Some plan sponsors in Alberta experienced an unpleasant surprise this month. And plan sponsors throughout the rest of Canada need to be weary.
Alberta’s Health Statutes Amendment Act (Bill 11) took effect on October 1. The new rules state that, regardless of the age of the employee, private plans are the first payor for drug and selected other health benefits. In other words, active employees aged 65 and older are no longer eligible for public coverage unless all private coverage has been used.
“Until now a lot of plans would default to the member claiming through the province after age of 65. If it wasn’t covered then the private plan might cover it or top up the public coverage,” says Graham Young, Board Member of the Smart Health Benefits Association (SHBA) and Director, Employee Benefits at Capcorp, a benefits advisory firm.
“Now, after age 65, the core public provincial plan will only be available to those who don’t have a private plan. Employers can’t remove somebody from their private plan to push them to the provincial plan.”
Step one for plan sponsors in Alberta is to ensure their policies for termination age comply with the legislation. “Older, especially smaller plans that haven’t been updated in a while likely have an age-70 or even age-75 termination. That will need to change to an ‘at retirement’ age, which is already the case for most newer plans,” says Young.
Plan sponsors also need to decide if the reinstatement of employees over age 65 to the plan includes spousal benefits. “The legislation specifies employees only, but I would suspect most will allow spouses on because otherwise there’s a risk of being accused of discriminatory behaviour,” says Young.
Bigger questions, and concerns
In 2025, 15.2 per cent of Canadians aged 65 and older were still working, a record high and the fifth consecutive annual increase, reports Statistic Canada. In 2000, that number was six per cent.
Alberta’s new rules will add to the drug plan’s claims count for some employers, especially since drug utilization increases with age. While the full financial impact likely won’t be known until early 2028, after a full cycle of renewals, the cost of the drug plan will inevitably rise. “The increase in claims will lead to an increase in premiums for all members since the rates for most plans do not vary by age but are based on the claim experience of the entire plan. In plans with a cost share, all members will see an increase,” says Young.
Alberta Blue Cross is the insurance provider and pharmacy benefits manager for Alberta’s drug plan for seniors. Its blog post about the new legislation states: “The Government of Alberta set goals that include a focus on fiscal responsibility and encouraging more shared costs with Albertans and employers.” It also notes the legislation will “protect older Albertans by prohibiting employers from terminating or reducing select health benefit coverage for active employees regardless of age.”
And in a written communication to its clients, Alberta Blue Cross projected that private plans’ spending on drug claims would increase by two to five per cent.
These communications and the legislation itself “raise important questions around the evolving role of employer-sponsored benefits plans and the government’s expectations,” says Young. “It’s extremely important that the perspectives of plan sponsor, plan members and benefits advisors are part of policy discussions around health care.”
SHBA, a national advocacy group representing plan sponsors and members, met with representatives for the Alberta government several times since Bill 11 was introduced in October 2025 and passed in December. “They were interested in clarifying the details of the Bill but there was no receptivity to change or delay it,” says Young. “Their general feeling was that if there is a private plan in place, why should the province take on the costs?”
SHBA continues to try to communicate its concerns about the long-term unintended consequences for all members of private plans, especially drug plans. “The most extreme options are for plan sponsors to limit the drug coverage for everyone on the plan since they can no longer limit coverage based on age. Or this could throw out the baby with the bathwater, especially for smaller plans. If it adds yet another financial strain to keeping these plans sustainable, smaller employers will be less likely to maintain or even start a plan,” says Young.
What about other provinces, where drug plans for seniors kick in regardless of possible private coverage? “This could become a much bigger challenge if other provinces follow suit. We are keeping a close eye on them,” says Young. “Our overriding message is to bring us in on discussions around the sustainability of the healthcare system because private plans are a part of that system.”
Photo credit: Andranik Hakobyan
