The federal government followed up on its Budget announcement earlier this year by introducing Bill C-38, Jobs, Growth and Long-term Prosperity Act, for first reading.

While much discussion of the Budget has focussed on proposed changes to Old Age Security (OAS) and Guaranteed Income Supplement - gradually increasing the age of eligibility from 65 to 67 starting in April 2023 and allowing for the voluntary deferral of the basic OAS for up to five years starting on July 1, 2013 - the Bill also includes a benefit-related change, which if proclaimed in force will directly affect many federally-regulated employers that have long-term disability (LTD) plans in place for their employees. Specifically, the Bill includes amendments to the Canada Labour Code, which would require every federal employer that provides an LTD plan to its employees to insure the plan with an insurer, subject to certain exceptions to be set out in regulations.

Given that the circumstances under which an employer may provide uninsured LTD benefits are yet to be prescribed, the full impact of this provision is not yet clear. However, federal employers which provide LTD benefits on an “administrative services only” (pay-as-you-go) basis should be aware that if this Bill passes, they may no longer be permitted to continue such arrangements.