Ontario health premium: who pays?
During the Ontario government's budget speech on May 18, 2004, provincial finance Minister Greg Sorbara announced the introduction of a new "health premium" designed to provide additional funds for health care. The Ontario Health Premium (OHP) commenced in mid 2004.
The OHP is not specifically termed a "tax," but it is charged to an individual tax-payer at the end of a calendar year and based on the individual's taxable income. It is anticipated that such a premium will be imposed on all individuals earning more than $20,000 per year. It will be graduated on the basis of income, capping out at $900 per year for those earning an annual income of more than $200,000.
In 1989, Ontario discontinued the collection of OHIP premiums and adopted an Employer Health Tax. Despite this, however, many collective agreements have maintained references to OHIP health premiums being wholly or partly paid for by an employer. Such language will surely lead unions to call on employers to assume the cost of their employees' OHP. The issue is also sure to be raised at the bargaining table. The ability of the union to reasonably advance this claim will be dependent on the precise wording of the collective agreement.
Anticipating this, the minister of finance has been clear in his comments that the OHP is vastly different from the old Ontario Health Insurance Plan premiums that were discontinued in 1989. He has announced that the premium will be "... taken off paycheques as part of the provincial income tax, not as a separate premium, as was the case with the Ontario Health Insurance Plan levies eliminated 14 years ago".
Despite reassurances by the minister, employers are encouraged to review their collective agreements to determine whether there exists any language that the union could use to advance the argument that the employer is contractually bound to cover the costs of the OHP.
If a risk is identified, employers are encouraged to develop a strategy to respond.
Victoria R. Chiappetta is a lawyer with the Sault Ste. Marie office of Mathews, Dinsdale & Clark LLP. Her practice is restricted to labour and employment on behalf of management.
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|Title Annotation:||BUSINESS LAW|
|Author:||Chiappetta, Victoria R.|
|Publication:||Northern Ontario Business|
|Date:||Jan 1, 2005|
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