Group size – new rules for 2019

For insurers and administrators of employe benefit plans

N.B.: This QDIPCinfo replaces the first two versions of Bulletin 2 published in December 2004 and updated in 2011 and QDIPCinfo Terms of Application – Group Size published in June 2018

 

Approved by the Board of Directors of the Quebec Drug Insurance Pooling Corporation On June 27, 2019

Under section 43 of the Act Respecting Prescription Drug Insurance (the Act) which took effect in 1997, all insurers and administrators of employee benefit plans (the Participants) are required to pool the risks inherent in the costs of pharmaceutical services and medications of Quebec residents according to the criteria to which they mutually agree. To fulfill this obligation, the industry set up a risk-sharing (Pooling) system. The Quebec Drug Insurance Pooling Corporation administers this system. This publication presents the principles of Pooling and, more specifically, the rules governing the determination of group size.

Principles and Objectives of the Pooling System

The Quebec Drug Insurance Pooling Corporation (QDIPC) is the only body recognized in Quebec to pool the portion of drug insurance risks that are above its established thresholds. Under the Act, Pooling is mandatory in Quebec and applies before any other form of reinsurance, including pooling under the Canadian Drug Insurance Pooling Corporation (CDIPC) and private reinsurance. Only Quebec residents are subject to Pooling.

The objective of this Pooling system agreed upon by the industry and administered by the QDIPC is to protect the accessibility of Quebec residents to private drug insurance. Its purpose is to prevent a given Group from experiencing too great a cost increase resulting from one or more large claims, putting the plan’s sustainability at risk, such that the plan’s possible termination could become a form of anti-selection against Quebec’s Basic Public Prescription Drug Insurance Plan.

Every year, the QDIPC sets the terms and conditions of pooling, including reviewing rules and establishing parameters, pooling factors and pooling threshold levels, and carrying out the compensation process between Participants in order to comply with the requirements of the Act.

The pooling factors are re-evaluated at the time of compensation, based on the actual experience of paid drug claims in excess of the thresholds, to ensure full compensation of the sums involved, such that the total of the amounts claimed at the end of a given year corresponds to the total of the amounts paid in compensation, so that no surplus or deficit is ever created. In addition, every Participant is charged an annual administrative fee to cover the administrative expenses incurred by the QDIPC.
In accordance with industry practices, it is recognized that a Group’s ability to support large claims is a function of its size. The pooling terms set by the QDIPC, more specifically, the thresholds and pooling factors, vary according to the size of the groups so as to meet the Pooling objectives.

Definitions

  • An “Employer” is the natural or legal entity that pays wages to their active employees or that maintains contractual relations with their retirees.
  • An “Employer/Employee Group” is made up of all the active or retired employees of an Employer. It can also be made up of active employees or retirees who are members of a Union Unit or employees’ association working for a single Employer.
  • A “Multi-employer Group” is made up of several Employer/Employee Groups or of one or more Union Units made up of active or retired members from several different Employers.
  • A “Group of Association of Persons” is made up of individuals (and not of Employers and their employees) and is determined in accordance with section 15.1 of the Act. Groups of Association of Persons include active or retired members:
    • of a professional order;
    • of a professional association that brings together members of a professional order;
    • of an association that groups together members practising the same trade or the same work;
  • A “Certificate” includes both the member and their dependents, as the case may be.
  • A “Policyholder” is an entity (legal or natural) who, on behalf of their employees or members, enters into a contract or agreement to offer a group plan providing drug coverage. The Policyholder has decision-making power over the types of coverage provided and the financial terms negotiated or applied.
  • A “Market Intermediary,” for the purposes of this document, refers to a broker, a consulting actuary, a group insurance representative and a third-party administrator (TPA).
  • A “Contract” refers to the agreement that defines the coverage terms for a group insurance contract or an uninsured Administrative Services Only (ASO).
  • A “Union Unit” refers to a union unit representing the employees of an employer, as well as to the employee association of a single employer in the absence of a union unit. In the examples given in the QDIPCinfo, in order to streamline the text, the use of the term “Union Unit” also refers to an employee association and the term “non-unionized employees” also refers to employees represented by an employee association.
  • A “Financial Agreement” in a group insurance Contract refers to a contract document that sets the parameters for risk sharing between the insurer or the third-party payer (TPP) and the Policyholder (i.e., unilateral or bilateral retention agreements and financial agreements of ASOs).
  • A “Significant Financial Relationship” is said to exist between:
    • an employer and the Union Units representing its employees;
    • the members of a Union Unit from one or more different Employers;
    • the members of several Union Units from one or more separate Employers;
    • a parent company and its franchisees;
    • a parent company and its subsidiaries;
    • a holding company and the companies connected to it.

