Canadian Benefits Guide 2018 Overview of government benefit programs and core legislation relevant to group benefit plan sponsors

Transcription

1 Canadian Benefits Guide 2018 Overview of government benefit programs and core legislation relevant to group benefit plan sponsors

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3 Foreword Privately-sponsored employee benefits may supplement and/or complement available government benefits. This year s Canadian Benefits Guide spotlights key program elements, contribution requirements, or tax provisions of particular interest to group insurance plan sponsors. Aon s Canadian health and benefits team plans, builds, and manages benefit plans that drive results. With indepth knowledge of the Canadian healthcare landscape, we provide targeted local and national perspective and insights into our evolving industry, workforce trends, and legislative change that affect employers across Canada and around the world. We help our clients achieve sustainable performance through an engaged and productive workforce; navigate the risks and opportunities to optimize financial security; redefine health solutions for greater choice, affordability and wellbeing; and help their people make smart decisions on managing work and life events. For more information on how the material in this document applies to your employee benefit programs, please contact your Aon consultant or send a note to Aon s Health and Benefits Practice. Aon January

4 Table of Contents 3 Group Insurance Taxation 6 Public Health Insurance Programs 15 Employment Insurance 20 Government-sponsored Pension Plans 2 Canadian Benefits Guide 2018

5 Group Insurance Taxation 1. Taxation Employer Where group insurance plans comply with the Income Tax Act and Regulations, all related costs are tax deductible for the employer. Employee Taxable benefit: Where the employer pays the cost of certain benefits, the contribution, including the applicable sales tax, may be a taxable benefit for the employee, as shown in the table below. 2. Taxable benefits Employer contribution Federal Québec Life Employee Dependent Yes Yes Yes Yes Accidental death and dismemberment Yes Yes Critical illness Yes Yes Disability No No Employee assistance program 1 No No Health and dental care No Yes Health care spending account No Yes 1 For limited counselling services related to health, re-employment or retirement. Benefit: No benefit is taxable except for disability benefits. Disability benefits are taxable unless they are received from an employee-pay-all disability insurance plan. The non-taxable status is maintained if the employer pays the related cost on behalf of the employees and treats it as salary. Deduction: When a disability insurance plan is partially funded by an employer, insurance premiums paid by an employee can be deducted from the taxable disability benefits. 3

6 3. Other taxes For self-insured plans without stop-loss coverage, GST (5%) is calculated on administration fees and on the portion of insurance tax imposed on administration fees. However, GST does not apply to fully insured group insurance plans or to self-insured plans with stop-loss coverage or any financial arrangement that provides a limitation of risk. QST (9.975%) and HST (where applicable) apply in the same situations noted for GST. For administrative services only (ASO) benefits, QST is applicable to administration fees and the portion of insurance tax imposed on administration fees for Québec resident employees. Insured plans 1 Self-insured plans Insurance Sales Insurance Sales Harmonized Jurisdiction Tax 2 % Tax % Tax 2,3 % Tax % Sales tax % Alberta 3.00 N/A N/A N/A N/A British Columbia 2.00 N/A N/A N/A N/A Saskatchewan N/A N/A Ontario Québec N/A Manitoba N/A N/A N/A New Brunswick 2.00 N/A N/A N/A Nova Scotia 3.00 N/A N/A N/A Prince Edward Island 3.75 N/A N/A N/A Newfoundland and Labrador 5.00 N/A 5.00 N/A Northwest Territories and Nunavut 3.00 N/A N/A N/A N/A Yukon 2.00 N/A N/A N/A N/A 1 The sales tax is applicable to the premium (less any refund). 2 This tax is sometimes referred to as a premium tax. 3 This tax applies to paid claims, administration fees and related interest. In Québec and Newfoundland and Labrador, it applies to the paid claims, administration fees, interest, and insurance tax (since insurance taxes are considered expenses like administration fees). However, for unfunded disability insurance plans in Ontario that are not fully paid by employees, the insurance tax does not apply. 4 In Ontario, the sales tax is calculated on the total claims and administration fees. Where there is no stop-loss coverage, the sales tax applies only to total claims. 5 In Québec, the sales tax is calculated on the total claims, administration fees, and insurance tax where there is stop-loss coverage. Where there is no stop-loss coverage, the sales tax applies only to total claims. 6 In Manitoba, the sales tax is applicable to premiums for life, accidental death and dismemberment, critical illness, and disability insurance. 7 Effective 1 August Canadian Benefits Guide 2018

