FTR Quarterly – Issue 11
Date: November 15, 2018
In This Issue
- Considering Cannabis Coverage under Benefits Plans
- Recreational Cannabis and Your Workplace: Five Steps to Consider
- Featured Topic – Cannabis Expertise
Considering Cannabis Coverage under Benefits Plans
With the legalization of recreational cannabis on October 17, 2018, employers across Canada have been preparing to answer questions about whether their current health and benefits plans provide reimbursement for cannabis products used for therapeutic or medical purposes. While access to cannabis for medical purposes is not new, with all the attention that cannabis is currently getting, employers need to be aware of the changing landscape for benefits coverage related to cannabis and its derivatives.
Here is a brief description of three key issues for you, as an employer, to consider regarding whether: (i) your existing benefits plan already provides reimbursement for cannabis products; and (ii) you want to provide coverage for cannabis products.
What and Where are the Benefits Plan’s Terms?
Most employers are generally aware that the terms of their health and benefits plan are found in an official policy and in an employee booklet or brochure. However, additional coverage obligations can arise out of the terms of collective agreements, employment contracts, and other employee communications (both written and verbal). These terms may not be reflected in the employee-facing description of the benefits plan, particularly if the employee benefits booklet or brochure is an “off-the-shelf” product.
As an employer, it is important for you to identify and compile the sources of your benefits plan’s terms in order to confirm the full scope of coverage the plan provides and your ability to change that coverage. This is also considered a best practice from a benefits plan governance point of view.
Is Cannabis Already Covered?
Once all of the benefits plan terms are located, you need to review the terms to determine whether cannabis is already covered. This is a unique exercise for each employer and each plan but there is some common language in benefits plans that is prevalent across the industry that you can look for. Here is a brief summary of some of the relevant terms that might exist in your plan.
What is a Drug?
Many benefits plans, including both those that are insured and those that are self-funded by employers, will not provide any reimbursement for treatments that do not possess a Drug Identification Number (DIN) issued by Health Canada. Cannabis does not have a DIN and the investigation into whether coverage for cannabis exists in the benefits plan often ends there. However, additional provisions of the plan can expand or restrict coverage and also need to be reviewed carefully to assess whether the benefits plan contains language that may apply to medical cannabis coverage.
Is there a Prescription?
Both prescription and over-the-counter treatments can possess a DIN but many benefits plans only provide coverage for treatments obtained by prescription. On October 17, 2018, the date that recreational marijuana access was legalized, Health Canada added products that: (i) make health claims; and (ii) contain a phytocannabinoid produced by or found in the cannabis plant to its published Prescription Drug List (with some exceptions).
However, prior to October 17, 2018, Health Canada also had an established and extensive regime for individuals accessing cannabis for medical purposes, which is now incorporated, with modifications, into the federal Cannabis Regulations. As a result, access to medical cannabis continues to require the issuance of a medical document by a qualified health practitioner. This medical document contains information similar to that contained in a prescription but is often referred to as an “authorization.” As a result, a medical document may or may not be captured by a benefits plan’s definition of “prescription.” For this reason, it is also important to review any provisions of your benefits plan that provide coverage for “over-the-counter” treatments to assess whether recreational or medical cannabis, including the tools to consume or grow it, could fall under that coverage.
Listed Exclusions and Inclusions
Specific inclusions or exclusions may also be explicitly listed in your benefits plan that could address cannabis. In particular, benefits plans often include lists of treatments and drugs that are explicitly excluded from coverage and many employers are considering whether cannabis should be expressly added to these lists. However, whether such a list can be amended unilaterally, regardless of whether the change is initiated by you or the insurer, will depend on the terms of applicable collective agreements or employment contracts. As a result, you need to carefully evaluate any proposed changes to your benefits plan.
Options to Cover Cannabis
In the absence of an obligation under a collective agreement or employment contract, as a general principle, employers are not obligated by law to provide benefits coverage to their employees. Nor does the law require benefits plans to cover all treatments. However, you should consider whether you want to expressly provide some coverage for cannabis products or, alternatively, explore your options to clearly restrict coverage. As noted above, your ability to introduce restrictions may be limited by a collective agreement or employment contract.
