What’s all the fuss about cannabis?
What’s all the fuss about cannabis?
By Karen Gleeson and Alyssa Hodder
Insights – February 2019
All views expressed are the authors’ own and do not necessarily reflect the official position of any agency, organization, plan sponsor or company.
Over the past year, there’s been a lot of discussion on the impact that the legalization of cannabis will have on the workplace in general, and on benefits programs in particular. But despite all the hype, it’s not really a new issue. So, let’s take a look at what has changed, what hasn’t changed at all – and where plan sponsors should be focusing their attention.
What hasn’t changed
Cannabis has been around forever. Or at least since the third millennium BCE, and maybe even further back than that! Did you know Canada was the first nation to legalize medical cannabis for certain conditions back in 2001? We weren’t the first for recreational cannabis though – that was Uruguay in 2015, with Canada following in 2018. The point is, we’ve been dealing with cannabis and its workplace implications for a loooonnnnng time.
Cannabis has been connected to benefits plans for years. Many plan sponsors offer healthcare spending accounts (HCSAs) as part of their benefits program, as a tool to allow for some flexibility in plan design. Plan members can claim any health and dental expense under an HCSA as long as it’s listed as an eligible medical expense by the Canada Revenue Agency – and, since 2015, that has included medical cannabis. However, the plan sponsor can still decide whether or not to include medical cannabis at the health spending account level, as most insurance carriers can turn this feature on or off.
Because an HCSA usually has a set limit per year, such as $500 or $1,000, the amount an employee can claim for medical cannabis is limited to the total annual HCSA amount. In other words, if medical cannabis is payable under an HCSA, it includes a built-in cap – and plan members still need to provide a medical prescription to claim it – so plan sponsors don’t really need to worry, as the cost for usage is limited. While we may see expanded coverage for medical cannabis going forward, the fact that it’s an allowable HCSA expense isn’t new.
Medical cannabis isn’t the same thing as recreational cannabis. It seems an obvious point, but there appears to be some conflation of the two when the subject of cannabis comes up. If your employees want to know if they can claim medical cannabis on their benefits plan, that’s one thing. The issue of a potential impairment at work is another.
Medical cannabis can (and should) be addressed through your benefits plan design. As a plan sponsor, you need to review your benefits plan wording for the definition of a prescription drug, such as requiring a Drug Identification Number (DIN) or simply whether prescription drugs are medically necessary. A plan sponsor has the right to manage what’s covered and what’s not, as long as the plan design language is clear, fair and equitable.
But recreational cannabis isn’t a benefits issue at all. It’s a workplace issue, just like alcohol use, that should be addressed through your company’s policies and procedures. As a plan sponsor, you need to have comprehensive drug and alcohol policies in place that focus on employees being “fit for duty,” and ensure those policies meet the bona fide occupational requirement for having the policy in the first place.
What’s changing, and why you should care
If it’s not a new issue, does this mean plan sponsors can just ignore it? (“Pay no attention to the cannabis behind the curtain….”)
Not really. What the legalization of both recreational and medical cannabis has done is draw more attention to how cannabis can be used for various conditions. There’s medical evidence that it provides effective treatment for neuropathic pain and spasticity, for example, and that may be just the tip of the iceberg. Going forward, we may see more applications for conditions like mental health, anxiety, sleep disorders and post-traumatic stress disorder. There will likely be increasing pressure from employees to claim cannabis on their benefits plans, after trying it recreationally and obtaining positive outcomes. As a plan sponsor, how you address that expectation is up to you, but you’ll still need to think about it and be prepared to deal with it.
Some benefits plans already allow medical cannabis to be claimed under the plan itself (not just the HCSA) – and now, nearly all the major insurers are adding coverage for medical cannabis as an option under their plan offerings. However, in most cases, it requires a stringent prior authorization review process, is only allowed for three to five severe medical conditions, is capped at $1,500 to $5,000 per year, and could mean a premium increase when first added to the plan and adjusted at renewals, depending on usage. If you allow coverage for medical cannabis under your drug plan today, with an appropriate limit, then we do not expect a major impact on your overall plan costs in the short term. However, this could easily change in the future, if more medical conditions are covered.
So what do I do now?
At this stage, addressing the new legalization of recreational cannabis is probably the more pressing issue. As a result, plan sponsors should focus on establishing proper workplace policies that prohibit its use in the workplace and comply with both occupational health and safety legislation, as well as workplace accommodations and human rights legislation. It will only take one highly unfortunate, very public mistake to draw plan sponsors’ attention to the fact that they should have dealt with the risk earlier.
When it comes to dealing with cannabis at work, prevention is the best medicine. Make sure your employees understand the rules and expectations – from both an HR and a benefits perspective. Follow the research and trends as they develop, so you know the facts and understand your options. You don’t have to buy into the cannabis craze… but you will want to have clear documentation and communication with plan members to make sure you’re covered.
This issue of Insights has been prepared for general information purposes only and does not constitute professional advice. Should you require professional advice based on the contents of this notice, please contact an Eckler consultant.