Medical Marijuana Coverage Under the ARTA Retiree Benefits Plan
The below article was originally published in the Summer 2017 issue of news&views
ARTA members covered by the ARTA Retiree Benefits Plan are always encouraged to submit coverage suggestions for consideration to the ARTA Health Benefits Committee. However, sometimes submissions to the committee are automatically excluded from coverage because they are not permitted to be covered by group benefit plans in Canada (referred to as private health services plans, or PHSPs, by the Canada Revenue Agency). For example, gym memberships or procedures which are considered cosmetic in nature have been requested in the past, though current tax regulations do not permit these items to be covered by the plan.
There are also, on occasion, submissions that may technically be allowed to be covered under a PHSP, but may not feasibly be covered by the ARTA Retiree Benefits Plan. One such item that falls into the latter category is medical marijuana which, even though it is permitted to be covered by PHSP’s based on current CRA regulations, only qualifies for coverage under certain types of specialized plans. In this article, we will review current legislation in Canada as it pertains to eligible benefit plan expenses and medical marijuana coverage.
First, let’s explore the history of the legality of medical marijuana in Canada since there are likely to be some major changes made to marijuana legality in general in 2018. (The Federal Government has recently tabled legislation that will permit marijuana to be considered legal in Canada, with all signs indicating specific regulations will be handled by the respective provincial governments, similar to those currently in place for alcohol and tobacco.) The possession of marijuana in Canada without a valid prescription is currently unlawful under the Controlled Drugs and Substances Act. Cannabis is considered to be a Schedule 2 narcotic, meaning no person shall possess it except as authorized under the regulations contained therein.
The use of marijuana was legalized for medical purposes only under the Marijuana for Medical Purposes Regulations (MMPR). The MMPR outlines the very strict provisions for the production and distribution of medical marijuana. These stringent regulations make it difficult to enter the medical marijuana production market, especially for relatively small companies, with cost being one of the main hurdles to accessing the market. In recognition of these cost challenges, the Federal Court of Appeal in Canada v Allard ruled that patients should have the right to produce their own medical marijuana. The MMPR was declared invalid to the extent that the regulations unjustifiably prevented patients from growing their own marijuana, thereby infringing on their liberty and security interests under the Canadian Charter of Rights and Freedoms. This Federal Court of Appeal decision resulted in the evolution of the MMPR to the Access to Cannabis for Medical Purposes Regulation (ACMPR), effective August 2016.
The ACMPR provides the following framework for how individuals can access medical marijuana:
- Individuals requesting access to medical marijuana must first consult with a qualified health care practitioner and demonstrate that they have a documented medical condition;
- They must then obtain medical documentation or a prescription, which would include the person’s name, date of birth, the daily amount of marijuana permitted to use and the period of use (which is not permitted for more than one year); and
- Finally, they have to register as a client with a licensed producer or register to produce cannabis for their own medical purpose.
While the framework to access medical marijuana has been established, cannabis is currently not considered an approved drug or medicine in Canada. Even though Health Canada regulates medical marijuana, it is not an approved drug and its use is not endorsed. In addition, the Canadian Medical Association does not support prescribing medical marijuana in the absence of more scientific evidence; however, there are several observational and clinical trials underway.
There have recently been a number of publications that have discussed the addition of coverage for medical marijuana as an eligible benefit under certain private health services plans, which has led to a number of ARTA members covered by the ARTA Retiree Benefits Plan submitting requests for its coverage. There are a number of industry practices and regulations that do not permit this, however.
Medical marijuana coverage is not normally considered eligible under group prescription drug plans because, contractually, these plans only cover drugs that legally require a prescription and have been assigned a Drug Identification Number (DIN). Because Health Canada does not consider marijuana to be an approved drug or medicine, marijuana has not been assigned a DIN, and the insurance industry, therefore, does not recognize it as an approved eligible expense under their prescription drug plans. Furthermore, marijuana is not likely to have a DIN assigned any time soon because of the rigorous testing trials required of a drug manufacturer to have a drug approved by Health Canada.
Health Canada and the Canada Revenue Agency are not on the same page when it comes to medical marijuana. Medical marijuana is listed as an approved medical expense tax credit (METC) in the Income Tax Act. The METC list is that which the insurance industry uses to determine what is eligible for coverage under a private health services plan. Therefore, given medical marijuana is not permitted to be covered under prescription drug plans since it does not have a DIN, but is allowed to be covered by private health services plans because of its inclusion on the METC list, group insurance providers in Canada are covering medical marijuana on an exception basis only. They do this by allowing covered plan participants to submit eligible claims for reimbursement from their health care spending account (HCSA), the specialized PHSP mentioned earlier in this article, instead of through their regular prescription drug coverage.
The ARTA Retiree Benefits Plan does not include a health care spending account component because these plans only make sense in an employer-sponsored group-benefit-plan environment, where a plan sponsor can use an HCSA to provide tax-effective remuneration to their covered employees. In a voluntary, member-paid plan like ARTA’s, the tax advantages of having an HCSA are not attainable, since all premiums are already paid for by covered members with after-tax dollars, with no premium cost sharing being provided by an employer. In the case of a voluntary, member-paid plan, covered members are better off claiming the expenses associated with the purchase of medical marijuana as a medical expense when completing their annual tax return that, as mentioned above, is permitted by the Canada Revenue Agency.
ARTA will continue to monitor the Health Canada approval process and the legality of medical marijuana and review coverage if marijuana is approved by Health Canada and assigned a DIN, which would then permit its coverage under the ARTA Retiree Benefits Plan.