January 1 to December 31, 2023
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, 2023.
Chairperson of the Board of Management
Patti Bordeleau
Employer Side Members
Irene Arkorful, Treasury Board of Canada 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
Colby Briggs, Professional Institute of the Public Service of Canada
James Infantino, Public Service Alliance of Canada
Stéphanie Rochon-Perras, Association of Canadian Financial Officers
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, 2023.
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 to which employees may be eligible from other disability benefit programs.
The DI Plan is a group insurance policy underwritten and administered by Sun Life Assurance Company of Canada.
Financial And Administrative Oversight
The total benefits paid out by the Plan during the 2023 year amounted to $455.0 million, compared to $421.8 million in 2022. As of the end of 2023, the DI Plan had 12,694 members utilizing benefits (claims in payment at year-end 2023) and had $3.554 billion in claims reserves. The average number of Plan members during 2023 was 305,000 (up from 290,000 members in 2022).
The disability incidence rate in 2023 was lower than the previous year at 10.5 approved claims per thousand Plan members, compared to 11.0 approved claims per thousand Plan members in 2022. The rate of termination of active claims (approved claims in payment) increased from 2.32 terminated claims per 10 claims in payment in 2022 to 2.40 terminated claims in 2023.
The overall result of the 2023 financial experience for the Plan at year-end was positive, with an in-year gain of $85.5 million. As of December 31, 2023, the balances in the Claims Fluctuation Reserve and the Surplus Account were $177.1 million and $501.6 million respectively for a total Plan surplus of $678.8 million. This is an increase over the $593.2 million total Plan surplus as of December 31, 2022. The Plan is on a sound financial footing at the end of 2023. The Board, in its role of overseeing the financial management of the Plan, will continue as always to monitor the trends in Plan experience in the coming year.
In addition to overseeing the financial results of the Plan, the Board continued 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.
Member Experience
At its May meeting, the Board was briefed by the Insurer on the results of the annual Claimant Survey conducted in 2022. The results are based on the research methodology which provides a true account of the entire claims experience. Objectives included assessing claimants’ satisfaction with their disability claim experience and identifying areas of improvement.
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 is an overall measure of the disability claim experience that considers factors such as 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. The score was relatively on par with 2021 results, and it was found that case managers continue to be an important element of the score, particularly how members feel about the conduct of the case manager. It was noted that claimants who returned to work view their experience much more positively than those whose claim was ended. Areas identified for improvement were making the claim process easier, educating the claimant on the process, and improving the clarity of case manager communication.
Activities
The Board began 2023 with more appeals than in previous years, and successfully reviewed more than in previous years; however, with case volume returning to pre-pandemic levels, the Board has many outstanding appeals to be heard. Ongoing improvements to file presentation remain a collaborative effort between the Board and the Insurer.
The Board continued to meet in a hybrid format and continued to use the electronic file sharing service which has allowed Board members to instantaneously retrieve confidential protected documents in a secure setting. This allowed the Board to work efficiently and review more appeals to address the increasing volume of files.
The Board’s sub-committee proposed modernizations to its Terms of Reference and tabled it to the Executive Committee. In 2024, the sub-committee intends to table their proposed changes to the provisions of the DI Plan.
The Board continued to receive updates from the Insurer, which included the new Plan Member Survey and the 2022 Plan Claimant Survey Results.
At its annual Sun Life Headquarters’ meeting, the Board received various presentations, including Sun Life’s practices in adopting and embracing inclusion, the upcoming WEB/Mobile app for plan members, Sun Life’s disability appeals process, the role of a Rehabilitation Consultant, mental health strategies, and the 2022 DI Plan Financial Results. Highlights of years 2019 to 2023 are presented in the chart below.
It was reported that the overall financial experience of the Plan in 2023 was positive, with an in-year gain of $85.5 million. Of that amount, the interest on the Plan surplus total at the beginning of the year contributed $19.7 million in revenue. The net in-year Plan experience (without the surplus) was therefore a gain of $65.8 million. Therefore, the premium level alone, without the interest of $19.7 million generated from the surplus was sufficient to support the costs incurred by the claims in 2023. This is similar to 2022 but in contrast with the year 2021 where the premium level, without the interest from the surplus, was not sufficient to support the costs incurred by the claims that year.