7 4. Medical expense tax credit Some health and dental care expenses may be eligible to be claimed as personal tax credits. These include expenses not covered by a group insurance plan as long as they fall within the medical expense parameters of relevant tax legislation. Co-insurance and the deductibles paid by employees in regard to a private or government plan, insurance premiums, and taxable benefits corresponding to the premium paid by the employer may also be claimed. Non-refundable tax credit Federal Québec 15% of the total medical expenses 20% of the total of all medical for the family in excess of the lesser expenses for the family (including of $2,302 and 3% of the net adult dependents) in excess of 3% income of the taxpayer of the net family income Refundable tax credit Plus 15% of the medical expenses for an adult dependent minus the lesser of $2,302 and 3% of the dependent s net income The lesser of: a) $1,222; and b) The total of 25% of all medical expenses for the family used to establish the non-refundable tax credit, and 25% of the disability support deduction Less 5% of the net family income in excess of $27,044 The lesser of: a) $1,185; and b) The total of 25% of all medical expenses for the family (including adult dependents), and 25% of the disability support deduction Less 5% of the net family income in excess of $22, Employment insurance premium reduction Employers providing short-term disability benefits that are equal to or greater than certain Employment Insurance special benefits may be eligible for a premium rate reduction under the Premium Reduction Program. Summary information on potential reduction rates can be found in the Employment Insurance section of this guide. 5

8 Public Health Insurance Plans 1. Hospital insurance In addition to provincial health programs that cover the services of physicians, certain paramedical services, and other medical services, 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. 2. Emergency out-of-country benefits Province Inpatient daily maximum payment ($) Outpatient daily maximum payment ($) British Columbia 75 N/A Alberta Saskatchewan Manitoba Ontario Québec New Brunswick Nova Scotia 525 plus physician fees at N.S. rates and 50% of ancillary fees N/A Prince Edward Island 3 1, Newfoundland and Labrador 350 (community or regional hospital)/ 465 (tertiary or specialized hospital) 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 are payable at $400/day rates 62 6 Canadian Benefits Guide 2018

9 3. 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 Province Gross annual payroll ($) % Manitoba 1,250,000 or less 0 1,250,001 2,500,000 (first 1.25 million exempt) 4.30 Ontario Over 2,500, ,000 or less Over 450, Québec 2 1,000,000 or less ,000,000 4,999,999 From ,000,000 or more 4.26 Newfoundland and Labrador 1,200,000 or less 0 Over 1,200, Applies to eligible employers only. Eligible employers generally include private-sector employers and some Crown corporations; noneligible employers are generally public-sector employers. Exemption not available for private sector employers with gross annual payroll over $5 million. 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%

10 Premium rates Province British Columbia 1 (monthly) Ontario (yearly) One adult Premium rate ($) Two adults in family Individual taxable income ($) , ,001 28, ,001 30, ,001 34, ,001 38, ,001 42, Over 42, ,001 36,000 Phased in at 6%, to a max. of ,001 38, ,501 48,000 Phased in at 6%, to a max. of ,001 48, ,601 72,000 Phased in at 25%, to a max. of ,001 72, , ,000 Phased in at 25%, to a max. of , , From 200,601 and over Phased in at 25%, to a max. of Up to 20, ,001 25,000 1 Premiums for children under the age of 19 eliminated effective 1 January Premiums are based on the number of adults on an MSP account. 8 Canadian Benefits Guide 2018

11 4. Drug Insurance Plans Eligibility and Other Characteristics Deductible % reimbursement British Columbia Fair PharmaCare: Net annual individual/family income: Less than $15,000 None (government assisted) Maximum out-ofpocket expenses 70 2% of net income $15,000 $30,000 2% of net income 70 3% of net income Over $30,000 3% of net income 70 4% of net income Fair PharmaCare*: Enhanced assistance for those born in 1939 or earlier. Net annual individual/family income: Less than $33,000 None % of net income $33,000 $50,000 1% of net income 75 2% of net income Over $50,000 2% of net income 75 3% of net income Alberta Albertans 65 years of age and older and all recipients of the Alberta Widows Pension, and their dependents Optional coverage for residents under age 65 and their dependents, with a premium (% reimbursement varies according to prescription use): Taxable income single person Less than $20,970 premium of $44.45/month $20,970 or more premium of $63.50/month Taxable income family (no children) Less than $33,240 premium of $82.60/month $33,240 or more premium of $118.00/month Taxable income family with children Less than $39,250 premium of $82.60/month $39,250 or more premium of $118/month None 70 $25/prescription None 70 $25/prescription 9

