ARCHIVED CD 2006-022
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Note This document has been modified. The changes are identified by a vertical line "|". Revision (|)
SUBJECT: Changes to the Public Service Health Care Plan (PSHCP) Effective April 1, 2006
1.1 The purpose of this directive is to provide compensation advisors with information concerning changes to the Public Service Health Care Plan (PSHCP) which came into effect on April 1, 2006. The Treasury Board Secretariat and the National Joint Council directive regarding this policy is available at the following Web site: Public Service Health Care Plan Directive - April 1, 2006
2.1 Further to the announcement of these changes, Public Works and Government Services Canada (PWGSC) has put in place procedures to be used in the interim for compensation advisors concerning the processing and remitting of PSHCP contributions by employees who are on leave without pay (LWOP).
2.2. PSHCP contributions while on LWOP
Prior to April 1, 2006, in order to continue the PSHCP coverage during a period of LWOP, an employee was required to remit the contributions in advance of the LWOP. As a result of the changes, effective April 1, 2006, the employee has new payment options.
3.1 Effective April 1, 2006, the PSHCP coverage continues unless the employee gives notice in writing that he wants to opt out of the Plan while on LWOP.
3.2. Payment of PSHCP contributions while on LWOP
| Coverage under the Plan continues while the employee is on LWOP unless he provides notice in writing stating that he opts out of the Plan during the period of LWOP. If such notice is provided, coverage will be terminated at the end of the month following the month in which the notice is received by the designated officer. The coverage will be reinstated at the end of the period of LWOP effective the first of the month following the date of the return to work. A member going on LWOP who does not opt out of the PSHCP for the period of LWOP, will be required to either:
- pay the required contributions in advance; or
- pay the contributions owing on ceasing to be on LWOP, whether due to a return to work or ceasing to be employed.
An employee who has not chosen to pay the required contributions in advance will be deemed to have opted to pay the contributions retroactively on ceasing to be on LWOP. In this directive, any reference to LWOP presumes that the leave has been duly authorized by the employer.
4.1 Due to the complexity of introducing the change to the LWOP provision, additional time is required before permanent procedures can be in place to collect outstanding PSHCP contributions upon ceasing to be on LWOP.
4.2 A separate "PSHCP Agreement" describing the changes to the LWOP provision has been specifically prepared for employees who are currently on LWOP or proceeding to be on LWOP. The compensation advisor must send immediately by registered mail the attached notice and a copy of the March 2006 PSHCP Trust Bulletin #18 to employees who wish to continue their PSHCP coverage in order to have them indicate their payment option choice. Please follow-up with employees who do not return the "PSHCP Agreement", as it is critical that their payment option be in writing.
Ensure that all employees currently on or proceeding to be on LWOP who wish to continue their PSHCP coverage while on LWOP continue to be covered during this interim period. Unless the form "Contribution Remittance for Period of Leave Without Pay - PSHCP" (PWGSC-TPSGC 2278) has already been forwarded to the Payroll Accounting Division (PAD), compensation advisors must complete and forward the form to the PAD of PWGSC on behalf of all employees on LWOP who participate in the PSHCP, unless they have indicated in writing that they wish to cancel their coverage during the LWOP period.
This form must be sent to the PAD, regardless of whether or not the employee has submitted a cheque.
This procedure will ensure that all eligible PSHCP claims for these employees will continue to be paid while they are on LWOP.
4.3 Payment Options - PSHCP Contributions for the Period of LWOP
4.3.1 Remittance of monthly or quarterly cheques in advance (pay-as-you-go) - no change to current procedure
The compensation advisor must continue forwarding copy 1 of form PWGSC-TPSGC 2278 and the cheque(s) or money order(s) to the PAD. The compensation advisor should remind the employee that contributions are due one month in advance of the effective date. Failure to make the required payments will not result in termination of coverage but the employee will be required to pay the deficiencies upon return to work or on termination of employment. It should be noted that in the event an employee fails to make the required payments, the compensation advisor must continue forwarding copy 1 of form PWGSC-TPSGC 2278 to ensure that all eligible claims for the employee will continue to be paid while on LWOP. The form should be annotated to indicate that the employee did not forward the required payments.
4.3.2 Payment of contributions retroactively upon ceasing to be on LWOP - Retaken on strength (RE- Take-on-Strength (TOS)) or struck off strength (SOS)
If not already sent, the compensation advisor must forward copy 1 of form PWGSC-TPSGC 2278 to the PAD and annotate on the form that the employee will pay the contributions retroactively upon ceasing to be on LWOP. This procedure will ensure that all eligible claims for this employee will continue to be paid during the period of LWOP.
If an employee chooses to pay his contributions upon ceasing to be on LWOP, it is important that the employee is advised in writing that depending on the type and duration of the LWOP, the outstanding PSHCP contributions owing at the end of the period of LWOP can be significant.
4.3.3 When LWOP ceases and the employee is RE-TOS Until new deduction codes to recover the PSHCP contributions deficiencies can be implemented the following procedures are to be used during this interim period:
The compensation advisor will be required to calculate the PSHCP deficiencies taking into account the annual adjustment to the employee and employer contribution rates as well as the provincial sales tax for employees residing in the province of Ontario or Quebec. For details on the contribution rates, refer to the Insurance Administration Manual (Insurance Administration Manual (IAM) Section 2-5-3). Please refer to the example provided below.