Groups subject to pooling

Under the Act, all insured and uninsured plans with at least one member residing in Quebec, to the extent that the plans are eligible, i.e., that they meet the norms set out in the Act, are subject to Pooling.

To ensure a common understanding of the obligations arising from this Act, the Régie de l’assurance maladie du Québec (RAMQ) specifies the legislator’s intentions via newsletters. The QDIPC uses this information to apply the pooling system.

Since the establishment of the pooling mechanism in 1997, all insured and uninsured (ASO) plans providing coverage for drugs covered by the Basic Prescription Drug Insurance Plan (BPDIP) have been subject to Pooling according to the pre-established parameters agreed upon by the Participants.

Under the Act, individuals meeting the eligibility criteria to belong to a Group established because of a relationship formed through their employment (former or current), usual occupation or profession, and who are offered a group insurance plan providing prescription drug coverage, must be covered by this plan unless they hold coverage under another private plan. All private plans must include the minimum coverage criteria provided by the Act.

Since 1997, the Regulation under the Act Respecting Insurance (RALA) has expanded the definition of what constitutes a Group. Because the RAMQ has not adjusted its criteria to allow these Groups to reimburse drugs appearing on the BPDIP list, this change has no impact on the groups covered by the QDIPC.

As a rule, self-employed workers cannot benefit from a private plan providing reimbursement of drugs appearing on the BPDIP list. Self-employed workers must enrol in the public plan unless they have access to a private plan through their profession (as a member of an association or a professional order offering a plan to their members) or as a dependent through their spouse.

Determining Group Size

A Group’s pooling threshold and pooling factors are both determined by its size. The more certificates with prescription drug coverage the Group has, the better able it is to support large claims, and, as a result, the higher the pooling threshold set by the QDIPC.

The pooling threshold used for Group renewal pricing and shown in the renewal documents cannot be higher than that set by the QDIPC’s pooling rules.

To determine a Group’s pooling threshold and factors, it is important to properly establish its size.

To determine the size of a Group, the principles below must be applied for the different types of Groups.

 

Principle of Joint Responsibility

In a Group, the decisive criterion for establishing its size, and therefore, its pooling threshold, is the number of Canadian certificates jointly and severally at risk with the Policyholder.

A priori, an Employer and all of its employees (active and retired) are considered jointly and severally responsible. The Union Unit representing the employees of a single Employer is also considered jointly and severally responsible for its members.

When a portion of the employees of a single Employer is represented by a Union Unit and this Union Unit is the joint Policyholder with the Employer of a group insurance contract, the QDIPC considers that, even though they are separate Policyholders, and therefore separate Groups, the principle of joint responsibility of the Employer is maintained between these Groups.

Therefore, whether an Employer, or an Employer jointly with the Union Unit, covers their employees under one or more contracts, distributed over one or several divisions, whether pricing is identical for all employees or varies per contract and/or division, the size of the Group is established on the basis of the total number of certificates with drug coverage.

When a portion of the employees of a single Employer is represented by a Union Unit and the Union Unit is the sole Policyholder of the group insurance contract, the QDIPC considers that they are, for the purposes of Pooling, separate Policyholders, and therefore, separate Groups, and that a priori, there is no joint and several responsibility between these Groups. The size of the Groups is therefore established independently on the basis of the number of certificates of the two parties subscribing to drug insurance coverage. Note that, because a Significant Financial Relationship is considered to be present between an Employer and the Union Unit covering their employees, when all the conditions laid out in the section dealing with Multi-Employer Groups are met, for the purposes of establishing the size of the Groups, these groups must be grouped together.

Note that, even though the total number of Canadian certificates is considered to establish the size of a Group, only the certificates of employees residing in Quebec can benefit from QDIPC pooling.

Respect for the Spirit of Equity and the Principle of Joint Responsibility

The Pooling system created by the industry is intended to be fair and equitable. Participants are required to engage in behaviour that does not create anti-selection against the government system and other Participants. Anti-selection occurs when known information is used to improve one’s situation to the detriment of the other Participants.

 

Participants undertake to respect the Spirit of Equity and the Principle of Joint Responsibility.

