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Large Business Example #1

1. Employer Proposal

On the effective date Employer intends to introduce a new employee health care benefit called the Private Health Services Plan. Under the Private Health Services Plan, employees will be allocated an annual dollar amount that can be used for eligible health related services which are not covered by provincial health programs or existing group coverage, whichever is the case. A description of the Plan and the rules governing its operation is outlined below.

2. Rationale for Proposed Transaction

Employer advised that it wished to enhance its employee benefit program by the introduction of a Private Health Services Plan as an aid in retaining its current employees and attracting future employees of the calibre required to properly service its clients. In addition, by providing the above benefits through a contractual, professionally administered Private Health Services Plan, rather than through conventional insurance contracts, the Employer is of the view that it will reduce the net cost of providing such a benefit to its employees without jeopardizing the rights of employees under such a program.

3. Suggested Plan Details

• All full time employees of the Employer are eligible to become members of the Private Health Services Plan.
• All full time employees of the Employer on (specific date) and all new employees of the Employer, on accepting such employment, will automatically be enrolled in the Private Health Services Plan.
• An annual dollar amount / spending account for each employee will be paid by the Employer to its employees.
• Employees may use their spending account dollars to pay for eligible health related services including dental care, prescription drugs and vision care. (May be all inclusive if desired) The Private Health Services Plan may also be used as a supplement to a spousal insurance plan; that is, the portion of costs in respect of eligible health related services that is not reimbursed under a spousal insurance plan may be submitted to the Private Health Services Plan for reimbursement to the employee.
• Employees will be required to submit original receipts with a completed claim form to the Employer’s administrator for reimbursement. Once the claim is approved, the Employer will pay for 80% of all costs in respect of eligible health related services, up to the employee’s annual limit.
• At the end of the benefit year any unused amount in the employee’s spending account shall be rolled over for a maximum of one year.

The Private Health Services Plan will be “self-insured” by reimbursement of eligible expenses by the Employer to its employees who are members of the Private Health Services Plan.