NOTE: When an employee is RE-TOS in a month for which at least one day of entitlement is earned e.g. RE-TOS on July 31, 2006, that month is not to be included in the calculation of the PSHCP deficiencies. The contribution for the month will be deducted by the pay office (PO) using the PSHCP deduction arrears code 872.
Method of payment for contribution deficiencies
The employee can pay his PSHCP contributions deficiencies and provincial sales tax by having them deducted at source or by paying them in a lump sum amount by personal cheque or money order. They can be deducted from salary over a period of time not greater than the length of the period of LWOP or in a lump sum payment. The Deduction Commence (DEC) screen using deduction code 794 must be used to collect the PSHCP deficiencies and provincial sales tax. By using the deduction code 794, the Regional Pay System (RPS) cannot validate the PSHCP contribution rate; therefore, it is essential to verify that the correct amount is input when collecting the deficiencies over the period of LWOP . The Rate Base "6" (monthly) must be used with future "effective from" and "effective to"dates. The monthly deduction will be split in two payments and collected on each pay cheque of the month not including pay period plus (PP+). To collect the PSHCP deficiencies and provincial sales tax from salary in a lump sum payment, use the Rate Base "0" with past "effective from" and "effective to" dates. The lump sum payment can also be made by personal cheque or money order. For detailed reporting requirements, please refer to the Personnel-Pay Input Manual (PPIM) Section 4-4-16-1.
- An employee is on LWOP for personal needs reason from August 7, 2006 to February 2, 2007, followed by a relocation of spouse leave from February 5, 2007 to August 3, 2007. The employee opts to pay his PSHCP contributions at the end of the LWOP period and is RE-TOS on August 6, 2007.
The employee resides in Ontario and the monthly contribution rate for Family Level III is $10.34. The employee is required to pay the employees'share only for the first three months and the remainder of the LWOP period will require both the employee and employer shares. For details on coverage while on LWOP, please refer to the IAM Section 2-13-3. See example of calculation below:
Months to be recovered for the LWOP period (total duration is 11 months) Employee share - Family Level III Plus: Employer share Multiplied by number of months included in the period Total From September to November 2006 $10.34 n/a 3 months $31.02 From December 2006 to March 2007 using contribution rates effective April 1, 2006 $10.34 $81.79 4 months $368.52 From April 1, 2007 to July 2007 using contribution rates effective *April 1, 2006 (assuming there are no changes in rates effective April 1, 2007) $10.34 $81.79 4 months $368.52 Total PSHCP deficiencies $768.06 Add the Ontario retail sales tax (8%) $61.44 Total to be recovered over 11 months $829.50
- Use the deduction code 794 on the DEC screen to commence the monthly contribution to be recovered which should correspond to the total deficiencies and provincial sales tax to be recovered divided by the number of months the employee was on LWOP e.g. 11 months ($829.50 divided by 11 months = $75.41). The "From Date" must be the first of the month where the deduction is to commence and the "To Date" must be the last day of the month when the deduction should stop.
|DEC (PAC16)||C||794||01 09 07 1||31 07 08 2||6||75.41||0071234567 *Insert a 10-digit reference number as per DEDENT 703 (PPIM 9-5-4)|
NOTE: It is extremely important that the 10-digit reference number (PSHCP number) be included when reporting to the RPS as this will facilitate the reconciliation of the deficiencies and provincial sales tax by the PAD.
4.3.4 When LWOP ceases due to termination of employment (SOS) - The compensation advisor will be required to calculate the deficiencies taking into account the employee/employer contribution rate changes adjustment each year and the provincial sales tax. For information on contribution rates, refer to the Insurance Administration Manual (IAM) Section 2-5-3 .
- The employee can pay the deficiencies in a lump sum amount by having them collected from supplementary termination payments such as severance pay (on the Termination Entitlements (TEC) screen) or from unpaid vacation pay (on the ENT screen) or by personal cheque or money order. To collect from the TEC screen, the termination deduction (TED) screen (with Pay Period SS) and deduction code 794 is to be used. To collect from ENT screen deduction code 029, the TED screen (pay period left blank) and deduction code 794 is to be used. Both the supplementary termination payment and the collection of the deficiencies must be processed for the same update. For detailed reporting requirements, please refer to the PPIM Section 4-4-77.
- If there are still outstanding PSHCP contributions to be paid, a personal cheque for the full remaining amount will be required from the employee.
|TED (PAC77)||794||13 07 75 1||21 07 06 2||0||78.11||SS||0071234567 *Insert a 10-digit reference number as per DEDENT 703 (PPIM 9-5-4)|
|TEC (PAC71)||54||13 07 75 1||21 07 06 2||0||32 040||SS|
4.4 Quebec taxable benefits for employees residing in Quebec - The employer's share of the PSHCP contributions continue to be a taxable benefit. There will be no change to the current process in place for taxable benefits.
4.5 The IAM, the PPIM and the form PWGSC-TPSGC 2278 will be updated to incorporate the changes contained in this compensation directive.
5.1 Any inquiries on the information contained in this document should be addressed to your PWGSC Compensation Services Office.
Original Signed by
Acting Director General
Accounting, Banking and Compensation
Reference(s): CJA 9242-3-13, DED 794
- Date modified: