New Developments in Benefit Plans - CAHRMA Conference Presentation

1. 6th Annual CAHRMA National ConferenceEdmonton, AlbertaNew Developments in Benefit Plans Presented by Clarke Financial Planning & Insurance Services May 16, 2018

2. Clarke Financial Planning and Insurance Services • Clarke Financial Planning and Insurance Services is the largest aboriginal benefits advisor firm in Canada. We advise more than 3,500 employees. • Clarke Financial Planning and Insurance Services is a professional firm headquartered in Winnipeg, Manitoba. Andrew Clarke is a Certified Financial Planner (CFP). The business is 100% First Nations owned and operated. Andrew Clarke is from the Norway House Cree Nation. • The business has over 24 years of experience in designing and managing group insurance and pension plans for a variety of different aboriginal entities. Clarke Financial Planning and Insurance Services is an independent broker with the ability to deal with most insurance and pension companies. • The firm operates a toll-free customer call centre (1-800-558-2088) that is staffed with fully licensed service representatives. The call centre uses the latest Goldmine contact database management system for customer support. • Andrew Clarke is a board member of the Manitoba Civil Service Superannuation Board ($10.0 billion in assets). He has previously served on the boards of numerous entities including the Aboriginal Chamber of Commerce (chair) plus he is the recipient of a number of awards. CAHRMA Conference Presentation

3. Why Have Benefits • Build a positive employer/employee relationship • To attract and retain employees • Be different from competitors • Manage employee absenteeism • Contribute to employee health and wellness • Address legislative requirements • Protect employees from large financial losses due to accident or sicknesses that cause disability, death or other health related issues • Form of compensation beyond salary and wages that can be provided in a tax advantaged way to employees • Ensure that long serving employees have an adequate income when they retire from working CAHRMA Conference Presentation

4. 5 New Developments in Benefit Plans • Electronic administration for employers and employees • How insurers are handling catastrophic drugs • Will cannabis make its way onto group insurance plans • Recent changes in the Non-Insured Health Benefit (NIHB) program and how it impacts group insurance plans • How are pension plans regulated and by whom. What is OSFI doing CAHRMA Conference Presentation

5. Electronic Administration of Benefit Plans - Part 1 CAHRMA Conference Presentation

6. Electronic Administration of Benefit Plans - Part 2 CAHRMA Conference Presentation

7. Electronic Administration of Benefit Plans - Part 3 CAHRMA Conference Presentation

8. Electronic Administration of Benefit Plans - Part 4 CAHRMA Conference Presentation

9. Electronic Administration of Benefit Plans - Part 5 CAHRMA Conference Presentation

10. Electronic Administration of Benefit Plans - Part 6 CAHRMA Conference Presentation

11. Electronic Administration of Benefit Plans - Part 7 CAHRMA Conference Presentation

12. Electronic Administration of Benefit Plans - Part 8 CAHRMA Conference Presentation

13. How Insurers Are Handling Catastrophic Drugs - 1 • Over the last number of years a number of break thru drugs have hit the marketplace that enable treatment of conditions that were previously untreatable. These drugs are usually very unique and are extremely high cost (more than 10% of a member’s annual earnings) and generally not covered by provincial healthcare plans or the non-Insured Health Benefit (NIHB) program. Insurers have responded to these catastrophic drugs and costs in several different ways to ensure that these drugs are being managed effectively and that the cost of these drugs doesn’t impact the affordability of a plan for employers and members • Some of the ways that insurers, employers and members have been containing plan costs are as follows: 1) Increasing deductibles within plans that have drug coverage. 2) Reducing the number of drugs that are covered within a plan. 3) Signing distribution agreements with catastrophic drug manufacturers to lower the cost of such drugs. 4) Changing plan policy provisions to manage catastrophic drugs the same way that disability claims are managed. It is item number 4 that we are going to talk about more in depth • Remicade for example is a brand name biologic catastrophic drug (a protein based drug derived from living cells that is given by injection of IV infusion) that successfully treats health conditions such as Rheumatoid Arthritis and Crohn’s Disease. The average cost of treatment is about a $1,000/month CAHRMA Conference Presentation