In this context, it is not permitted to create, as part of the drug reimbursement benefit, categories of coverage or different plans whose goal is to isolate one or more members with high drug claims in order to benefit from lower pooling thresholds or to cluster members in order to benefit from a higher pooling threshold or to avoid pooling.

• Employer/Employee Groups

Definitions :

An Employer/Employee Group, as its name indicates, is made up of a single Employer’s employees.

The Policyholder may be the Employer, the Union Unit or the Employer jointly with the Union Unit.

For the purposes of the QDIPC, a Union Unit whose members are from a single employer is related to the concept of Employer.

However, when the Policyholder is a Union Unit and the members covered by the Contract are from more than one Employer, for the purposes of the QDIPC, the Group is considered a Multi-Employer Group.

The size of an Employer/Employee Group corresponds to the number of Canadian employees (Certificates) benefiting from drug coverage.

Examples to Determine Group size

  1. 1. An Employer with employees living exclusively in Quebec. The employees are not represented by a Union Unit.

a. 1 Contract in which the Employer is the Policyholder, 1 division, full membership

The 300 employees of a single Employer all subscribed to the Contract and all have drug coverage.

Group size: The size of the Group is set at 300 – the pooling threshold and pooling factors correspond to those of a Group of 250 to 499 certificates.

b. Contract in which the Employer is the Policyholder, 1 division, partial membership

The 300 employees of a single Employer have all subscribed to the Contract but 60 employees have requested an exemption from the Employer’s drug (health) coverage, confirming that they have subscribed to another private group insurance Contract providing drug coverage (the administrator or Policyholder must keep evidence of the request for exemption on file).

Group size: The size of the Group is set at 240 – the pooling threshold and pooling factors correspond to those of a Group of 125 to 249 certificates.

c. 1 Contract in which the Policyholder is the Employer, 2 divisions, single rate adjustment

The 300 employees of a single Employer have subscribed to the Contract and they have all subscribed to the drug coverage. The employees are divided into 2 divisions – 100 are covered in division 1 and 200 in division 2. At the time of renewal, the rate adjustment is the same for both divisions.

Group size: The size of the Group is set at 300, the Policyholder and its 300 employees are joint and severally responsible for the group’s experience.

d. Contract in which the Policyholder is the Employer, 2 divisions, rate adjustments varying per division

The 300 employees of a single Employer have subscribed to the Contract and have all subscribed to the drug coverage. The employees are divided into 2 divisions – 100 are covered in division 1 and 200 in division 2. At the time of renewal, the rate adjustments differ per division.

Group size: Although rate adjustments differ per division, the Employer and its employees are deemed to be jointly and severally responsible for the experience. The size of the Group is set at 300.

e. 2 Contracts, the Employer is the Policyholder of both Contracts (with or without a financial agreement linking the Contracts)

The 1,000 employees of a single Employer have subscribed to the drug coverage of one or the other of the 2 Contracts (e.g., a contract covering management employees and a second contract for office staff). The Employer is the Policyholder of both Contracts. The Contracts may or may not be linked by a financial Agreement; this aspect has no impact on the size of the Group.

Group size: The size of the Group is set at 1,000. An Employer and its employees are always implicitly considered to be jointly and severally responsible for the experience. The presence of a Financial Agreement linking the two Contracts explicitly confirms the joint responsibility intent of the Employer and of the two groups of employees but has no impact on the establishment of the size of the Group. When the Policyholder is a single Employer, the rate adjustments may differ per Contract and even per division within the Contracts where applicable. The Employer shall be deemed to act fairly towards the different employee groupings.

f. 3 Contracts, the Employer does business at 3 different addresses, and is the Policyholder of the 3 Contracts

A single Employer has 3 plants in separate locations. The 1,000 employees of the 3 plants all receive their wages from the same Employer.

Group size: The size of the Group is set at 1,000. As in the 1st example, the Employer and its employees are considered to be jointly and severally responsible for the experience. The rate adjustments may differ per Contract and even within Contracts where applicable.

  1. An Employer with employees residing in Quebec and outside Quebec. The employees are not represented by a Union Unit.

a. 1 Contract in which the Policyholder is the Employer, 1 division

The 130 employees of a single Employer have all subscribed to the Contract and have all subscribed to the drug coverage. 30 employees are residents of Quebec and 100 employees live outside Quebec.

