Private Medical Insurance for Foreign Workers in Canada: Legal Obligations Not to Be Overlooked

The labour shortage is a well-established reality in Quebec. Although the unemployment rate increased in 2023 and 2024, after reaching an all-time low in 2022, the lack of resources is still an issue in several regions and sectors of activity.

To address the situation, many organizations are using temporary foreign workers. Different types of work permits exist; It is essential for businesses to fully understand the particularities associated with these permits, the obligations that result from them and the options available to them to make the appropriate choices.

Two years after the implementation of the Immigration and Refugee Protection Regulations¹, specifically section 209.3 aimed at better regulating the rights of temporary foreign workers, we offer you an overview of the current situation as well as indications for complying with it.

With some exceptions, foreign workers need a work permit to become employees in Canada.

There are three main government programs that allow residents of other countries to come and work in Canada:

• International Experience Canada (IEC)²;
• Temporary Foreign Worker Program (TFWP)³;
• International Mobility Program (IMP)⁴.

• The IEC is open to young workers between the ages of 18 and 35 who are citizens of a partner country of Canada, with a permit of up to two years. The “working holiday” stream is an open permit, while the “young professionals” and “international co-op internship” streams are closed permits, i.e., they are tied to a specific employer. The worker must ensure that they have sufficient medical insurance.
• The TFWP allows Canadian employers to hire temporary foreign workers. While there are exemption codes, most employers will be required to submit a Labour Market Impact Assessment (LMIA) to demonstrate that these resources fill a need that cannot currently be met by a Canadian worker or permanent resident. These permits are generally closed and for a period of one to three years, renewable. The worker must file an application for coverage with the Régie de l’assurance maladie du Québec (RAMQ) and the employer must verify that this process has been completed.
• The IMP allows an employer to hire a temporary foreign worker when an LMIA does not need to be completed. The worker must apply for a work permit.

Over the past five years, the number of LMIA-approved positions has doubled in Quebec, now exceeding the 60,000 mark annually. In this regard, it is interesting to note that although the number of approved positions is relatively similar between the primary agriculture and low-wage streams, the number of applications submitted for the latter stream is almost double.

Similarly, in 2023, there are more LMIAs approved under the high-wage stream than for primary agriculture. In short, the program benefits Quebec businesses in a much broader way than just the agricultural component.

Given the increase in popularity of the program, and the evolution of the job market, some restrictions have recently come into effect. These tightening measures include, as of September 3, 2024, the temporary suspension of the processing of applications for the low-wage component in the Montreal region; the unemployment rate increased for this category of workers in 2024.

New restrictive provisions were added on September 26, affecting the duration of permits and the cap on the number of temporary foreign workers in companies. Then, more recently, as of November 8, the starting hourly wage used for workers in the high-wage stream was increased by 20% from the current level, and stricter rules for housing and transportation assistance were introduced for the low-wage stream.

The situation is currently highly publicized, which generates more attention on employers benefiting from this foreign workforce.

In all cases, participants are protected by Canadian labour law, and the employer must ensure that the workplace is safe. The employer must also pay a wage equivalent to or higher than the minimum wage, except for the “co-op” component, which can be an unpaid internship. For employees hired under the TFWP, the employer also has obligations regarding medical insurance coverage. However, this obligation does not apply to workers hired under the IEC or IMP.

Although it was introduced more than 50 years ago, the TFWP has grown in popularity with employers in recent years. As a result, the federal government has introduced new obligations for employers who hire inpatriate workers in section 209.3 of the Immigration and Refugee Protection Regulations.

These rules, which came into force on September 26, 2022, include a component affecting insurance coverage. Thus, this regulation stipulates that the employer is responsible for taking out private medical insurance covering emergency medical care, effective as soon as the worker arrives in Canada. He or she must also pay the costs of the plan as long as the health insurance coverage under the public plan is not in effect. This requirement does not apply to seasonal agricultural workers from Mexico and the Caribbean due to specific agreements that exist between countries.

More recently, the Ministère de l’Immigration, de la Francisation et de l’Intégration added a clarification regarding the obligations of employers for the low-wage component. The Ministère specifies that the employer must, for these workers, provide health insurance coverage equivalent to that of the Régie de l’assurance maladie du Québec (RAMQ) plan, which is a more extensive coverage than emergency medical care alone.

In the event of non-compliance with their obligations, employers are subject to sanctions including prohibitions on hiring IMP and TFWP workers on a temporary or permanent basis, monetary penalties and the revocation of active permits.

The organization is also exposed to reputational risk, as the penalties provide for the employer to be registered in the Register of Non-Compliant Employers , a public registry that is easily accessible online.

In order to comply with the obligations related to medical insurance coverage, employers have various alternatives:

• Additional coverage in their group insurance plan: Most insurers offer additional coverage for emergency medical care in Canada, for an additional premium, and this coverage complements the employer’s group insurance plan. Where the eligibility clauses of the contract allow for coverage of temporary foreign workers, this option is probably the simplest in terms of operational management. However, the employer must ensure that the coverage can take effect as soon as the worker arrives in Canada, which is a regulatory requirement. Some insurers do not allow such coverage.

• Individual insurance policy: Many insurers offer emergency medical insurance coverage in Canada. However, individual policy prices may be higher and may include additional restrictions.
• Bundling of policies with a market intermediary: This option allows the employer to benefit from greater purchasing power than purchasing individual policies, helping to reduce costs for enhanced protection.

When taking out a contract of this type, it is essential to validate the coverage elements, in addition to the costs. Several characteristics are likely to vary from one contract to another. It is recommended to validate various aspects, including:

• The maximum amount of compensation;
• Pre-existing terms and conditions;
• Inclusions and exclusions, particularly for obstetric expenses, which are a frequent exclusion;
• The length of covered stays outside Canada.

Regardless of the coverage required for emergency medical care upon arrival in Canada, temporary workers may be eligible for the company’s group insurance contract. It is strongly recommended that you validate with your group insurance advisor the eligibility for coverage as well as the procedure to follow for enrolment to ensure optimal compliance.

Regarding retirement savings programs, there are no specific legal requirements related to temporary foreign workers or newcomers. However, for employers offering such programs, they must be vigilant in various respects, including with respect to the eligibility of these workers according to the rules in effect in their programs (eligibility, admissibility period, etc.).

In addition, employers must be aware of the tax issues and constraints affecting this foreign workforce; for example, that the RRSP margin available to contribute to an RRSP is created in the year following the first tax return.

Experience shows us that it can also be complex for foreign workers to navigate the Canadian financial system, even with regard to the basic concepts: the banking system, debit or credit cards, housing, taxes, etc.

The concepts and terminology used in Canada can be very different from those in their home country. An employer wishing to offer additional support to these foreign workers in connection with personal finances can certainly find solutions with their group retirement savings advisor, especially if they offer a financial education program.

Have questions? Do not hesitate to contact us. Our consultants will be happy to discuss this with you.

1. https://laws-lois.justice.gc.ca/eng/regulations/SOR-2002-227/section-209.3.html
2. https://www.canada.ca/en/immigration-refugees-citizenship/services/work-canada/iec/about.html
3. https://www.canada.ca/en/employment-social-development/services/foreign-workers.html
4. https://www.canada.ca/en/immigration-refugees-citizenship/services/work-canada/hire-temporary-foreign/international-mobility-program.html
5. https://www.canada.ca/en/immigration-refugees-citizenship/services/work-canada/employers-non-compliant.html