12 Eligibility and Other Characteristics Deductible % reimbursement Saskatchewan Seniors drug plan For tax year 2016, an individual senior s reported income must be less than $83,427 Children s drug plan (available to children under 14) Others Manitoba Adjusted total family income $25 or less/prescription $25 or less/prescription Can apply through the Drug Plan Special Support Program if family prescription drug costs are greater than 3.4% of total family income Less than $15, % $15,001 $21, % $21,001 $22, % $22,001 $23, % $23,001 $24, % $24,001 $25, % $25,001 $26, % $26,001 $27, % $27,001 $28, % $28,001 $29, % $29,001 $40, % $40,001 $42, % $42,501 $45, % $45,001 $47, % $47,501 $75, % $75,001 and greater 6.90% N/A N/A Percentage reimbursement varies according to prescription use. Maximum out-ofpocket expenses N/A N/A N/A Once the income-based deductible is reached (minimum $100), Pharmacare pays 100% of eligible prescription drug costs 10 Canadian Benefits Guide 2018

13 Eligibility and Other Characteristics Deductible % reimbursement 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 Age 65 or over others OHIP+ drug coverage for children and youth age 24 and under Québec Effective 1 July 2017 until 30 June 2018 Mandatory for all adults from age 18 to 64 unless covered by a private group insurance plan (annual premium of $667 or less, depending on income) Individuals age 65 or over, not receiving any GIS (annual premium of $667 or less, depending on income) Individuals age 65 or over, receiving from 1% to 93% of GIS (annual premium of $667 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 fulltime students, without a spouse and living with their parents (no annual premium) New Brunswick Voluntary for residents without private coverage Gross income individual $17,884 or less (annual premium $200) $17,885 22,346 (annual premium $400) $22,347 $26,360 (annual premium $800) An amount based on income and number of dependents + $2/prescription $2/prescription $100/year + a maximum of $6.11/prescription Maximum out-ofpocket expenses 100 N/A N/A N/A N/A 100 N/A $19.45/month 65.2 $1,066 ($88.83/month) $19.45/month 65.2 $1,066 ($88.83/month) $19.45/month 65.2 $632 ($52.65/month) $5 $10 $15 N/A 100 N/A N/A 100 N/A 70 N/A 70 N/A 70 N/A 11

14 Eligibility and Other Characteristics Deductible % reimbursement $26,361 $50,000 (annual premium $1,400) $50,001 $75,000 (annual premium $1,600) Over $75,000 (annual premium $2,000) $20 $25 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) Voluntary for residents without private coverage. Maximum out-ofpocket expenses 70 N/A 70 N/A $5 70 N/A $10 $15 $20 $25 $30 $9.05 Gross income individual $15 $17,884 or less (annual premium $200) $115/month + $15/prescription $17,885 to 22,346 (annual premium $400) $5 70 N/A 70 N/A 70 N/A 70 N/A 70 N/A 100 $500/year 100 N/A 12 Canadian Benefits Guide 2018

15 Eligibility and Other Characteristics Deductible % reimbursement Nova Scotia Age 65 or over; optional with annual premium of $424 (less if low income) Family Pharmacare Program (payer of last resort) Prince Edward Island Age 65 or over Based on income and family size $8.25/prescription plus $7.69 dispensing fee Maximum out-ofpocket expenses None 70 $382/year 80 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 N/A 100 N/A Newfoundland and Labrador 65Plus Plan (receiving GIS and OAS) None 100 Dispensing fee (maximum $6) The Assurance Plan 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%) 13

