An explanation of the issue:
As small employers grow in number of staff, they become eligible for increases to the Non-Evidence Maximum (NEM) levels for Life and LTD coverage. An NEM is the amount of coverage an insurer will offer without any medical questions (evidence) being asked for. As an example, a small group with 5 staff might have a $1,500 LTD NEM. If an employee earned $36,000/year, or $3,000 a month, they might be eligible for an LTD benefit that would pay a $2,000 monthly benefit (in the event of total disability). In this example, the first $1,500 of benefit would be provided with no questions asked. The next $500 worth (to get to the $2,000 total) would require to the employee to respond to number of medical questions, and if approved, the employee would then move to the $2,000 level of coverage.
The problem begins when the employee is declined the excess ($500 of coverage) and held at $1,500.
Now let’s assume that the group grows through the year from 5 to 10 staff, and is now eligible (due to that growth) for an increase in the NEM to $2,500. The advisor requests the NEM increase, and it is implemented at the renewal. This means that the next employee hired (at the same earnings) would be provided the $2,000 benefit with no questions asked (as under the $2,500 limit).
The problem is that many insurers would leave that previously declined employee at the older, lower level of coverage of $1,500. As a result, the employee is disadvantaged based solely on their date of hire. I don’t think that this employee inequality is good for any party.
Benefits Canada has now picked up the story HERE
We now have almost 79.5% of in the industry in alignment (with another 10% pending change). I’d call that a win.
Here is the interesting part. Most insurers would actually move the employee to the new NEM, if any of the following situations occurred.
- The group moved to another insurer with a higher NEM. The old insurer could then take the case back (a year later) and would grandfather the coverage and add the employee(s) at the new higher NEM level
- The employee left the company and then was re-hired (after 6+ months). The insurer would then take the re-hired employee(s) back at the new higher NEM level
- The benefit (such as LTD) was dropped and was then reinstated at a later date. The insurer would then accept the employee(s) at the new higher NEM level
In all these scenarios the employee(s) would be moved to the higher NEM. So why not, when the advisor and their client remain loyal to the insurer, are they not in return?
We posed the following question to insurers…
A employer has a group plan in place with life &/or LTD coverage. The employee count increases through the year, and as a result they are entitled to an increase in the NEM level(s). At renewal, the advisor (with client consent), makes a request that the plan be amended to the new higher increased NEM. Do you….
The survey responses are as follows…
Alberta Blue Cross - (pending) BBD (Empire) - 3 Camden - 3 (follows their market partners) Canada Life (GWL) - 3 (now all case sizes) The Chamber Plan - 3 Cooperators - 3 Desjardins - 3 Empire - 3 Encon (SSQ) - 3 (some late app./1- life u/w limitations) Equitable - 3 Fenchurch - 3 Industrial Alliance - Group Health - Lloyds - 3 Manulife - 3 Medavie Blue Cross - (pending) Pacific Blue Cross - (pending) RBC - 3 RWAM - 1 (if an amendment is being processed increasing NEM’s, any employee who was previously declined, closed, or is pending would be held at their current amount of coverage and would not be eligible to increase to the new NEM.) SSQ - 3 Sun - 3 (confirmed for SunAdvantage) If your providers' response is not included, please share their response. Last updated 6/1/20
2013 – Great West Life
Great West Life/Canada Life was the industry leader in this area. They began the practice of increasing declined employees (held at an NEM) on their small groups (under 35 lives) to the new, higher NEM as far back as early 2013.
September. 15, 2014 – Manulife
Manulife announces that they were changing and aligning their practice
February 4th, 2020 – Sun Life
Sun Life announces that they were changing and aligning their practice
May 29, 2020 – RBC
Great to see RBC come to the table and put our clients first.
June 18, 2020 – Co-operators
Great to see Co-op add their name and put our clients first.
Great to see BBD both add their name to the list and communicate it so well to advisors and clients.
“Notice of Policy Amendment
To better protect plan member health, we are updating our Contract and Booklet wording to reflect changes to our Empire Life pooled benefits.
In short, clients with Empire Life pooled benefits will see new wording describing changes to the non-evidence maximum (no-evidence maximum).”
WINTER 2020/21 – More to be announced
Watch for an announcement that will take us to over 80%
Benefits Canada has now picked up the story HERE
We now have almost 75% of in the industry in alignment (with another 10% pending change). I’d call that a win.
We applaud the many insurers for taking the time to respond to the survey and who work with us to ensure both advisors, our clients and their employees are treated fairly and equitably.
Initiatives like this that help bring the industry together rather than creating reasons to be divisive. It kind of makes you wonder what exactly the CLHIA does anyway if not taking this kind of initiative.
We look forward to working together with these insurers on other initiatives in the near future.
This project was an initiative of Dave Patriarche, the founder of CGIB. CGIB is an association dedicated to advisor education and not an advocacy group. The results posted here are for general public reference only and should not be construed as a CGIB initiative, or that it has been supported by CGIB members in any way..