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BC’s Medical Services Plan: What is MSP – and what does it have to do with your benefits plan?

The three certainties that come along with living in British Columbia: death, taxes – and Medical Services Plan (MSP) premium increases.

 

Prior to joining Immix and entering the world of employee benefits, I shared the common misconception that the employer always pays MSP. I had worked for large companies and with the BC government in a union environment; in both job settings, my employer paid my MSP premiums as a part of the benefits package.

 

When I received my first MSP invoice with months of back charges, I had a rude awakening!

 

Now that I’m an Employee Benefits Account Executive with Immix, I get asked almost weekly what MSP covers and who should pay for it. With this article, my aim is to give you a brief overview of provincial health care – and how it relates to employer-sponsored benefit plans.

 

 

What is MSP?

MSP provides basic coverage and access to medically necessary health services in BC: doctor/hospital visits, emergency dental/oral surgery performed in the hospital, and some diagnostic services such as X-rays and eye exams.

 

Each province across Canada has its own version of provincial health care. The way each province bills health care varies.

 

 

Who pays for MSP?

MSP premiums are the responsibility of each individual/family, unless they’re lucky enough to have an employer who covers some or all of the cost. From my many years of experience in the benefits industry, many large corporations and unions will generally cover MSP costs, or have some sort of cost-sharing arrangement in place.

 

Smaller companies usually do not cover the cost of MSP premiums. However, that is not to say they can’t. Coverage is at the company’s discretion and is a generous perk. If an employer does pay provincial health care insurance premiums on its employees’ behalf, those premiums are considered to be a taxable benefit to the employee.

MSP premiums are based on an individual’s Adjusted Net Income. Effective January 1, 2017, minors and dependents enrolled in full-time postsecondary studies are no longer subject to MSP premiums.

 

As of January 1, 2017, the government further segmented income brackets to reduce the premiums for lower-income levels. For example, someone earning $30,000+ in 2016 (the highest-income bracket prior to 2017) was paying $75 per month in MSP premiums. In 2017, that same person earning $30,000 now pays $46 per month. The highest-income bracket has been increased to $42,000. Low-income individuals and seniors over age 65 may be eligible for premium assistance.

 

 

Premium Assistance- You might be eligible for a discount!

From personal experience, I highly recommend that anyone with senior parents or grandparents double-check to ensure they are receiving premium assistance, that is, lower monthly MSP premiums. MSP does not prompt them to do so – as my 88-year-old grandmother and I learned the hard way.

 

My grandma was paying way too much in MSP contributions. From my career in benefits, I recognized this – but MSP didn’t cooperate easily. We had to show them seven years of tax returns to prove her earnings! Only then, finally, did they backdate her significantly lower premium amount and refund those seven years of overpayment.

If we hadn’t taken the initiative, my grandma would still be overpaying to this day. So remember: MSP is quick to increase your monthly premiums when your income increases. But they don’t bother to reach out if you qualify for premium assistance. It’s up to each individual to apply for MSP premium assistance.

Here’s information on current premiums.

 

 

Do I need to have MSP?

The short answer is yes. British Columbia requires its residents to have MSP. In certain circumstances, adults can opt out of MSP, but this is very unusual. MSP covers access to physicians, hospitals and other services, regardless if care is needed for an emergency or non-emergency situation.

 

Employer-sponsored health coverage is additional coverage above and beyond MSP. The two types of coverage work in a complementary way, meaning an extended health insurance contract will not cover items paid for through MSP. Extended health care covers some or all of the cost of prescription drugs, medical equipment, health practitioner visits, etc. Without a group benefits plan, individuals are responsible for 100% of the cost of most health-care-related expenses not covered under MSP.

 

You need MSP to enrol in an employer-sponsored group health care plan. If you opt out of MSP, or become ineligible for other reasons, you won’t be able to enrol in the extended health care portion of the employer’s group benefits plan. (Note: dental will still be covered through group plans.) As well, you may not be able to purchase emergency travel insurance for trips outside the province.

 

 

The future of MSP…?

As noted earlier, provincial health care coverage varies by province; how the premiums are paid varies, as well. BC is the only province that charges a premium directly to individuals. Many other provinces have implemented a payroll tax or income tax charge to account for provincial health care premiums.

 

There has been a lot of talk in the media about the restructuring of MSP in BC. Minority political parties keep voicing their desire to change the way provincial health care premiums are collected. Generally speaking, the current administrative pricing arrangement is very unpopular with both individuals and the employers who administer the premiums for their employees.

 

The current BC government recently announced that as a part of BC’s plan to eliminate MSP premiums, they plan to cut premiums in half for individuals with an annual household net income under $120,000 effective January 1st, 2018. 


We’ll be sure to keep you posted on that and any other MSP developments.

 

 

Further reading 

http://www2.gov.bc.ca/gov/content/health/health-drug-coverage/msp/bc-residents/premiums 
http://www.bcchamber.org/policies/small-business-benefits-simplifying-msp-tax-system 
http://www.timescolonist.com/opinion/op-ed/comment-it-s-time-to-rethink-medical-services-plan-tax-1.1744144 
http://www.cbc.ca/news/canada/british-columbia/b-c-premier-says-big-changes-coming-to-msp-premiums-1.3765327

 

 

  

 

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