On September 1, 2009, the British Columbia government released a budget update that included an increase of about six per cent to the monthly Medical Services Plan (MSP) premiums. The increase takes effect January 1, 2010. Premiums were last increased in 2002.

This Communiqué will be of interest to employers that cover all or a portion of MSP premiums for their British Columbia employees or retirees.

Premium Increase

Premiums will be increased by $3 per month for individuals and $6 per month for couples and families. The difference between the current and new monthly premiums is as follows:

We anticipate these revised premiums will appear on monthly MSP statements, starting with the January invoice.

Retiree Benefits Liability

Employers who subsidize the cost of MSP premiums for retirees will likely see an increase in their post-retirement benefits liability because of the premium increase. In addition, there may be an increase in liability if the benefit plan’s actuaries change their recommendations with respect to the trend assumptions for MSP premiums.

Premium Assistance

The government will also increase the annual income thresholds for premium assistance by $2,000, allowing more individuals to qualify. Premiums will decrease if income is $30,000 or less. No premiums will be required if income is $22,000 or less.

Controlling and Redistributing Health Care Costs

The MSP covers medically necessary supplies and services for eligible residents. The government – like employer plan sponsors – has been looking for ways to address the escalating costs of health care.

Over the past decade the government has eliminated provincial paramedical coverage and regular eye examination coverage for adults and has made adjustments to the provincial PharmaCare program. The changes have resulted in a cost shift from the government program to private plan sponsors. Plan sponsors, in turn, must control their own costs and the trend has been for individual citizens (employees and retirees) to take on a greater share of health care costs.

The government reports that the MSP increase is in line with the increasing cost of providing health services to citizens. As the government moves to link premiums more closely to program costs, organizations should expect to see an annual adjustment to MSP premiums.

For More Information

The Ministry of Health’s website setting out MSP premiums has not been updated at the time of writing, but more details will be available soon. Its website is: www.health.gov.bc.ca/msp/. The budget update website is www.bcbudget.gov.bc.ca. The specific changes to the MSP can be found on pages 68 and 69 of the Budget and Fiscal Plan document.