Benefits coverage for medicinal cannabis use is increasingly available in the insurance marketplace and can be incorporated into existing insured plans. At the current time, partly due to a lack of study into its efficacy, the recognition of cannabis as a legitimate treatment for medical conditions is limited. In addition, cannabis is not always a more cost-effective treatment than existing, more widely-recognized treatments. As a result, while the coverage options in the insurance market are increasing, they generally limit coverage for cannabis by imposing relatively conservative annual caps on reimbursement or limit reimbursement to the treatment of a few specified conditions. For this reason, you may need to explore whether the coverage you want or are required to provide for medical cannabis exists in the insurance market or if you must self-insure the benefit.
Employers who fund their own benefits plans under administrative services only or “ASO” arrangements or that offer employees the use of healthcare spending accounts have greater flexibility if they wish to add cannabis coverage to their plans. The Canada Revenue Agency has already recognized medical cannabis as an eligible medical expense under the Income Tax Act (Canada), which means that reimbursements for medical cannabis can be made from these plans without risking their tax-effectiveness. However, you must still carefully consider the cost impact of extending this coverage, which can be difficult based on the fact that cannabis coverage in benefits plans remains relatively new.
Recreational Cannabis and Your Workplace: Five Steps to Consider
By: Shivani Chopra
On October 17, 2018, Canada made headlines around the world by legalizing the use of recreational cannabis. The legalization of cannabis for recreational use, however, raises challenges for employers who require that employees report fit for duty in the workplace.
Here are five key steps to consider when managing the use of recreational cannabis in your workplace:
1. Review existing workplace policies to address use of recreational cannabis
Step one is ensuring that your existing workplace policies specify that employees are required to report to work fit for duty and that the consumption, sale and/or distribution of recreational cannabis is prohibited in the workplace. You should also consider your position on possession of recreational cannabis in the workplace and address any related requirements within the policy. Zero tolerance for recreational cannabis use should be specified for employees working in safety-sensitive positions to ensure both employee and public safety.
2. Provide training to managers, supervisors, and health and safety committee (H & S) members
You should ensure that training specific to cannabis use is provided to managers / supervisors / H & S committee members so that they can identify signs of impairment, take appropriate corrective measures with the impaired employee and provide assistance as needed.
3. Ensure drug and alcohol policies address testing, accommodation requests and discipline
Your workplace policies should address accommodation requests from two sources: addiction (arising from recreational use of cannabis), and medical requirements.
Accommodation options should be considered for those medically prescribed cannabis users where the need for use at work is medically substantiated by a healthcare provider. Policies should outline an employee’s obligation to disclose their drug and alcohol dependency (including cannabis) where such usage may give rise to impairment in the workplace. These policies must also clearly specify the disciplinary consequences for non-compliance, up to and including termination of employment.
Remember that drug and alcohol testing is subject to a very high bar in Canada. Testing may be allowed in very limited circumstances. Policies must be carefully reviewed to ensure that testing mechanisms are used appropriately.
4. Factor in new employer posting requirements under the Smoke Free Ontario Act, 2017 (SFOA)
The same day recreational cannabis was legalized, Ontario also proclaimed the SFOA into force. Among other things, the SFOA requires employers, proprietors and others to post mandatory signs ensuring that employees and the public are aware that smoking and the use of electronic cigarettes is prohibited in the enclosed workplace, place or area. The posting requirements for the signs are outlined in our recent communication, Ontario Posts New Sign Requirements under the Smoke-Free Ontario Act, 2017.
5. Be clear in your communications
Any policy changes will not be effective unless there is a clear line of communication between you and your employees about these amendments. Develop an action plan to educate employees about the changes to your policies and the fact that consumption, sale and/or distribution of drug and alcohol (including cannabis), and possession (in some cases) is strictly prohibited in the workplace.
Whether you’re an employer dealing with cannabis in the workplace, a service provider encountering impaired customers, or a grower or producer expanding your workforce, Hicks Morley can help your organization navigate this evolving area.
• meeting your obligation to provide reasonable accommodations for employees – and ensuring a safe workplace for everyone
• if you serve the public, offering services to balance the interests of your non-smoking clientele and medicinal cannabis users
• if you’re a producer, helping you manage your own growing workforce needs.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©