Group size: The size of the Group is set at 130 because the Employer and the 130 employees are considered to be jointly and severally responsible. Note that even if the size of the Group, for the purposes of establishing a pooling threshold, is set at 130, only the 30 residents of Quebec are subject to Pooling.

b. 1 Contract in which the Policyholder is the Employer, 2 divisions, the coverage for both divisions complies with the minimum requirements of the BPDIP

The 130 employees of a single Employer have subscribed to the Contract, and they have all subscribed to the drug coverage. 30 employees are Quebec residents and 100 employees live outside Quebec. The Quebec employees are grouped into one division and the employees outside Quebec are grouped into a second division. At the time of renewal, the adjustment rates vary per division or are the same. The drug insurance coverage for both divisions complies with the requirements of the BPDIP.

Group size: The size of the Group is set at 130 because the Employer and the 130 employees are considered jointly and severally responsible.

c. 1 Contract in which the Policyholder is the Employer, 2 divisions, only one division’s coverage complies with the minimum requirements of the BPDIP

The 130 employees of a single Employer have subscribed to the Contract, and they have all subscribed to the drug coverage. 30 employees are residents of Quebec and 100 employees live outside Quebec. The Quebec employees are grouped into one division and the employees living outside Quebec are in a second division. At the time of renewal, the rate adjustments vary per division or are the same. The drug coverage of the 30 employees who live in Quebec complies with the requirements of the BPDIP and that of the employees outside Quebec does not comply with it.

Group size: The size of the Group is set at 130 because the employees are covered under a single contract. The Employer and the 130 employees are considered jointly and severally responsible.

d. 2 Contracts, the Policyholder is the Employer for both contracts, separate rate adjustments per Contract (with or without financial agreements linking the Contracts)

An Employer creates 2 separate Contracts; namely one Contract for 30 Quebec certificates to provide a plan that complies with the minimum requirements of the BPDIP and a second Contract for 100 certificates for those living outside Quebec, not compliant with the minimum requirements of the BPDIP.

Group size: For the purposes of Pooling, because the Act covers Quebec employees only, and because the Employer purposefully created 2 Contracts with separate coverages, the size of the Group is set at 30.

 

  1. A single Employer with employees residing in Quebec only, a portion of the staff is represented by a Union Unit.

a. 1 Contract, 2 divisions, the first division covering non-unionized employees and the second covering employees who are members of the Union Unit, the Employer is the Policyholder

The 400 employees of a single Employer have subscribed to the Contract and they have all subscribed to the drug coverage. The employees are divided into 2 divisions: the 150 non-unionized employees are covered in division 1 and the 250 unionized employees in division 2. At the time of renewal, the rate adjustment differs per division.

Group size: Because the Policyholder is the Employer alone, the size of the Group is set at 400.

b. 2 Contracts, 1 covering non-unionized employees and the second covering employees who are members of the Union Unit, the Employer is the Policyholder of both Contracts

The 400 employees of a single Employer have subscribed to the Contract and they have all subscribed to the drug coverage. The employees are divided into 2 Contracts: the 150 non-unionized employees covered under the first Contract and the 250 unionized employees covered under the second Contract. At the time of renewal, the rate adjustment differs per Contract.

Group size: Because the Policyholder of both Contracts is the Employer, the size of the Group is set at 400.

c. 2 Contracts, 1 Contract covering non-unionized employees and the second covering employees who are members of the Union Unit, the Employer is the Policyholder of one of the contracts and the Union Unit is the joint policyholder with the Employer of the second contract

The 400 employees of a single Employer have subscribed to the Contract and they have all subscribed to the drug coverage. The employees are divided into 2 Contracts: the 150 non-unionized employees are covered under the first Contract and the 250 unionized employees are covered under the second Contract. At the time of renewal, the rate adjustment differs per Contract.

Group size: Because the Employer is the Policyholder for both contracts, i.e., the sole Policyholder of the first Contract and the joint Policyholder of the second contract, both are considered joint and several Contracts. The size of the Group is set at 400.

d. 2 Contracts, including one covering non-unionized employees and a second covering employees who are members of the Union Unit, the Employer is the Policyholder of one of the contracts and the Union Unit is the sole Policyholder of the second contract

The 400 employees of a single Employer have subscribed to the Contracts and they have all subscribed to the drug coverage. The employees are divided into 2 Contracts: the 150 non-unionized employees are covered under the first Contract and the 250 unionized employees are covered under the second Contract. At the time of renewal, the rate adjustment differs per Contract.