16 Eligibility and Other Characteristics Deductible % reimbursement Yukon Children s Drug Plan Pharmacare: Age 65 or more or aged 60 and married to a living Yukon resident who is at least 65 years of age Northwest Territories Extended health benefits for specified diseases and conditions (non-native or Métis) Seniors Benefit Program age 60 or over (non-native or Métis) Nunavut Extended health benefits for specified diseases and conditions Seniors Program age 65 or over (nonnative or Métis) $250/child max. based on 100% income and family size Maximum out-ofpocket expenses 100 $500/family None 100 N/A None 100 N/A None 100 N/A None 100 N/A None 100 N/A 5. Supplementary benefit practitioners coverage British Columbia Alberta Saskatchewan Manitoba Chiropractor Massage therapist 1 Naturopath 1 Osteopath 2 Ontario 9 Québec New Brunswick Nova Scotia Prince Edward Island Newfoundland and Labrador Yukon Northwest Territories Physiotherapist Podiatrist/chiropodist Medical Services Plan (MSP) premium assistance patients only. MSP pays $23 per visit for a combined total of 10 visits per year. 2 No coverage unless osteopath is a physician. 3 Albertans enrolled in the coverage for seniors health benefits plan will receive $25 per visit to use towards chiropractic services, to a maximum of $200 per annual benefit period. 4 Maximum of $250 payable each year for specific services. 5 Coverage in approved facilities only. 6 Effective 1 July 2017, chiropractic coverage ceased for all Saskatchewan residents. 7 Effective July 1, partial podiatrist/chiropodist coverage ceased for all Saskatchewan residents except those covered under the Family Health Benefits or the Supplementary Health Benefit programs. 8 Seven visits per year for specific treatment; $12.50 per visit from 1 April 2018 to 31 March 2019 ($13.75 in northern Manitoba). 9 Initial visit: $12; subsequent visits: $9.50 x-rays, $10 (max. of $25 per year); overall maximum of $155 per year. 10 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. 11 Initial visit: $16.40; subsequent visits: $11.45; maximum of $135 per year. 12 In many jurisdictions, a physician s approval is required. Nunavut 14 Canadian Benefits Guide 2018

17 Employment Insurance 1. General Employment Insurance (EI) provides temporary financial assistance for qualified unemployed workers while they look for work or upgrade their skills. Eligible Canadian citizens, permanent residents, and temporary foreign workers who are sick, pregnant or caring for a newborn or adopted child, as well as those who must care for a family member who is critically ill or gravely ill with a significant risk of death, may also be assisted by EI. Basic provisions and premium rates Basic provisions Maximum insurable earnings $51,700 Waiting period One week Taxation All benefits are taxable Premium rates Employee premium rate 1.66% of insurable earnings (annual maximum of $858.22) Employer premium rate without registered disability plan Québec premium rates times the employee premium rate of insurable earnings (annual maximum of $1,201.51) Employee premium rate 1.30% of insurable earnings (annual maximum of $672.10) Employer premium rate 1.4 times the employee premium rate of insurable earnings (annual maximum of $940.94) 1 Québec EI premium rates are lower than the rest of Canada, because the province offers its own maternity and parental benefits (see Québec Parental Insurance Program). Each dollar of insurable earnings is subject to a premium up to the maximum annual insurable earnings of $51, Eligibility criteria The qualifying period is the shorter of the 52-week period immediately before the beginning of a benefit period, or the period that begins on the first day of an immediately preceding benefit period and ends with the end of the week before the beginning of a benefit. The number of required insurable hours may increase if a person is found to have contravened the Employment Insurance Act in the five years preceding an application for benefits. Regular benefit general rule Regular benefit new entrants or re-entrants 1 Special benefits 2 From 420 to 700 hours, depending on the regional unemployment rate 910 hours of insurable employment 600 hours of insurable employment 1 Individuals who have less than 490 hours of work in the last 52 weeks before their qualifying period. 2 Sickness, maternity, parental, compassionate care or critical illness leave benefits. 15

