January 1 to December 31, 2021
In accordance with the NJC By-Laws, the undersigned submit this annual report regarding the performance and the administration of the Disability Insurance Plan during the period of January 1 to December 31, 2021.
Chairperson of the Board of Management
Patti Bordeleau
Employer Side Members
Irene Arkorful, Treasury Board Secretariat
Dr. Bryan Garber, Department of National Defence
Nathalie Leblanc, Agriculture and Agri-Food Canada
Michel Alarie, Innovation, Science and Economic Development Canada
Bargaining Agent Side Members
James Infantino, Public Service Alliance of Canada
Stéphanie Rochon-Perras, Association of Canadian Financial Officers
Samtou Tchamdja, Professional Institute of the Public Service of Canada
June Winger, Union of National Defence Employees
General Statement
The Disability Insurance Plan Board of Management (the “Board”) is pleased to provide this report on the administration of the Public Service Disability Insurance Plan (the “DI Plan” or "the Plan"), its financial performance and the activities of the Board for the period of January 1 to December 31, 2021.
Plan Overview
The DI Plan provides income replacement for Plan members during periods of long-term disability equal to 70% of insured earnings. Employees who meet the criteria of total disability preventing performance of the duties of their regular employment become eligible for long-term disability insurance benefits at the expiration of the longer of paid sick leave or the 13-week elimination period for the DI Plan. Employees receive income replacement payments as well as disability case management and rehabilitation services from Sun Life Financial (the Insurer). These payments are offset by payments that employees may be eligible for from other disability benefit programs.
The DI Plan is a group insurance policy underwritten and administered by Sun Life Assurance Company of Canada.
Administration
As of the end of 2021, the DI Plan had $3.105 billion in claims reserves, 272,000 Plan members (up from 255,000 members at the end of 2020), and 12,188 members utilizing benefits (claims in payment at year-end 2021). Total benefits paid out by the Plan during the 2021 year amounted to $380.8M, compared to $391.3M in 2020.
The disability incidence rate was higher than the previous year at 10.4 in 2021 compared to 10.1 approved claims per thousand Plan members in 2020. The rate of termination of active claims (approved claims in payment) decreased from 2.35 terminated claims per 10 claims in payment in 2020 to 2.28 terminated claims in 2021.
The overall result of the 2021 financial experience for the Plan at year end was positive, with an in-year gain of $11.9M. As of December 31, 2021, the balances in the claims fluctuation reserve and the surplus account were $149.5M and $347.4M respectively for a total Plan surplus of $496.9M. This is a small increase as compared to the $485M total Plan surplus as of December 31, 2020. The Plan is on a sound financial footing at the end of 2021. The Board, in its role of overseeing the sound financial management of the Plan, will continue as always to monitor the trends in plan experience in the coming year.
In addition to its accountability to oversee the financial results of the Plan, the Board continued during the year to work actively with the Insurer and the Plan Sponsor (Treasury Board Secretariat) to strengthen and improve the effectiveness of the administration of the Plan. Some of the key activities in this area are outlined below.
The Board began 2021 with fewer appeals than in previous years, and successfully reviewed them in a timely manner, remaining on schedule. Ongoing improvements to file presentation remain a collaborative effort between the Board and the Insurer. In accordance with the Board’s recommendations in 2020, the Insurer adapted the content of files to include references to medical guidelines and supplementary details supporting the rationale for its decisions, which has aided the Board in conducting sound review of the appeals.
Despite the continued restrictions on holding in-person meetings as a result of the COVID-19 pandemic, the Board continued to meet virtually via videoconference. This, coupled with the use of the electronic file sharing service which allowed Board members to instantaneously submit and retrieve confidential protected documents in a secure setting, enabled the Board to continue its work.
At its June meeting, the Board was briefed by the Insurer on the results of the annual claimant survey conducted during 2020. The results are based on the updated research methodology which provides a true account of the entire claims experience. The results reported on the experience of recovered members (change of definition, return to work, and not disabled). The survey was sent on a monthly basis extending from submission of a claim until its closure, from January to December 2020. Objectives included assessing claimants’ satisfaction with their disability claim experience and identifying areas of improvement. In terms of measuring overall satisfaction, the new methodology incorporates a scale from 1-5 on three components and results appear as percentages relating to the number of responses with a score of 4 or 5 out of 5 indicating satisfaction.