14. How Insurers Are Handling Catastrophic Drugs - 2 • An insurer’s normal drug paying process is very simple. A member hands over their drug card and possibly their Status card along with their doctor’s prescription to their pharmacist and within about 15 minutes the drug is dispensed and cost is paid for electronically to the pharmacy by the insurer or the Non-Insured Health Benefit (NIHB) program • For a catastrophic drug claim the process is completely different and starts first at the doctor’s office of the member. The member is generally required to exhaust all other drug therapies first before having their doctor prescribe a catastrophic drug. When prescribing such a drug the member’s doctor has to complete a special pre-authorization form for the insurer to determine whether the drug is eligible for coverage or not. Once the drug has been authorized by the insurer a case manager is assigned to the member to coordinate the drug claim. This case manager looks after such items as (but is not limited to): 1) Assisting the member in dealing with their pharmacy as most catastrophic drugs are not stocked by pharmacies and must be special ordered. 2) Is the drug treatment plan set by the doctor being followed by the member? 3) Is the drug treatment of any theraphic value to the member (improving their health condition)? 4) Does the drug require special handling (does the drug require refrigeration) or for the member to go to a special clinic for an injection or infusion by a nurse? 5) Is the member having any adverse reactions to the drug? • Catastrophic drug coverage is evolving. With some drugs now costing $250,000 annually it will be a challenge in the future for insurers, employers and members to maintain comprehensive drug coverage at an affordable price CAHRMA Conference Presentation

15. Cannabis and Group Insurance Plans - 1 • Medical cannabis is recognized as a drug by the federal government however the medical community in general (doctors) do not prescribe the drug as it is not recognized as a medicine or drug therapy in Canada and it does not have a Drug Identification Number (DIN) yet • In March 2015 a Waterloo university student who was prescribed medical cannabis for pain management successfully had the Student Union’s Sun Life group insurance plan changed to allow medical cannabis as a covered drug under the plan. This was followed in February 2017 by a disabled Nova Scotia man who’s Human Rights Board discrimation complaint against another insurer who refused to pay his medical cannabis bills was successful and compelled the insurer to pay his claims in full. The man had suffered a major car crash that left him with intense and enduring pain. Dues to these decisions and the upcoming legislation of recreational cannabis insurers are starting to review their positions on medical cannabis as a covered drug under their plans • One of the first companies to announce that medical cannabis can be included in their drug plans was Sun Life. Sun Life made a public announcement on February 15, 2018 stating that this drug can be added by plan sponsors as optional coverage to an existing plan. I asked other major insurers like Great-West Life and Manulife what their intentions are but they deferred any comment until a later date CAHRMA Conference Presentation

16. Cannabis and Group Insurance Plans - 2 So, the process to have Sun Life include medical cannabis into a group insurance plan would be as follows: • Prior to the introduction of the drug an employee education session should be conducted by the plan advisor to answer employer and employee questions about the what covering the drug means for all the stakeholders involved • If there is consensus from the stakeholders then the plan sponsor would make a request to Sun Life that the drug is to be a covered benefit under the plan • The benefit would be introduced and its global usage would be monitored by the plan advisor and sponsor. Please note that the Department of Veterans Affairs has a medical cannabis benefit for disabled veterans that cost $400,000 in 2014 and jumped to $4.3 million in 2015. Apparently the cost is now over $50 million per year • Sun Life’s dispensing and payment criteria is as follows: 1) The drug must be deemed medical necessary, prescribed by a doctor, dispensed by a Health Canada licensed producer or a person legally authorized to produce medical cannabis under the Access to Cannabis for Medical Purposes regulations and have an official receipt • Sun Life’s medically necessary definition states a person must have 1 of the following 5 conditions: 1) Cancer with severe pain or nausea/vomiting. 2) Multiple Sclerosis with pain. 3) Rheumatoid Arthritis with pain. 4) HIV/AIDS with pain. 5) Patients requiring palliative care CAHRMA Conference Presentation