18 Generally, no benefit is payable when an employee voluntarily leaves his or her employment without just cause, or loses his or her employment for misconduct. 3. Regular benefit Benefit rate Maximum weekly benefit $547 Benefit period (if maximum number of hours of insurable employment) 4. Special benefits Sickness benefits are paid for a maximum period of 15 weeks. 55% of weekly insurable earnings weeks, based on regional unemployment rate Maternity benefits 1 are payable for a maximum period of 15 weeks. The benefits may be received at any time from the 12 th week preceding the expected week of confinement or from the week of confinement, if earlier, to 17 weeks after the expected date of confinement or the week in which confinement occurs, if later. Parental benefits are payable for a maximum period of 35 weeks at the regular benefit rate of 55% or 61 weeks at a lower benefit rate of 33%. The benefits may be received from the week of birth or arrival at home (in the case of adoption) to 52 or 78 weeks, depending on the length of benefit selected (104 weeks for parents of hospitalized children). Benefits may be paid to either parent or divided between them. A woman s maximum combined sickness, maternity, and parental benefit entitlements may extend to 65 weeks, or 91 weeks, depending on the parental leave election made, if certain conditions are met; each week of parental benefit paid to her spouse is deducted from her own entitlement. Compassionate care leave benefits are payable for a maximum period of 26 weeks. The benefits will be paid to workers who have to be away from work temporarily to provide care or support to a relative, or a person who is considered to be like a close relative, who is gravely ill with a significant risk of death within 26 weeks. A medical certificate must be provided. A Family Caregiver Benefit for Children is payable to those providing care and support to one or more critically ill or injured children for a maximum period of 35 weeks if certain conditions are met. The benefits will be paid to workers who are away from work temporarily to provide care or support to a child whose baseline state of health has significantly changed and whose life is at risk as a result of an illness or injury. A medical certificate must be provided. A Family Caregiver Benefit for Adults is payable to those providing care and support to one or more critically ill adults for a maximum period of 15 weeks if certain conditions are met. The benefits will be paid to workers who are away from work temporarily to provide care or support to an adult whose baseline state of health has significantly changed and whose life is at risk as a result of an illness or injury. A medical certificate must be provided. Self-employed Canadians may be eligible for special benefits under certain conditions if they have reduced the amount of time devoted to their business by more than 40% because of birth, adoption, illness, injury, care to a gravely ill family member or care to a critically ill or injured child. 1 In Québec, maternity and parental benefits are provided by the Québec Parental Insurance Program (QPIP). 16 Canadian Benefits Guide 2018

19 5. Québec Parental Insurance Program (QPIP) The QPIP provides for payment of benefits to all eligible workers who take maternity, paternity, adoption or parental leave. To be eligible for QPIP benefits, a person must be a biological or adoptive parent of a child, pay premiums under the plan, have insurable earnings of at least $2,000 during the reference period (usually 52 weeks), be a resident of Québec at the beginning of the benefit period, have experienced an interruption of earnings and, in the case of a self-employed worker, have resided in Québec on December 31 of the year prior to the start of the benefit period. For an employee, a reduction in earnings of at least 40% is considered an interruption of earnings. For a selfemployed person, a reduction in time spent on business activities of at least 40% is considered an interruption of earnings. A person who is both employed and self-employed must have reduced the time spent on business activities by at least 40% and have seen a drop of at least 40% in earnings to be considered as having experienced an interruption of earnings. Basic provisions Maximum annual insurable earnings $74,000 Waiting period None Taxation All benefits are taxable Premium rates Employee contribution 0.548% of employee s insurable earnings (annual maximum of $405.52) Employer contribution 0.767% of employee s insurable earnings (annual maximum of $567.58) Self-employed worker contribution 0.973% of insurable earnings (annual maximum of $720.02) Plan details Type of benefit Maximum benefit weeks Basic plan % of average weekly earnings Maximum benefit week Special plan % of average weekly earnings Maternity Paternity Parental (May be shared) Plus Adoption (May be shared) Plus Under the basic plan, the number of benefit weeks can reach 50 weeks for the mother, that is, 18 weeks of maternity benefits at 70% and 32 weeks of parental benefits (which can be shared between parents), with the first seven weeks at a rate of 70% and the remaining 25 weeks at 55%. 17

20 6. High income claimant A claimant whose annual net income (including EI benefits) exceeds 1.25 times the maximum annual insurable earnings must refund the lesser of 30% of the benefits received or 30% of income exceeding $64,625. Benefit repayment does not apply to: Special benefits (e.g., sickness, maternity, parental, compassionate care or critical illness leave benefits); or, Regular benefits paid to claimants who received less than one week of regular benefits in the previous 10 years. 7. Coordination For the purpose of determining EI benefits, earnings to be taken into account include among other things, severance pay, vacation pay, group disability benefits, and pension payments. However, only the portion of earnings in excess of the greater of $50 per week and 25% of EI weekly benefits will reduce EI benefit payments at the rate of $1 of benefits for each $1 of excess earnings. From 2 August 2016 until 11 August 2018, a Working While on Claim pilot project is in place which changes the way earnings received while on claim affect weekly EI benefits. Under this pilot project, once the waiting period has been served, if earnings are equal to or less than 90% of the weekly earnings that were used to calculate the benefit rate, the benefits will be reduced at a rate of 50% of earnings. Any earnings that exceed this 90% threshold, will be deducted dollar for dollar from benefits. 18 Canadian Benefits Guide 2018