Group sizes: Because there are two separate Policyholders and because the Employer is not a joint Policyholder for the Contract covering the members of the Union Unit, both are considered to be independent Contracts and not joint and several Contracts. The size of the Group covering the non-unionized employees is set at 150 and the size of the Group covering the unionized employees is set at 250.

e. 2 Contracts, one covering non-unionized employees and the second covering employees who are members of the Union Unit, the Employer is the Policyholder of one of the Contracts and the Union Unit is the Policyholder of the second Contract, single rate adjustment

The 400 employees of a single Employer have subscribed to the Contracts and they have all subscribed to the drug coverage. The employees are divided into 2 Contracts: the 150 non-unionized employees are covered under the first Contract and the 250 unionized employees are covered under the second Contract. At the time of renewal of the Contracts, the financial analysis is done jointly, and a single rate adjustment applies to both Contracts.

Group sizes: Although these are Groups with separate Policyholders, because all the employees work for the same Employer, a significant financial relationship is deemed to exist between these two Contracts. When all the conditions laid out in the section dealing with Multi-Employer Groups are met, for the purposes of establishing the size of the Groups, these groups must be grouped together, and the size of the Group is then set at 400. When the conditions are not all met, the size of the Groups is set independently at 150 for the contract covering the non-unionized employees and at 250 for the contract covering the unionized employees.

f. 3 Contracts, the first covering management employees, the second covering professional employees and the third covering employers who are members of the Union Unit. The Employer is the Policyholder of the first two Contracts and the Union Unit is the Policyholder of the third Contract

The 400 employees of a single Employer have subscribed to the Contracts and they have all subscribed to the drug coverage. The employees are divided into 3 Contracts: the 25 management employees are covered under the first Contract, the 125 professional employees are covered under the second contract and the 250 unionized employees are covered under the third Contract. Rate adjustments differ per Contract.

Group sizes: For the purposes of establishing the size of the Groups, there are two separate Groups. The two Contracts that have the Employer as Policyholder and that cover management employees and professional employees are considered as being related under the principle of the Employer’s responsibility towards its employees. The size of this Group is set at 150 (125+25). Because the Policyholder of the third Contract is the Union Unit representing the Employer’s employees, this Group is considered separate from the two other Contracts and the size of this Group is set at 250.

  1. An Employer and its subsidiaries

a. 1 Contract, 2 divisions, one covering the Employer’s employees and the second covering the employees of the Employer’s subsidiary, the Policyholder is the Employer

The 400 employees of a single Employer and the 200 employees of the Employer’s subsidiary have subscribed to the Contract and they have all subscribed to the drug coverage. The Employer’s employees and those of its subsidiary are divided into 2 divisions: the 400 employees of the Employer are covered in division 1 and the 200 employees of its subsidiary in division 2. At the time of renewal, the rate adjustment differs per division.

Group size: Because the Policyholder is the Employer alone, the size of the Group is set at 600.

b. 2 Contracts, one covering the Employer’s employees where the Policyholder is the Employer and the second covering the employees of its subsidiary, where the Policyholder is the subsidiary.

The 400 employees of a single Employer and the 200 employees of its subsidiary have all subscribed to the drug coverage and are covered under Contracts with different Policyholders. Renewal rates differ per contract.

Group sizes: Because the Policyholders are different, each Group is considered independent and the size of the Groups corresponds to the number of employees covered by each of the Groups. The Employer’s size is 400 and its subsidiary’s is 200.

c. 2 Contracts, one covering the Employer’s employees, where the Policyholder is the Employer and the second covering its subsidiary’s employees, where the Policyholder is the subsidiary, single rate adjustment

The 400 employees of a single Employer and the 200 employees of the Employer’s subsidiary have all subscribed to the drug coverage and are covered under Contracts with separate Policyholders. At the time of Contract renewal, the financial analysis is done jointly, and a single rate adjustment applies for both Contracts.

situation involves an Employer’s subsidiary, a Significant Financial Relationship is deemed to exist between them. When all the conditions laid out in the section dealing with Multi-Employer Groups are met, for the purposes of establishing the size of the Groups, these groups must be grouped together, and the size of the Group is therefore set at 600. When the conditions are not all met, the size of the Groups is established independently, i.e., 400 for the Contract covering the Employer’s employees and 200 for the contract covering the subsidiary’s employees.

  1. A holding company and its subsidiariess

a. 1 Contract in which the Policyholder is the holding company, 3 divisions corresponding to the companies owned by the holding company

A holding company owns 3 companies. Each of the companies has 200 employees. The 600 employees have subscribed to the Contract and they have all subscribed to the drug coverage. At the time of renewal, the rate adjustment differs per division. .