Summary of Annual Financial Results
|
Year |
Premium Income ($ Million) |
Interest Income ($ Million) |
Paid Claims* ($ Million) |
Total Plan Expenditures* ($ Million) |
In-year Gain/Loss ($ Million) |
|
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 |
|
2022 |
651.0 |
99.1 |
421.8 |
653.8 |
96.3 |
|
2023 |
708.5 |
131.4 |
455.0 |
754.4 |
85.5 |
* 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 2023 annual report prepared by the Insurer includes a broad overview of Plan claims data. During the 2023 calendar year, there were 4,627 notified claims, an increase of 262 or 6.0%; 3,213 claims were approved, an increase of 24 or 0.8% from the 2022 calendar year. The number of claims declined during the year decreased by 153 or 11.5% and the number of claims terminated (closed) during the year increased by 161 or 5.6%. The decline and approval rates are something that the Board will continue to monitor with the Plan Insurer.
Claims Statistics
|
|
2019 |
2020 |
2021 |
2022 |
2023 |
|
Number of claims notified during the year |
4,020 |
3,421 |
3,906 |
4,365 |
4,627 |
|
Number of claims approved during the year |
3,211 |
2,575 |
2,816 |
3,189 |
3,213 |
|
Number of declined claims during the year |
869 |
1,046 |
830 |
1,331 |
1,178 |
|
Number of terminated (closed) claims during the year |
2,558 |
2,900 |
2,759 |
2,897 |
3,058 |
|
Total number of approved claims at year-end |
12,470 |
12,149 |
12,188 |
12,512 |
12,694 |
|
Total number of pending claims at year-end |
480 |
311 |
498 |
451 |
647 |
Distribution (%) of Claims Approved in 2023 by Causes of Disability
Total for Year 2023
|
Cause of Disability |
Per Cent |
|---|---|
|
Accidents |
5.6 |
|
Arthritis-Rheumatism |
3.8 |
|
Cardiovascular |
2.5 |
|
Gastro |
2.0 |
|
Mental Health Conditions |
29.6 |
|
Neoplastics (Cancer) |
10.9 |
|
Neurological |
5.4 |
|
Spine / Sacro-Iliac |
4.0 |
|
Other |
6.3 |
Mental health conditions remain the leading cause of new disability claims approved in 2023. This continues to be the experience across other Canadian disability plans. The distribution of causes of disability for all new claims approved in 2023 is shown in the chart above. As noted, the most frequent cause of new approved claims was mental health conditions (59.6% of the total), a decrease from 2022 (60.9%). The actual number of newly approved claims for this cause of disability decreased from 1,941 in 2022 to 1,916 in 2023. On the other end, several other causes have seen their numbers increase in 2023 which is in line with the overall volume of claims which increased in 2023.
The second largest cause of new disability claims was neoplastics (cancer), increasing from 10.0% in 2022 to 10.9% in 2023. Many other categories also increased as compared to the previous year.
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 21 new appeal cases in 2023. The Board found no reason to disagree with the Insurer’s decision to deny benefits in 15 appeals and disagreed with the Insurer’s decision in six (6) appeals.
Training
Board members were offered to attend three (3) conferences in 2023: the Canadian Legal and Legislative Update Conference, the Canadian Public Sector Pension and Benefits Conference and the 56th Annual Canadian Benefits Conference. The Board looks forward to continuing to participate in conferences and learning sessions held by the International Foundation of Employee Benefit Plans (IFEBP) as a means to develop Board member expertise and to stay current with trends.
Board Membership
The Board met seven (7) 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 Bargaining Agent Side member, Demi Francoeur from the Professional Institute of the Public Service of Canada.
The Board thanked Bargaining Agent Side member, Colby Briggs from the Professional Institute of the Public Service of Canada, for their dedication to the Board, as they stepped down from the Board.
The members of the Board at the end of the 2023 reporting period were:
- Patti Bordeleau, Chairperson;
- Michel Alarie, Innovation, Science and Economic Development Canada;
- Irene Arkorful, Treasury Board Secretariat;
- Bryan Garber, Department of National Defence;
- James Infantino, Public Service Alliance of Canada;
- Nathalie Leblanc, Agriculture and Agri-Food Canada;
- Stéphanie Rochon Perras, Association of Canadian Financial Officers;
- Demi Francoeur, Professional Institute of the Public Service of Canada; and
- June Winger, Union of National Defence Employees
As in previous years, the Board welcomed two (2) new Employer Side observers from the TBS Observer Program produced in 2023. It is expected that the Program will continue in the next year with new observers.
Conclusion
The Board would like to thank Dr. Raymond Aubin for providing expert medical advice during the review of appeals in their role as Medical Consultant to the Board.
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.