max./prescription $25 max./prescription $30 max./prescription $9.05 max./prescription $15 max./prescription $115/month + $15/prescription 2 66% 66% 66% 100% 100% 100% 100% Maximum Out-of-Pocket Expenses $1,029 ($85.75/month) $1,029 ($85.75/month) $622 ($51.83/month) $500/year 1 Effective July 1, 2015 until June 30, Unconfirmed at time of publication

19 6. Drug Insurance Plans (Cont d 3) Jurisdiction Eligibility and Other Characteristics Deductible % Reimb. Nova Scotia Age 65 or over; optional with annual premium of $424 (less if low income) Family Pharmacare Program (payer of last resort) None Based on income and family size 80% 1 Maximum Out-of-Pocket Expenses $382/year Prince Edward Island Age 65 or over $8.25/prescription + $7.69 of dispensing fee 100% Newfoundland and Labrador 65Plus Plan (receiving GIS and OAS) The Assurance Plan None Based on income. Annual out-of-pocket eligible drug costs capped as a percentage of income. $0 - $40,000 (max. 5%) $40,000 - $75,000 (max. 7.5%) $75,000 - $150,000 (max. 10%) 100% Dispensing fee (maximum $6) Yukon Children s Drug Program Pharmacare: Age 65 or more or aged 60 and married to a living Yukon resident who is at least 65 years of age $250/child max. based on income and family size None 100% 100% $500/family Northwest Territories Extended Health Benefits for specified diseases and conditions (Non-Native or Metis) Seniors Benefit Program age 60 or over (Non-Native or Metis) None None 100% 100% Nunavut Extended Health Benefits for specified diseases and conditions Seniors Program age 65 or over (Non-Native or Metis) None None 100% 100% 1 The co-payment for the Nova Scotia Family Pharmacare Program is 20% of the prescription price. A family is required to pay 20% of the total cost of each prescription until the maximum annual family copayment amount has been reached

20 7. Supplementary Benefit Practitioners Coverage Jurisdiction Chiropractor Osteopath Naturopath Podiatrist/Chiropodist Physiotherapist 1 Massage Therapist British Columbia Medical Services Plan (MSP) premium assistance patients only No coverage unless osteopath is a physician MSP premium assistance patients only MSP premium assistance patients only MSP premium assistance patients only MSP premium assistance patients only MSP pays $23 per visit for a combined total of 10 visits per year MSP pays $23 per visit for a combined total of 10 visits per year MSP pays $23 per visit for a combined total of 10 visits per year MSP pays $23 per visit for a combined total of 10 visits per year MSP pays $23 per visit for a combined total of 10 visits per year Alberta Albertans enrolled in the Coverage for Seniors health benefit plan will receive $25 per visit to use towards chiropractic services, to a maximum of $200 per annual benefit period No coverage No coverage Maximum of $250 payable each year for specific services Coverage in approved facilities No coverage Saskatchewan Not covered except for low-income individuals receiving Supplementary Health, Family Health or Seniors Income Benefits (up to 12 treatments a year) No coverage No coverage No coverage for services provided by private podiatry clinics Co-payment plan for services Coverage in regional health authority clinics for low-income individuals receiving Supplementary Health benefits Coverage in approved facilities No coverage 1 In many jurisdictions, a physician's referral is required

21 7. Supplementary Benefit Practitioners Coverage (Cont d) Jurisdiction Chiropractor Osteopath Naturopath Podiatrist/Chiropodist Physiotherapist 1 Massage Therapist Manitoba 12 visits per year for specific treatments $12.10 per visit from April 1, 2015 to March 31, 2017 ($13.30 in Northern Manitoba) Ontario No coverage Initial visit: $12 Subsequent visits: $9.50 X-rays: $10 (max. of $25 per year) Overall maximum of $155 per year No coverage No coverage No coverage Coverage in hospital facilities only No coverage Initial visit: $16.40 Subsequent visits: $11.45 Maximum of $135 per year Coverage for children, senior citizens, long-term care residents, some social assistance recipients, those needing services after hospitalization, and coverage in hospital and approved facilities Quebec No coverage No coverage No coverage No coverage Coverage in hospital facilities only New Brunswick No coverage No coverage No coverage No coverage Coverage in hospital facilities only Nova Scotia No coverage No coverage No coverage No coverage Coverage in hospital facilities only Prince Edward Island No coverage No coverage No coverage No coverage Coverage in hospital facilities only Newfoundland and Labrador No coverage No coverage No coverage No coverage Coverage in hospital facilities only Yukon No coverage No coverage No coverage No coverage Coverage in hospital facilities only Northwest Territories No coverage No coverage No coverage No coverage Coverage in hospital facilities only Nunavut No coverage No coverage No coverage No coverage Coverage in hospital facilities only No coverage No coverage No coverage No coverage No coverage No coverage No coverage No coverage No coverage No coverage 1 In many jurisdictions, a physician's referral is required