Group size: Because the Policyholder is the holding company and because a Significant Financial Relationship exists between a holding company and its subsidiaries, the holding company is considered to be the sole decision maker. The Group size is set at 600.

b. 3 separate Contracts, namely, one Contract for each of the subsidiary members of a holding company, each subsidiary is the Policyholder of its Contract

The 200 employees of each of the subsidiaries have all subscribed to the drug coverage and are covered under Contracts with separate Policyholders.

Group sizes: Because the Policyholders are different, each Group is considered to be independent. The size of each of the groups is set at 200.

c. 3 separate Contracts, namely, one Contract for each of the subsidiary members of a holding company, each subsidiary is the Policyholder of its Contract, single rate adjustment

The 200 employees of each of the subsidiaries have all subscribed to the drug coverage and are covered under Contracts with separate Policyholders. At the time of Contract renewal, the financial analysis is done jointly, and a single rate adjustment applies to the 3 Contracts.

Group sizes: Although these Groups have separate Policyholders, because this situation involves companies that are members of a single holding company, a Significant Financial Relationship is deemed to exist between these three Groups. When all the conditions laid out in the section dealing with Multi-Employer Groups are met, for the purposes of establishing the size of the Group, these groups must be grouped together, and the Group size is therefore set at 600. When the conditions are not all met, the Group sizes are established independently, namely, 200 for each of the contracts.

 

• Employer/Employee Groups

Definition :

A Multi-Employer Group consists of several Employer/Employee Groups or of one or more Union Units with active or retired members from several different employers.

 

The Principle of Independence of Responsibility :

For Pooling purposes, each Employer in a multi-employer plan must be reported individually. The size of each Group is set according to the number of certificates covered by the drug coverage guarantee provided by the Employer (or the “Union Unit”.

A Multi-Employer Group will be considered as a single large Group when:

      • the group is not established for the purpose of benefiting from a higher pooling threshold;
      • a Significant Financial Relationship exists linking all the employers that belong to the group;
      • there is no form of anti-selection [1], directly or indirectly, either at the time of entry or at the time of renewal. Note that pricing at the time of entry may be different per Employer, but it must not be anti-selective. Newcomers to a multi-employee group that is already set up must enter under the same conditions as those of the existing groups in terms of coverage, guarantees, term and renewal conditions. Only the entry price may be different;
      • renewal of drug coverage for all Employers belonging to the group is set on the basis of the overall experience of all the Employers, without the specific experience of an Employer directly or indirectly impacting its pricing or access to benefits. A single rate adjustment covering drug coverage applies to all the Employers participating in the Multi-Employer Group, whether access or pricing rules are set by the insurer, the TPA, the Market Intermediary or any other entity. To this end, the QDIPC does not expect that individual Employer’s experiences be presented to them, but rather that only the overall experience be accessible to the Employers of the group.
        Note that, should a change to the plan be required at the request of an Employer, the subsequent rate change must be justified by official documentation confirming the change to the plan.

When a Multi-Employer Group is presented as being a single Group, the Participant signing the Compliance Certificate must always be able to demonstrate compliance with the principles developed for setting group size. When the pricing established by the Participant is modified by a third party (the TPA, the Market Intermediary, etc.) the Participant must be able to demonstrate that this third party has complied with all the conditions.

Groupings made up of the clients of a Market Intermediary, a prevention mutual or a health care trust are not considered to have a Significant Financial Relationship and therefore do not qualify to be considered as a single large Group. The same holds true for groups made up of different Employers, with no affiliation other than the fact of being insured or administered by the same Participant. These Employers must always be reported individually for the purposes of Pooling.

When a Multi-Employer Group is presented as being a single large Group, the Participants must be able to demonstrate that all the conditions are met. This information must be available upon request by the QDIPC.

Examples 

  1. Multi-Employer Group made up of Employers without a Significant Financial Relationship uniting them and needing to be reported individually to the Corporation.

Example of Groupings that belong to this category:

      • A Multi-Employer Group made up of the clients of a Market Intermediary (i.e., insured groups or groups administered by a Participant and having the same renewal date);
      • A Multi-Employer Group made up of Employers of a certain size (i.e., a Multi-Employer Group for Employers with fewer than 25 employees and a second for Employers with 26 to 50 employees);
      • A Multi-employer Group made up of Employers who are members of an economic association (i.e., a grouping or association of Quebec employers and other similar situations);
      • A Multi-employer Group made up of Employers working in the same field but having no Significant Financial Relationship (i.e., the group of manufacturers and distributors of XYZ, an industrial park employers’ group, a group of cities or municipalities and other similar situations);
      • A Multi-employer Group made up of Employers grouped together for administrative or service-sharing purposes;
      • A Multi-employer Group called a “prevention mutual,” referring to the concept of risk management used by the Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST): this is a grouping of several Employers all sharing preventive services aimed at reducing disability insurance costs;
      • And all other similar situations.