17. Non-Insured Health Benefit Program - History • The Non-Insured Health Benefit (NIHB) program provides coverage for limited benefits and services to Status Indians that aren’t available through other plans • In 1995 the program was changed from a frequency based program to a medical needs based system. This means that a person in a cubicle somewhere determines you or your child’s medical need for a benefit or service • In 2003 the program was changed once again to make it a payor of last resort. The two simplest ways to make the NIHB program a “first payor” is to re-configure your organization’s benefits around so that your plan doesn’t pay for benefits that the NIHB program pays for. With drugs an electronic drug card can be set up so that it carves out the drugs that the NIHB program pays for and only allows your plan to pay for drugs that the NIHB program doesn’t pay for. On other benefits like the minor dental benefit - the benefit should be reduced to a 15% coinsurance amount. This forces the NIHB program to pay the majority of these claim costs so that they aren’t captured by your organization’s plan • Over the past couple of years the program has expanded its use of limited use, prior approval and exception drugs to cap costs - making it more difficult to access benefits. Let’s talk more about these more recent changes CAHRMA Conference Presentation

18. Non-Insured Health Benefit Program - Drugs 1 The NIHB program categorizes drugs as follows: • Open benefits are drugs listed on the Drug Benefit List (DBL) which do not have established criteria, gender or age limitations, or prior approval requirements. This means that, in most cases, pharmacy providers may submit claims for dispensing 'open benefit' drugs without receiving prior approval requirements • Limited use benefits are drug products listed on the DBL that may not be appropriate for general listing, but have value in specific circumstances. These products will have specific criteria for provision as a benefit under the NIHB Program. There are three types of limited use benefits: • Limited use benefits which do not require prior approval. • Benefits which have a quantity and/or frequency limit. A maximum quantity of drug is allowed within a specified period of time.). • Limited use benefits which require prior approval (using the “Limited Use Drugs Request Form”). Limited use benefits and the criteria for their coverage are identified in the Drug Benefit List. The criteria are also listed on the forms faxed to prescribers for completion • In addition to limited use benefits, some items not listed on the DBL may be considered for coverage under special circumstances, with prior approval. Prior Approvals (PA) may be obtained by contacting the Drug Exception Centre (DEC) directly. In these instances, the DEC will require details about the prescription, the prescriber, the client and the pharmacy. To complete the PA process, the DEC may also fax an Exception or Limited Use Drugs Request Form to the prescriber for completion stating the medical need for the drug CAHRMA Conference Presentation

19. Non-Insured Health Benefit Program - Drugs 2 • Exception drugs are drug products which are not listed in the DBL. These drug products may be approved in special circumstances upon receipt of a completed “Exception Drugs Request Form” from the licensed prescriber: • When the prescription is for a recognized clinical indication and dose which is supported by published evidence or authoritative opinion; and • When there is significant evidence that the requested drug is superior to drugs already listed as program benefits; or • When a patient has experienced an adverse reaction with a best price alternative drug, and a higher cost alternative is requested by the prescriber; or • When there is supporting evidence that available alternatives are ineffective, toxic, or contraindicated (personal preference alone does not justify an exception • Some drugs are excluded from the NIHB Program as recommended by the Common Drug Review (CDR) and the NIHB Drugs and Therapeutics Advisory Committee (DTAC) because published evidence does not support the clinical value or cost of the drug relative to existing therapies, or there is insufficient clinical evidence to support coverage. Exclusions are items not listed on the DBL and are not available through the exception or appeal processes. These include certain drug therapies for particular conditions which fall outside of the NIHB mandate and are not provided as benefits under the NIHB Program. They include, but are not limited to: anti-obesity drugs, household products, cosmetics, hair growth stimulants, and megavitamins CAHRMA Conference Presentation

