British Columbia budget includes 50% cut to MSP premiums

In the 2017 budget tabled on February 21, 2017, the British Columbia government announced that Medical Services Plan (“MSP”) premiums will be reduced by 50% for residents with a net annual household income below $120,000. This change could result in savings of $450 per year for individuals and $900 per year for families currently paying full premiums directly to the government.

Many employers in BC pay at least a portion of MSP premiums on behalf of their employees. In these cases, employees will receive a lower taxable benefit while employers stand to benefit from the reduction in premium cost. Employers should review employment contracts and collective agreements to determine the specific impact of this change.

The government indicated that in order to receive the premium reduction, individuals and families whose premiums are paid by a group plan (i.e. their employer or a multi-employer health care plan) will need to register through their group plan administrator. Those who are currently receiving premium assistance will automatically be registered for the reduction. More specific information on the registration process is expected soon.

In addition to the above noted cuts, effective January 1, 2018, the net income threshold at which individuals are fully exempt from paying MSP premiums will increase from $24,000 to $26,000, while couples with two children and family net income below $35,000 will also be exempt.

These and other budget measures are contingent on the outcome of the provincial election on May 9, 2017. The MSP premium reduction is characterized as the first step in eliminating MSP premiums altogether. BC is unique in collecting monthly premiums from individuals to fund health care. MSP premiums have increased by 4% annually for the last number of years, with the exception of January 1, 2017 when the premium structure was revised to no longer consider children and the 4% increase was cancelled. The budget document indicates that the future elimination of MSP premiums will be “influenced by the Province’s fiscal capacity”. While MSP premiums in their current format may be eliminated at some point in the future, it is unclear how this source of revenue for government will be replaced.

News & Views - March 2017 (PDF)