Group size:

      • For the purposes of the Corporation, each Employer of the Multi-Employer Group must be reported individually. The size of each Group is established on the basis of the number of certificates benefiting from the Employer’s drug coverage according to the principles established for Employer/Employee Groups..
  1. Multi-Employer Group made up of Employers with a Significant Financial Relationship uniting them.

Note that certain examples of Employers having a Significant Financial Relationship (subsidiaries, holding companies, etc.) are given in the Employer/Employee Group section.

Examples of Groups that belong in this category:

        • A Multi-Employer Group made up of an Employer and Union Units representing the Employer’s employees;
        • A Multi-employer Group made up of one or more Union Units grouping together the employees of several different employers;
        • A Multi-Employer Group made up of a network of franchisees (i.e., restaurant, pharmacy, hardware store franchisees);
        • A mpany or of a company and its subsidiaries;

Group size:

The size of the Group is set as being the total number of certificates with drug coverage of all the Employers when ALL the conditions laid out in the section dealing with Multi-Employer Groups are met, namely:

        • no selection or anti-selection, directly or indirectly, both at entry and at the time of renewal;
        • the renewal for drug coverage for all the Employers who belong to the group must be established on the basis of the overall experience of all the Employers without the specific experience of a single Employer having a direct or indirect impact on pricing or access to coverage. A single rate adjustment covering the drug coverage applies to all Employers participating in the Multi-Employer Group, whether access or pricing rules are set by the insurer, the TPA, the Market Intermediary or any other entity. To this end, the QDIPC does not expect that individual Employer’s experiences be presented to the Multi-employer Groups, but rather, that only the overall experience be accessible to them.

When the conditions are not all met, the size of the Groups is set independently for each of the Employers based on the criteria established in the section dealing with Employer/Employee Groups.

Prior approval required

In order to ensure compliance with these rules, any new multi-employer group to be considered for the purpose of establishing the size of the Group as a single Group must be pre-authorized by the Corporation.

• Groups of Association of Persons

Definition :

An Group of Association of Persons is a Group that offers, facilitates membership in or makes accessible to its active or retired members, either directly or through a Market Intermediary, a group insurance contract, an employee benefits plan or an individual insurance contract entered into on the basis of one or more of the characteristics of a group insurance plan. For the purposes of the BPDIP, an association is a professional order, a professional association that groups together members of one or more professional orders or an association that groups together members practising the same trade or the same work.

When a Group of Association of Persons provides drug coverage, its members are obligated to join unless they have private coverage through their job, their profession or their spouse.

Employers and their employees in business groups such as chambers of commerce or a grouping of municipalities, for example, are considered to be Multi-Employer Groups. To determine the size of these groups, please refer to the Multi-Employer section above.

Examples :

  1. Group of Association of Persons

Examples of Groups belonging to this category:

    • Professional orders (i.e., the Order of Architects of Quebec, the Order of Engineers of Quebec, etc.);
    • Trade associations (i.e., the Association of Authors of the Laurentians, the creative trades association, the Denturists’ Association, etc.);
    • Associations of management professionals;
    • And all other similar situations.

Group size:

The size of a Group of Association of persons is set according to the total number of certificates with drug coverage.

 

  1. Group of Association of Personsn

Example of Groups not belonging to this category:

    • Associations not related to trades or professional orders. Under the Act respecting prescription drug insurance, these associations cannot provide coverage for the reimbursement of the drugs included on the BPDIP list (i.e., the association of members of a sports club, the association of parents of a school board, etc.);
    • Associations of employer groups: these groups are considered to be Multi-Employer Groups for the purposes of the Corporation (i.e., the Association of Manufacturers and Distributors of XYZ, the Canadian Museums Association, etc.);
    • Consumers’ associations, homeowners’ associations;
    • And all other similar situations.

 

• • Possible Exception for Employers without a Place of Business in Quebec

All Quebec residents are required to join a private or public drug insurance plan meeting the standards of the Act and only these plans are eligible for Pooling.

