Is IT right for your business and your employees?
By Matt Houghton
With the change in Canadian laws surrounding the use of cannabis, discussion about its use is evolving, especially in the health care field.
This means that insurance companies are also shifting focus to improve drug plan coverage to incorporate all kinds of medical treatments, including medicinal cannabis.
There has been an increase in clients inquiring about this type of coverage, especially with legalization raising interest with many Canadians. With medicinal cannabis becoming more commonly accepted in the country, how do companies decide if adding this coverage is right for their business and employees? If it is, which coverage will best meet the needs of employees and the company? These are big questions that business owners and managers are asking these days.
There are three questions to consider in regard to the potential addition of medicinal cannabis coverage to an employee benefits plan:
- What do employees need in this coverage?
- Which type of coverage is best for your business?
- How will adding this coverage affect your business?
What do employees need in medicinal cannabis coverage?
Employees are likely to start asking about this coverage, if they haven’t already. It is important to understand and anticipate their needs in this area. This includes understanding which conditions employees may want to treat with medicinal cannabis and the necessary amounts required for treatment.
Most insurance providers will only accept medicinal cannabis as a medical expense if it is used to help with specific, predetermined health conditions. This determination does not fall on the employer, but on the insurer, who will use their prior authorization process to decide eligibility. This allows the insurer to confirm that the individual has tried other appropriate treatments that have failed. The insurer will confirm that there is medical evidence, provided through a doctor’s recommendation, that the medicinal cannabis will be beneficial for the conditions that they are allowing to be covered.
The conditions covered vary depending on the insurance provider, but they commonly include multiple sclerosis, cancers or patients requiring palliative care. Some plans also include treatment for chronic pain, rheumatoid arthritis and HIV/AIDS.
Medical research is relatively new when it comes to evidence-based information on the effects of medicinal cannabis as a treatment option for issues such as chronic illness and pain. As a result of this research gap, the number of conditions currently covered by insurance providers is limited. Outlining the predetermined conditions allows insurance providers to limit their exposure on the relatively unknown usage implications.
This has contributed to the low demand for medicinal cannabis. The legalization in Canada and change in stigma around the globe will likely increase the number of studies on the effectiveness of medicinal cannabis. This will provide greater insight into the merit of utilizing medicinal cannabis as a treatment option and could cause an increase in the demand.
Different conditions that can be effectively treated by medicinal cannabis require varying prescribed amounts for usage. Each employee who has been prescribed medicinal cannabis is unique and their prescribed usage amounts will differ. Research suggests that average daily use of prescribed cannabis is one gram, which is how many of the insurance companies base their coverage. Typically, this will likely leave many plan members with needs that exceed the caps put on coverage amounts for medically prescribed cannabis.
Which type of coverage is best for your business?
There is a range of options that allow companies to add medicinal cannabis coverage to employee benefits plans. While not all insurance companies are ready to offer this type of coverage, trends in the industry show that many providers are incorporating medicinal cannabis coverage as a plan add-on. Insurance companies are offering this coverage to employers in two distinct ways: Through health spending accounts and as an expense under medical services and equipment.
Medicinal cannabis currently does not have a Drug Identification Number, which means insurance providers categorize it under medical services and equipment and not under prescription drug benefits. Under this category, insurance providers offer coverage with various yearly maximums, ranging from $1,500 to upward of $6,000 per covered employee. Recently, GroupHEALTH partnered with Zenabis to introduce the No Max Medicinal Cannabis Program, which allows employers to offer coverage to their employees with no yearly maximums and no predetermined conditions. Valid medical documentation is required from the employee for both of the above coverage options.
Another option to consider for benefits plans with cannabis coverage is the inclusion of a health spending account. Since medicinal cannabis qualifies as a medical expense under the Canada Revenue Agency guidelines, individuals are eligible to expense their medicinal cannabis (with valid medical documentation) to their health spending account – as long as they acquire their medicinal cannabis supply in accordance with the Access to Cannabis for Medical Purpose Regulation. This means that individuals need to register with an authorized medicinal cannabis supplier to fill their requirements.
How will adding medicinal cannabis coverage affect your business?
Adding medicinal cannabis coverage to employee benefits plans is still a relatively uncharted concept and there is limited information available regarding how it might affect the cost of doing business. A new drug option can feel challenging, especially one with the legal and social history of cannabis. It is important to focus on seeing medicinal cannabis as a treatment option, comparable to prescription drugs.
The recently legalized recreational cannabis shouldn’t be confused with medicinal cannabis treatment, which has been around for close to 20 years. Medicinal cannabis is a medical treatment that is prescribed by a doctor; the form in which it is utilized and its effects on the body are different from that of recreational cannabis. There are safeguards in place to ensure that a company’s benefits plan is not covering recreational cannabis for employees. This includes requiring employees to have medical documentation from their doctor, that the prescription is dispensed by a licensed supplier and that the employee must use it for designated conditions.
Most employers are going to focus on the cost of the coverage. Comparing it to other treatments helps to put it in context. Prescription drugs can be extremely costly; medicinal cannabis as an alternate treatment may be less expensive. Commonly, medicinal cannabis is prescribed as an alternative to opioids, and there are many positives attached to reducing the number of prescribed opioids, one of which is lower costs. As more research is done into the effectiveness of medicinal cannabis, there will be a better understanding of how it compares to other prescription drugs on a more comprehensive level, providing a better handle on the prevalence of usage, effective dosage and ultimately, cost.
For business owners considering this coverage, it is recommended to speak with their insurance broker or advisor. Employee benefit plans constitute a considerable part of overall compensation and have become a key retention tool with low unemployment levels in Canada, and thus, have a significant cost associated with them. Licensed advisors can help decision makers understand the financial impact and provide information that will help them to make an informed decision on whether medicinal cannabis coverage is right for their employees and company.
The insurance industry trend of increased medicinal cannabis coverage options, along with the growing interest in the area by many Canadians, means that the expectation is that more and more businesses will begin to incorporate medicinal cannabis coverage into their employee benefits plans. It is important for company owners and managers to fully understand the benefits, costs and potential risks that come with this type of coverage. Your insurance broker or advisor can guide you so that you will have a full understanding of the options as you decide what is right for your company.
Matt Houghton is the CEO of GroupHEALTH Benefit Solutions®.