Changes to pensioners' contribution rates for the Public Service Health Care Plan – Frequently asked questions

Public Service Health Care Plan Retired Member Contribution Rates for Supplementary Coverage

• Effective January 1, 2015, the Public Service Health Care Plan (PSHCP) annual deductible was eliminated. Plan members no longer have to pay the first $60 for single coverage or $100 for family coverage per calendar year.
• Effective April 1, 2015, new retirees require a total of six years or more of pensionable service to be eligible as a retired member under the PSHCP. However, some exemptions apply, such as for retired members with a disability, survivors, the Veterans Affairs Canada client group and those affected by Workforce Adjustment.

• Why are Public Service Health Care Plan contribution rates for retired members changing?

  The contribution rate changes are consistent with the Government's commitment to ensuring compensation is reasonable and affordable, as well as aligned with similar plans offered by other public and private sector employers. To address this, Budget 2014 announced the Government of Canada's intention to move to a 50:50 (employer to retired member) cost-sharing model.

  Members who were retired or will retire before March 31, 2025, will not be affected by the cost-sharing change if a completed Public Service Health Care Plan (PSHCP) Relief Provision application is received and approved because their income is below the Guaranteed Income Supplement (GIS) thresholds under the Old Age Security Act.

• What is the contribution rate cost sharing ratio?

  The employer and retired members each pay a percentage of plan costs, this is referred to as the cost sharing ratio.

  Retired members' 50:50 cost sharing was phased in over a four-year period as shown in the table below. Annual adjustments were made to all contribution rates during the phase-in period and thereafter to reflect actual plan experience. Public Service Health Care Plan (PSHCP) members who retire before March 31, 2025 may be eligible for reduced contribution rates, see PSHCP Relief Provision.

  Retired Member Monthly Contribution Cost Sharing Model for Extended Health Provision

  Effective Date	Cost Sharing for Retired Members
  	Retired Member	Government of Canada
  April 1, 2015	31.25%	68.75%
  April 1, 2016	37.5%	62.5%
  April 1, 2017	43.75%	56.25%
  April 1, 2018	50%	50%

• What are the new monthly contribution rates for retired members under the Public Service Health Care Plan?

  The monthly contribution rates for retired members with Supplementary coverage can be found in Schedule V of the Public Service Health Care Plan (PSHCP) Directive.

• How are contribution rates for retired members calculated?

  The Public Service Health Care Plan (PSHCP) monthly contribution rates are comprised of two components, the cost associated with the Extended Health Provision and the cost for the Hospital Provision. These components have different cost sharing arrangements.

• Supplementary Extended Health Benefit:

  The Extended Health Benefit contribution rates are determined by three factors: the previous year's total plan costs, the pre-determined cost-sharing ratio and the type and level of coverage selected.

  Pensioner contribution rate changes are based on the previous year's total plan costs for the pensioner population and then adjusted by an estimated percentage increase in benefit costs for the upcoming year. Single or family coverage considerations are then accounted for and the cost sharing is applied. Contributions rates can be found in Schedule V of the PSHCP Directive.

• Hospital Provision:

  Hospital Level I is 100% employer paid. Hospital Levels II and III are 100% retired member paid. These contribution rates are available in Schedule V of the PSHCP Directive .

• Why do plan costs change?

  The cost of the Plan varies from year to year for a number of reasons:

  1. An aging population – with more chronic medical conditions
  2. Earlier diagnosis and treatment of health problems
  3. Availability of new and more expensive drug treatments
  4. Patient-driven demand due to advertising and online information

  You can help manage plan costs by shopping at pharmacies with low dispensing fees, requesting a three-month supply for maintenance prescriptions, electing to receive your Public Service Health Care Plan (PSHCP) Bulletin electronically and signing up for direct deposit.

• When will the next contribution change come into effect?

  The retired member contribution rates will be adjusted annually. Deductions from pension cheques are taken one month in advance of the effective date of coverage.

• Can I change or terminate my coverage as a result of this contribution rate change?

  Yes. You can apply to amend, increase, decrease or cancel your coverage at any time through your pension office. Please refer to the PSHCP Directive for details.

Public Service Health Care Plan Relief Provision

• What is the Public Service Health Care Plan Relief Provision and am I eligible?