For groups covering members outside Quebec, only the certificates of the Quebec residents are subject to Pooling.
In principle, all groups covering members living in Quebec and benefiting from a group plan providing drug coverage are subject to Pooling.

Employers without a place of business in Quebec who offer a group plan to their employees living in Quebec are not required to provide drug coverage meeting the minimum criteria of the BPDIP. When the existing plan does not meet the minimum criteria of the BPDIP, these employees living in Quebec are required to join the public plan unless they have access to a group plan meeting the criteria of the Act.

As an exception to the principle that all groups covering Quebec residents are subject to Pooling, the Corporation allows a Participant to exclude from Pooling Groups of Employers without places of business in Quebec and offering coverage that does not meet the minimum criteria of the BPDIP. The application of this exception must be coherent and consistent over time. A Participant wanting to take advantage of this exception must be able to, upon request by the QDIPC or its agents, provide proof of the rationale for excluding the group from Pooling.

A Quebec certificate can be defined as a member whose main/tax address is in Quebec. The Corporation accepts this simplified definition of “Quebec residency.”

The in-force for groups terminated during the year

The terms and conditions of pooling provide that, at the time of compensation, the size of an eligible group is determined by the number of certificates in effect in Canada as of December 31st of the relevant year, even if only the Quebec certificates are subject to Pooling.

For each group terminating during a given year, the in-force (determining group size) will be set by taking the average of the in-force on December 31st of the previous year and the in-force at the time the plan terminates. When a terminating group has come into force during the year (thus having under one year of experience), the group size will be determined by taking the average of the group size as of the date of its entry into force and the group size as of the termination of the plan. The average used will be a simple arithmetic mean, without any weighting.

Maintaining a Group’s legitimacy

It is the responsibility of Pooling Participants to ensure consistency with respect to the group size used for pricing purposes and that used for the purpose of risk pooling. The Group threshold for pricing purposes cannot be higher than that established for Pooling purposes. Participants are asked to declare this consistency via the compliance certificate submitted during a Pooling process or to demonstrate it when an audit is conducted.

The legitimacy of a group with respect to the applicable laws is usually validated when the contract begins and then at each renewal unless otherwise indicated in the text of the contract or unless automatic renewal clauses, notice-giving clauses or renewal time limits exist. In reality, since group contracts are generally renewable contracts issued for a one-year term, the validation of the legitimacy of a group must be done annually.

In addition, although the obligation to join a plan rests on the individual, Participants are required to ensure that every individual who has access to a private plan is indeed insured. Thus, when an individual asks to be excluded from a group insurance plan on the grounds that they are already covered under another group coverage, the Policyholder, administrator or insurer must keep on file the information justifying this exemption from participation. Since, by definition, a group includes at least two certificates, the declaration of a “group of one” implies that the information justifying the exemption of the other group member(s) is available in the event an audit is conducted.

Prior Approval

This QDIPCinfo is intended to be a guide to the terms of application of Pooling. If you have doubts or questions or require clarifications, please send an e-mail to the QDIPC at the following address, explaining your actual case: directiongenerale@mutualisation.ca. The subject line of the e-mail should read as follows: REQUEST FOR PRIOR APPROVAL for new files or REQUESTS FOR INFORMATION for existing cases.

The request should describe the case in detail, with the reasons for the ambiguities, and must include the name(s) of the company(ies) involved. All requests will be handled in a consistent and confidential manner. The Corporation undertakes to answer requests within 30 days for cases considered non-complex. The cases submitted, as well as their responses, may be published in the FAQ section of the Corporation’s website, with personal information removed, so as to help others in the market to consistently interpret the rules.

Denunciation for Dubious Practice

Over the years, the Corporation has developed a Pooling formula that minimizes its impact on market practices while remaining true to the spirit of the Act. Its aim is to ensure that all pooled claims are handled fairly and equitably while maintaining fairness for each Participant.

Any practice that goes against fair and equitable pooling should be referred to the Corporation by sending an e-mail to directiongenerale@mutualisation.ca, with: DUBIOUS PRACTICE as the subject line. The Corporation will examine the situation and take action as needed. The QDIPC shall ensure the confidentiality of the communications it receives.

[1] A form of anti-selection is deemed to occur when the criteria established for an Employer to join a Multi-Employer Group, or when an Employer’s renewal conditions, including benefits other than drug insurance, are directly or indirectly influenced by the experience of the drug benefit plan, by its size, by the demographic characteristics of an Employer (such as the number of disabled persons or retirees) or by any other anti-selection action not mentioned herein

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