The survey results were compared to those of the previous year, as well as other benchmark groups, representing results from other large clients of the Insurer. The DI Plan Disability Client Index score, which is an overall measure of the disability claim experience which considers the ability to make the claim process easy, the ability to proactively reach out during the claim process and the ability to effectively handle any issues during the claim process, remains relatively on par with the experience reported by other claimants of the Insurer, as both groups experienced an improvement from 2019. Results indicated that, similar to the results from the 2019 survey, the high number of case manager-related improvements and positive comments demonstrated the significant role case managers play during the disability claim. The survey further indicated that DI Plan claimants had positive perceptions of the case managers. Case managers conduct and communication were rated strongly, and many claimants cited case manager conduct as an area in which the Insurer performed well. Claim resolution continued to have a strong impact on perceptions of the Insurer, as claimants who returned to work viewed their experience much more positively than those whose claim was ended. Opportunities for improvement included making the claim process easier, educating the claimant on the claim process, and more clearly explaining how the payment is calculated. The Insurer will continue to conduct this survey in the years to come and will continue to provide year-to-year comparisons.
The Board continued to receive updates from the Insurer on several topics. These included updates regarding retroactive adjustment of benefits as a result of new collective agreements, and an overview of the adjudication process for fibromyalgia claims.
Financial and Administrative Oversight
The Board held its annual financial update meeting in June 2022, where the Insurer provided an overview of the year-end financial results for 2021 as well as updates on the status of the Plan. Highlights are presented in the following chart.
It was reported that the overall financial experience of the Plan in 2021 was positive, with an in-year gain of $11.9 million. Of that amount, the interest on Plan surplus total at the beginning of the year contributed $13.6 million in revenue. The net in-year Plan experience (without the surplus) was a loss of $1.7 million. Therefore, the premium level alone, without the surplus which generated $13.6 million in interest, was not sufficient to support the costs incurred by the claims in 2021.
Summary of Annual Financial Results
|
Year |
Premium Income |
Interest Income |
Paid Claims* |
Total Plan Expenditures* |
In-year gain/loss |
|---|---|---|---|---|---|
|
2018 |
405.0 |
91.0 |
352.7 |
600.6 |
(104.6) |
|
2019 |
430.2 |
90.4 |
385.5 |
660.1 |
(139.5) |
|
2020 |
838.6** |
91.4 |
391.3 |
522.0 |
408.0 |
|
2021 |
597.9 |
94.9 |
380.8 |
680.9 |
11.9 |
* Total plan expenditures are calculated as paid claims, expenses and premium taxes, as well as the change in the claims reserves held at the beginning of the year as compared to the end of the year. (Note: The paid claims amount column is included in the total Plan expenditures column. The In-year Gain/Loss equals the Premium and Interest Income minus the Total Plan Expenditures.)
** The 2020 Premium Income is composed of “Regular premiums” totalling $524.8M and two lump sum deposits totalling $313.7M.
The Board has reviewed the monthly and annual reports received from the Insurer and it has found that the current format continues to serve its needs and purposes.
Claims Experience
The 2021 annual report prepared by the Insurer includes a broad overview of Plan claims data. During the 2021 calendar year, there were 3,906 notified claims, an increase of 485 or 14.2%; and 2,816 claims approved, an increase of 241 or 9.4%. The number of claims declined during the year decreased by 216 or 20.7% and the number of claims terminated (closed) during the year decreased by 141 or 4.9%. The decline and approval rates are something that the Board will continue to monitor with the Plan insurer.
Claims Statistics
| 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|
|
Number of claims notified during the year |
|
4,020 |
3,421 |
3,906 |
|
Number of claims approved during the year |
2,972 |
3,211 |
2,575 |
2,816 |
|
Number of declined claims during the year |
787 |
869 |
1,046 |
830 |
|
Number of terminated (closed) claims during the year |
2,573 |
2,558 |
2,900 |
2,759 |
|
Total number of approved claims at year-end |
11,862 |
12,470 |
12,149 |
12,188 |
|
Total number of pending claims at year-end |
525 |
480 |
311 |
498 |
Distribution (%) of Claims Approved in 2021 by Causes of Disability
(total for year 2021)
|
Cause of Disability |
Per Cent |
|---|---|
|
Accidents |
6.4 |
|
Arthritis-Rheumatism |
4.0 |
|
Cardiovascular |
2.5 |
|
Gastro |
2.2 |
|
Mental Health Conditions |
57.6 |
|
Neoplastics (Cancer) |
11.6 |
|
Neurological |
4.9 |
|
Spine / Sacro-Iliac |
5.6 |
|
Other |
5.1 |
Mental health conditions remain the leading cause of new disability claims approved in 2021. This continues to be the experience across other Canadian disability plans. The distribution of causes of disability for all new claims approved in 2021 is shown in the chart above. As noted, the most frequent cause of new approved claims was mental health conditions (57.6% of the total), an increase from 2020. The actual number of newly approved claims for this cause of disability increased from 1,419 in 2020 to 1,623 in 2021 in line with the overall volume of claims which also increased in 2021.
