Prescription drug spending in Canada is on the rise, one in five Canadians experience a mental health problem or illness in a given year, and the rate of growth of hospital spending has increased over the past 15 years.
During their working years, many public-sector employees have sufficient benefits to help manage these costs. But finding a suitable health insurance coverage plan that offers peace of mind once retired is another story.
In fact, Canada’s retiree health insurance market is severely underserved, according to Eric Biehn, partner and vice-president of Viking Benefit Solutions. The company manages group benefit plans for several organizations in Saskatchewan as well as the Saskatchewan Municipal Retiree Association, which offers insurance coverage to municipal retirees.
That’s why Biehn headed up Viking’s Publik plan, a new insurance offering aimed at retired public-sector employees. It launched last June in Saskatchewan, and will be available in Manitoba starting on May 1.
“It felt like insurers weren’t there to truly help the client, they were there to protect themselves — offering low coverage limits in order to keep their own risks down,” Biehn says. “That was the push-off point for us, where we decided that we needed to do something different, to build something that’s better.”
In partnership with Publik, we take a look at their coverage plans as they launch for public-sector retirees in Manitoba.
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Finding a better solution for retiring public-sector employees
According to Biehn, most plans for retirees offer the bare minimum, with roughly $1,500 or less in drug coverage and no built-in mental health programs.
The plans also usually have an age-banded structure, which means the price of coverage increases beyond standard inflationary pressures every five to 10 years, depending on age. Discounted entry-level rates encourage retirees to purchase coverage, Biehn says, but price hikes discourage people from maintaining health insurance when it’s most needed.
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Publik, however, offers a plan with up to $10,000 in drug coverage and up to $1,500 in combined paramedical services (such as massage and acupuncture), mental health programs, doctor’s second opinion services and retiree assistance services, as well as virtual healthcare, virtual pharmacy and elder care services. The price of coverage does not increase with retirees’ age.
Part of the reason Publik is able to offer significantly higher coverage and value, according to Biehn, is the structure of its parent company. Viking has evolved from a traditional advisory firm to a third-party administrator, which gives the company more control over the products it offers.
Amid this shift, Viking has cut down on administrative costs by investing in fintech and taking on more responsibility when it comes to onboarding products, Biehn says. The company also works in conjunction with current provincial plans, which offer discounted prescriptions to those over 65 years old.
“People are retiring younger, at least in our public-sector demographic. We’re getting lots of retirees between the age of 50 and 55,” Biehn says. “So they have a good 15 years that they need more coverage for.”
Publik also offers travel insurance for up to 90 days of travel with $5 million in coverage per trip, as well as a feature that’s the first of its kind in Canada: $2.5 million in COVID-19 coverage regardless of COVID-19 restrictions, as long as travellers have one vaccine dose and follow provincial laws, and $5 million in coverage for fully vaccinated travellers.
That can be an important consideration for retirees who plan to travel and need coverage — and one that’s often lacking in traditional coverage plans.
“If you’re stuck in a foreign country — including the U.S. — and you face a big expense and you need to spend money on medical circumstances, it’s incredibly expensive compared to what Canadians are used to,” says Rod Tyler, a certified financial planner in Regina who’s helped a number of clients prepare for retirement. “Having that kind of coverage makes more sense if you can obtain it or sandwich it with the kind of benefits that Publik is working with.”
Getting one chance to choose sufficient coverage for retirement
Most group insurance plans want employees to convert their coverage to a permanent choice within a few months of retirement. But dealing with any retirement plan — including medical insurance — at the last minute is never a great idea, Tyler says.
Converting coverage can also cost a lot. “Here’s the rub: that plan was constructed to give benefits to people who are working and is determined by how much and how often people in that age group have issues,” Tyler says. “As you age, those issues go up dramatically, and so the pricing of the conversion from the group plan to the permanent plan is usually very costly.”
That makes it notable that Publik is launching in Manitoba with an open enrolment period. Between May 1 and July 1, the plan is accepting applications from any public-sector retiree in Manitoba under the age of 75, as well as public-sector employees in the province who are within 60 days of their retirement date.
The open enrolment period gives people the option to join the plan with no pre-existing-condition clauses and no medical or health questions asked. It’s a rare offer in the insurance world, Biehn says, where most conversion plans require additional health questions or medical exams in order to potentially rule out coverage of pre-existing conditions unless employees enrol within 60 to 90 days of retiring.
“Generally when you are retiring, you have a one-time shot to get it right,” Biehn says. “It’s really important to be able to make sure that you pick something within that window so that you can continue to have the coverage for all of those things that you’ve had coverage for while you were working. You really have to pick a plan, and then you have to stick with that plan for life.”
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For more information or to take advantage of the open enrolment period for Manitoba retirees, visit mypublik.ca.
