A common question I receive from benefit plan administrators is ‘how will medical marijuana affect our benefit plan’? Usually it stems from plan members asking if their plan includes medical marijuana as part of the offering. The Liberal government’s promise to legalize the use of recreational marijuana by July 2018 is helping to fuel many of these discussions. So how does one go about managing benefit plans and medical marijuana?
Medical Marijuana Facts
- medical cannabis has been legal in Canada since 1999
- Health Canada data shows that 167,000 Canadians were registered to purchase medical cannabis by the end of 2016
- as the numbers of Canadians with medical marijuana prescriptions grows, there is increased pressure for benefit plans to cover medical marijuana
- medical marijuana is not an approved drug under the Food and Drug Act which makes it difficult for insurers to process claims (no DIN)
- in 2015, CRA added medical cannabis to the list of medically exempt health products or services. This means that it can be claimed as an eligible health expense on your personal income tax return or eligible to be reimbursed through an employer-sponsored Health Spending Account.
- Medical marijuana is effective for three specific treatments: spasticity in Multiple Sclerosis patients, nausea reduction for chemotherapy patients and relief of chronic pain
- very few plan sponsors have added medical marijuana to their benefit plans. Employees that have HSAs and a prescription are eligible to use this means for reimbursement
How To Address the Medical Marijuana Question with Employees?
As a benefit administrator, unless your plan specifically identifies medical marijuana your plan does not cover it. If you provide a Health Spending Account for employees, employees are eligible to make claims for medical marijuana through their HSA provided they have a doctor’s prescription. Also, employees are eligible to claim legitimate medical marijuana expenses on their income tax return. The eligible Health Credit is dependent upon upon a percentage of your earnings and up to a maximum amount.
Benefit Plan Sustainability
There are constant pressures on driving the cost of employee benefit plans higher. The ever -increasing cost of prescription drugs, in particular the cost of biological pharmaceutical drugs, medical marijuana, paramedical practitioner abuse and other expensive procedures are all putting pressure on your plans’ sustainability.
The best and most cost certain means of having medical marijuana covered under your benefit plan is through a Health Spending Account or have the employee claim a tax credit on their personal income tax return.
If you have have questions regarding employee benefit best practices please do not hesitate to contact me directly.
Chris Coulter is the Founder and President of The Finish Line Group. He works with business owners to leverage their businesses to increase their wealth, reduce corporate and personal taxes, create viable succession strategies, enable employee retention strategies and allow them to exit their businesses on their terms.
Chris’ passion for what he does evolved from the mistakes he made in his first business; by not diversifying his risk and not utilizing a lot of the opportunities within his business to create significant wealth. Chris found out the difficult way and now educates business owners on how to avoid many of his former oversights and ultimately control where their finish line ends.
Benefit Plans and Medical Marijuana