The second largest cause of new disability claims was neoplastics (cancer), at 11.6% with other categories remaining somewhat similar to the previous year.
Plan Governance
The Board of Management continues to focus on good governance in its responsibilities to oversee the administration of the DI Plan. Over the course of 2021, the Board has been very engaged with the Insurer on topics and issues of interest. In the coming year, this mutually beneficial and helpful engagement will continue to be welcomed by both the Board and the Insurer.
Appeal Cases
The Board’s terms of reference include the duty to examine appeals against claims declined by the Insurer, making recommendations to the Insurer on these and in certain circumstances providing advice to the Employer on practices related to disability management in departments and agencies.
The Board reviewed a total of four new appeal cases in 2021. The Board found no reason to disagree with the Insurer’s decision to deny benefits in three appeals, and deferred a decision on one appeal, pending further information from the Insurer.
Training
Due to the travel restrictions resulting from the COVID-19 global pandemic, the Board did not participate in any events held by the International Foundation of Employee Benefit Plans (IFEBP) in 2021. As the social distancing and travel restrictions are lifted, the Board looks forward to resuming building their expertise and staying abreast of current information and trends in the disability field by participating in conferences and learning sessions.
Board Membership
The Board met five (5) times during the period covered by this report, devoting much of its time to hearing appeal cases and overseeing the administration and financial experience of the DI Plan.
The Board welcomed a new chairperson, Patti Bordeleau, and thanked the outgoing chairperson, Barry Fennessy, for his dedication to the Board.
The Board welcomed a new Bargaining Agent Side member, Samtou Tchamdja from the Professional Institute of the Public Service of Canada, and also welcomed a new Employer Side member, Irene Arkorful from the Treasury Board Secretariat.
The Board thanked Bargaining Agent Side member, John Staric from the Professional Institute of the Public Service of Canada, and Employer Side member, Nathalie Julien from the Canadian Food Inspection Agency, for their dedication to the Board, as they both stepped down from the Board.
The members of the Board at the end of the 2021 reporting period were:
- Patti Bordeleau, Chairperson;
- Irene Arkorful, Treasury Board Secretariat;
- Bryan Garber, Department of National Defence;
- James Infantino, Public Service Alliance of Canada;
- Nathalie Leblanc, Parks Canada;
- Catherine Monette, Treasury Board Secretariat;
- Stéphanie Rochon Perras, Association of Canadian Financial Officers;
- Samtou Tchamdja, Professional Institute of the Public Service of Canada; and
- June Winger, Union of National Defence Employees
In 2021, TBS introduced an Observer Program, whereby diverse senior-level public servants may be selected to participate on pension and benefits boards to develop their knowledge and experience to become future appointed Employer representatives. As a result, two Employer-Side observers began attending meetings for a one-year term. The Board also provided the opportunity to the Bargaining Agent side to nominate two observers per meeting for the same purposes.
Workplan for 2022
In the coming year, the Board plans to address the following key areas through a variety of activities:
- Monitor and advise on DI Plan operations including the ongoing streamlining of the claim process and communications to claimants;
- Review financial results and experience to ensure the Plan is appropriately funded going forward;
- Monitor trends in claims processing and engage with the Insurer on issues of concern to the Board;
- Review appeal processes to ensure timeliness of appeal reviews;
- Provide learning and development opportunities to Board members;
- Provide feedback, based on appeal case reviews, to TBS and other stakeholders on opportunities for improvement in enabling employees to return to work following absences due to disability;
- Review the results of the new Plan member survey with a view to improving services for Plan members;
- Review the provisions of the Disability Insurance Plan and provide recommendations to modernize the Plan to the Executive Committee and the Treasury Board for consideration; and
- Review and update the Terms of Reference of the Board.
Conclusion
The Board would again like to thank Dr. Raymond Aubin for providing expert medical advice during the review of appeals.
Finally, the Board would also like to express its appreciation to the Insurer for its commitment and collaboration in working with the Board. A number of constructive initiatives were undertaken over the year in the interest of supporting and communicating with Plan members and providing the Board with the knowledge and information it needed to fulfil its duties.