21 8. Employer premium reductions An employer with a registered private disability plan providing benefits equal to or greater than EI sickness benefits may be entitled to a premium rate reduction. Category Cumulative paid sick leave plans that allow for a minimum monthly accumulation of one day and a maximum accumulation of at least 75 days Cumulative paid sick leave plans that allow for a minimum monthly accumulation of one 2/3 days and for a maximum accumulation of at least 125 days Weekly indemnity plans with a maximum benefit period of at least 15 weeks Weekly indemnity plans provided by certain public and para public employers of a province or territory with a maximum benefit period of at least 52 weeks Employer factor (100% employees outside Québec) 1,2 Employer factor (100% employees in Québec) 2 Premium reduction per $100 of insured earnings (all)($) To determine the employer premium per $100 of insured earnings, the number in this column should be multiplied by the employee premium rate, which is 1.66% for For employers with employees both in and outside Québec, composite rates will be determined by the EI Premium Reduction Program based on 2017 employment information. 19

22 Government-sponsored Pension Plans 1. Canada Pension Plan (CPP) and Québec Pension Plan (QPP) Both the Canada Pension Plan (CPP) and the Québec Pension Plan (QPP) came into effect 1 January The CPP and QPP provide contributors and their families with partial replacement of earnings in the case of retirement, disability or death. Beginning in 2019, the CPP will be gradually enhanced. This will only affect those who, as of 2019, work and make contributions to the CPP. Higher contribution rates beginning in 2019, will lead to higher CPP retirement, disability, and survivors pension benefits. Québec has also submitted draft legislation in order to similarly enhance the QPP as of Employee contributions to the CPP and QPP are based on a percentage of earnings in excess of the basic exemption, and up to the Year s Maximum Pensionable Earnings (YMPE), which is a dollar amount established on an annual basis. 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. 2. Old Age Security (OAS) The Old Age Security program is the Government of Canada s largest pension program. It is funded out of the general revenues of the Government of Canada. The OAS provides a monthly payment to seniors aged 65 and older who meet the Canadian legal status and residence requirements. 3. 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 25 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 10 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 to inflation up to retirement (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). 20 Canadian Benefits Guide 2018

23 4. Contributions CPP QPP Maximum annual pensionable earnings $55,900 $55,900 Basic exemption amount $3,500 $3,500 Maximum contributory earnings $52,400 $52,400 Employee and employer contribution rate (%) 4.95% 5.4% Maximum annual employee and employer contribution 2, $2, Maximum annual self-employed contribution $5, $5, Maximum monthly benefits Maximum payment amounts CPP ($) QPP ($) Retirement (at age 65) 1, , Disability 1, , Survivor younger than Survivor 65 and older Children of disabled contributor Children of deceased contributor Death (maximum one-time payment) 2, , Summary data CPP, QPP and OAS CPP and QPP numbers are identical unless indicated otherwise. Year s Maximum Pensionable Earnings Annual basic exemption Annual maximum employee contribution Maximum monthly retirement pension at Rate of indexation CPP/QPP pension Change in CPI (Dec. to Maximum monthly Year (YMPE)($) ($) % $ age 65 ($) (%) Dec.) (%) OAS ($) ,900 3, , , n/a ,300 3, , , n/a ,900 3, , , ,600 3, , , ,500 3, , , ,100 3, , , ,100 3, , ,300 3, , ,200 3, , ,300 3, , QPP 2012 = 5.025%, $2,341.65; 12 QPP 2013 = 5.10%, $2,427.60; QPP 2014 = 5.175%, $2,535.75; QPP 2015 = 5.25%, $2,630.25; QPP 2016 = 5.325%, $2,737.05; QPP 2017 = 5.4%, $2, ; QPP 2018 = 5.4%, $2,

24 About Aon Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance. 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. 22 Canadian Benefits Guide 2018