20. Non-Insured Health Benefit Program - Processes • So, the processes to get NIHB to approve a particular drug can be almost overwhelming. Lets talk more about how a member’s drug claim can coordinate with the NIHB program and the member’s group insurance plan • First off to do coordinated drug claims between the NIHB program and an insurer the plan needs set up properly behind the scenes with different classes of employees so that employees or their dependents who have or don’t have Status are separated according to benefits they already have. This separation allows for different premiums to be paid by each group of members and it also allows the insurer to carve out any drug benefits that the NIHB program may have so that the plan doesn’t pay for these drugs. Remember the NIHB program is a payor of last resort and the insurer is considered to be a first payor. As a plan sponsor and a plan member you don’t want the insurer to be paying for drug benefits that you as a member already have thru the NIHB program • When a group insurance plan has a drug card for members a lot of the routine drug claims will automatically be processed by the NIHB program and the insurer because electronic assessment and adjudication of a drug claim can be done as everyone in the drug world is required to be on the provincial online drug dispensing system. When a drug claim is for a limited use, prior approval or exception drug then this automated process can breakdown as the NIHB program may need to talk first to your doctor about the drug he or she is prescribing or require your doctor to justify in writing the drug they are prescribing or they may require or pharmacist to use a different lower cost drug. These interventions take time but are generally resolved in a few days. In the meantime a pharmist will generally dispense an emergency supply of a drug until it is figured out who is paying for what. It can be very frustrating time for a plan member. If the issue can’t be settled quickly or there is a dispute about who is paying the member needs to contact the plan advisor who can assist in resolving the issue CAHRMA Conference Presentation

21. Pension Plans: Who Is Your Regulator - 1 • In November 2010 two Supreme Court of Canada decisions determined that two different aboriginal entities (child welfare agencies) were subject to provincial labour laws. These decisions caused the Office of the Superintendent of Financial Institutions (OSFI) to develop a legal opinion concerning all of the First Nation plans that were under their jurisdiction - maybe the plans didn’t have to be under their rules anymore! So, without any notification, consultation or negotiations with First Nations, OSFI got together in secret, with all of the provincial pension regulators and decided that all of the Health and Education Authority pension plans that are resident on reserves would be transferred to provincial jurisdiction because the provinces had the “legal” authority to look after these plans. This mass transfer process finished 4 years ago. Over 300 plans were transferred to provincial jurisdiction. As I speak though a number of previously “safe” plans are in the process of being transferred by OSFI to provincial jurisdiction as OSFI is in the process of applying a new secret test to First Nation pension plans to determine which jurisdiction a plan should be under • This new secret test was applied to one of my pension clients, who was doing a partial windup of one of their plan divisions, in February 2018. This pension plan, since its inception in 1995, has been under federal pension jurisdiction. In fact members who were terminating from the plan as early as last summer were being provided option packages that featured federal pension rules and regulations concerning their monies. As everyone is aware federal rules and regulations are very generous to members and generally allow members several different ways to un-lock and receive their monies as lump sum cash payments whereas provincial rules and regulation concerning the same can be very limited (no unlocking in some provinces) and can be subject to approval by a provincial bureaucrat CAHRMA Conference Presentation

22. Pension Plans: Who Is Your Regulator - 2 • Since the introduction of this test on this pension plan my client, the affected members and myself have had to object to the secret OSFI test and have had to submit documentation to the regulator that the affected division and its members are indeed under federal pension and labour laws. We have been providing relevant provisions of the Indian Act that the employer is under and have requested intervention by the minister. Due to our objections OSFI froze the accounts of the affected members and won’t allow any of the terminated members to access their funds even members who are suffering from shortened life expectancy • Late last week the employer and affected members retained a lawyer who is now supplying additional legal documentation to OSFI. It is expected that a favourable ruling by OSFI will be in the next couple of months. If not then a decision will be made to pursue the matter thru the courts • It is very important to determine what jurisdiction your pension plan is under. If you are a Band Office, Education or Health entity your pension plan should be under federal jurisdiction. If you are a small entity under a large First Nation pension plan, by the virtue of the majority of the members being under federal jurisdiction your entity is also classified under federal jurisdiction, even though you may be an entity that is under provincial labour jurisdiction (like a hydro implementation office or gas bar). Your pension plan advisor is always the first contact concerning issues with your pension plan CAHRMA Conference Presentation

23. Questions? CAHRMA Conference Presentation