Legislative change affects health and drug coverage for employees 65 and older
Starting this fall, Alberta employers will face significant changes to how they fund health benefits for their oldest workers. The Alberta government passed Bill 11, the Health Statutes Amendment Act, 2025 (No. 2), with the changes taking effect Oct. 1, 2026.
There are two core changes employers need to understand.
First, the Alberta government will become the payer of last resort for prescription drug and certain supplemental health benefits. As Sun Life explained in an April 2026 update, provincial programs will only pay "if private insurance coverage is unavailable or plan members are ineligible for coverage." This applies to plans covering both active employees and retirees.
Second, employers will no longer be permitted to terminate or reduce drug and health care coverage for active employees aged 65 and older. Sun Life noted two important caveats: age-based restrictions may still apply to retiree plans, and Bill 11 does not mandate minimum coverage requirements for private health plans.
In practical terms, when a claim is eligible under both a workplace benefits plan and a government-sponsored one, it will now be billed to the private plan first.
"As eligible costs shift from provincial to private coverage, your plan costs and claims experience may change, affecting your rates," Sun Life advised plan sponsors. "The impact will depend on your plan design, member demographics, and where your members reside."
Costs expected to rise for employers
The financial implications are already being modelled by insurers. The change is projected to increase drug and health claims for active employees by two per cent to five per cent, according to Hub International in a 2026 update.
Kenneth MacDonald, an associate vice-president at Hub International, acknowledged the added pressure, while stopping short of predicting employers would abandon benefits packages altogether. "With all kinds of costs increasing, this is just one more irritant for employers," he told CBC News, adding that whether companies pass those costs on to employees will ultimately be their own decision.
Alberta's Hospital and Surgical Services Ministry told CBC News that in 2025–26, it spent $1.1 billion on pharmaceutical and supplementary health benefits for more than 843,000 Albertans aged 65 and over — costs that will now increasingly fall to private employers.
Employers rethinking hiring
For some business owners, the changes are already reshaping how they think about recruitment.
"Right now, or at least before this, health care wasn't really a consideration when we were hiring because it was provided for by the government," Peter Hurd-Watler, owner of a Calgary-based startup that partners with small businesses, told CBC News.
“With the advent of this bill … we would have to seriously consider that, and that would be a new variable in our hiring decisions."
Hurd-Watler also worried about downstream effects on growth. "If a health insurance plan or more of it is on the burden of the employer, then that's going to increase costs for employers, and therefore they wouldn't be able to hire as much or grow their companies as well."
His concerns echo a broader warning raised by economists such as Erin Strumpf, an economics professor at McGill University.
"It kind of creates a weird disincentive to employ people who have the higher risk of high-cost health events and high-cost health-care needs," she told CBC News. "It's not to say that everybody over age 65 has high health-care costs, but the chance of those things… the risks certainly go up."
Strumpf added that employers squeezed by rising plan costs may respond by trimming the generosity of their coverage overall. "Employers have to find that money somewhere or they start, you know, trimming back a little bit the generosity of their insurance coverage."
Aging workforce on the rise
The policy change comes as older Canadians are staying in the workforce in growing numbers. According to Statistics Canada data cited by CBC News, the labour participation rate for people aged 65 and over rose from 14.2 per cent to 15.2 per cent between 2021 and 2025 nationally. In Alberta, that figure oscillated between 17 and 18 per cent over the same period.
It is worth noting what Bill 11 does not change for retirees. According to Alberta Blue Cross, which administers several provincial programs on behalf of the government, Albertans who retire before 65 can still access the Non-Group Coverage program, which provides supplementary health benefits for a monthly premium.
For those who retire at 65 or older, the Coverage for Seniors program continues to offer premium-free prescription drug and supplementary health coverage to those not otherwise insured.
