Termination of employees because of age

Apr 15, 2013

“Age is an issue of mind over matter. If you don’t mind, it doesn’t matter” – Mark Twain

“But it matters with benefit plans!” – Brent Delveaux

We are an aging population, a reality that is not going to change any time soon.  2011 was the year the first of the “baby boomer” generation turned 65.  We are also living longer than ever before with life expectancy in Canada now exceeding 80 years in 2010.

When it comes to benefit plans, an aging population creates serious issues for benefit plan sponsors.Many benefits, such as life insurance and long term disability, incorporate an age limitation and benefits just cease when that age is reached by an employee.If you have older employees who want to keep working and stay on the benefit plan, you could ask your insurer to increase or eliminate the termination age for most benefits; but is this the right decision for your organization?

In Canada, you can no longer force an employee to retire because of age, but benefit plans are still permitted to terminate due to age.  When designing benefit plans, we encourage employers to think about what is best for their company given the conventions and standard practices of the industry or market they are in. For example, if the company operates in an industry where it is hard to find employees, they may need to entice employees to continue working past regular retirement age and if they do remain active, employers may have to continue benefits.

In reviewing your decision, you must consider that healthcare costs rise significantly with age so you may not want to leave the termination age open ended, however, some employees will want to continue to work and not retire because they have large recurring medical claims they cannot afford.

This is a difficult subject and it will affect all employers at some point in time. No one wants an employee to experience financial hardship but can your business afford to continue providing coverage?


[i] United Nations, World Population Prospects, The 2010 Revision

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