  The Public Service Health Care Plan (PSHCP) Relief Provision provides eligible retired members of the PSHCP with an opportunity to maintain the 25:75 cost sharing ratio for Supplementary Coverage (i.e. for members residing in Canada). To be eligible you must meet the following criteria:

  1. The Relief Provision has been extended to include members who retire between April 1, 2015, and March 31, 2025. This means you must become a retired member of the PSHCP (retiree or survivor) before March 31, 2025, and continue to be a PSHCP member without interruption.
  2. You must either be in receipt of a Guaranteed Income Supplement (GIS) benefit; or the joint net income of you and your spouse/common-law partner as reported on your income tax Notice of Assessment(s) is lower than the GIS thresholds established for the Old Age Security Act. For current quarterly GIS thresholds please reference the Service Canada website.

  Note: If you are a survivor of a deceased plan member and you apply for PSHCP coverage within 60 days of your spouse's death you may be eligible to continue the Relief Provision uninterrupted.

• What are the contribution rates under the Public Service Health Care Plan Relief Provision?

  The monthly contribution rates for retired members with Supplementary Coverage - Relief Provision can be found in Schedule V of the Public Service Health Care Plan (PSHCP) Directive. The contribution rates for the PSHCP Relief Provision will be adjusted annually to reflect actual plan experience and the cost sharing ratio will be maintained at 25:75. Deductions from pension cheques are taken one month in advance of the effective date of coverage.

• How do I apply for the Public Service Health Care Plan Relief Provision?

  You must complete the Public Service Health Care Plan (PSHCP) Relief Application Form and return it to your pension office. Changes cannot be accepted over the phone.

  Note: If you are a survivor of a deceased plan member and you apply for PSHCP coverage within 60 days of your spouse's death you may be eligible to continue the Relief Provision uninterrupted if you include a new PSHCP Relief Provision Application Form with your application.

  The form is available on-line or by calling the Government of Canada Pension Center at one of the following numbers:

  • Pensioners in receipt of a Public Service Superannuation Act (PSSA) pension must call 1-800-561-7930;
  • Pensioners in receipt of a Canadian Mounted Police Superannuation Act (RCMPSA) pension must call 1-855-502-7090;
  • Pensioners in receipt of a Canadian Forces Superannuation Act (CFSA) or Veterans Affairs Canada (VAC) pension must call 1-800-267-0325.
• Must I reapply each year?

  Yes. Those approved will be contacted by the appropriate pension office with further instructions.

• How will I find out if I have been accepted / declined?

  Eligible retired members who apply for the Public Service Health Care Plan (PSHCP) Relief Provision will receive a letter from their pension office advising them of the status of their application.

• If my income status changes, can I apply or re-apply for the Public Service Health Care Plan Relief Provision?

  Yes. However, you must complete a new  Public Service Health Care Plan (PSHCP) Relief Application Form and return it to your pension office for assessment.

• My spouse or common-law partner receives a Guaranteed Income Supplement (GIS) benefit but I do not. Do I need to apply, in my own right, for GIS before I can become eligible for the Relief Provision?

  To be eligible for the Public Service Health Care Plan (PSHCP) Relief Provision, you must either be the GIS recipient or your joint net income (i.e., you and your spouse/common-law partner), as reported on your income tax Notice of Assessment(s), must be lower than the GIS thresholds established for the Old Age Security Act.

PSHCP Employer Rate

• What is the Employer Rate?

  The Employer Rate is the estimated employer portion of plan costs per plan member. It is calculated based on the previous year's total plan costs for the entire population, (employees, Canadian Forces/Royal Canadian Mounted Police members and pensioners), minus the total member contributions, and then divided by the total number of plan members. This amount is then adjusted by the estimated percentage increase in benefit cost for the following year and divided by 12 to obtain a monthly rate.

  The Employer Rate is used to determine total employee contribution in certain types of Leave Without Pay (LWOP) situations, to calculate the Quebec Taxable Benefit and in the remittance of contributions from certain participating separate employers.

• Can I calculate next year's contribution rate using the cost sharing ratio and Employer Rate?

  No, the pensioner contribution rates will be adjusted annually to reflect the previous year's pensioner plan costs and population and adjusted by the estimated percentage increase in benefit cost for the following year.

  The cost of the plan varies from year to year for a number of reasons:

  • An aging population – with more chronic medical conditions
  • Earlier diagnosis and treatment of health problems
  • Availability of new and more expensive drug treatments
  • Patient-driven demand due to advertising and online information

  You can help manage plan costs by shopping at pharmacies with low dispensing fees, requesting a three-month supply for maintenance prescriptions, electing to receive your PSHCP Bulletin electronically and signing up for direct deposit.