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Wendy Matton

 Tags: EP3

EP3 is an industry acronym that stands for Extended Health Policy Protection Plan. Within EP3, Insurance companies have banded together to share the risk of high drug claims and protect fully insured drug plans from the impact of high drug costs. Additionally, this program helps protect the sustainability of benefit plans for small to medium-sized enterprises (SME).

How Does EP3 Work?

In Canada, the Canadian Drug Insurance Polling Corporation (CDIPC) requires all fully insured drug plans to have pooling protection. The EP3 program is one of two pooling programs and as mentioned above, it spreads the risk of catastrophic drug claims across all insurance companies in the pool.

This program works based on pooling thresholds set by your insurance carrier. When drug costs exceed the threshold for two consecutive years, a percentage of the claim will be moved to the EP3 pool and essentially ‘re-insured’ by the EP3 pool, helping to mitigate the impact to the insurance company.

How Do You Know If Your Benefits Plan Is Eligible For EP3?

The simplest way to know if you are eligible to participate in the EP3 program is to ask your advisor. Typically, your fully insured plan through a ‘traditional’ insurance company is required to participate in EP3 unless you meet the requirements necessary to opt out. Those requirements can include, but are not limited too, an annual individual maximum less than or equal to the ongoing threshold of the industry pool, an annual certificate maximum less than or equal to the threshold of the industry pool, etc.

What Groups Or Plans Are Ineligible to Participate?

The following list included types of plans that are not eligible to participate in the EP3 pooling:

  • ASO plans (Administrative Services Only)
  • Plans with refund accounting models
  • Cost Plus or Health Spending Accounts (HSA)
  • Association plans

EP3 can be a complex subject and we’re just scratching the surface here. If you want to know more about EP3, how it works, and its impact on the industry, we recommend reaching out to your advisor.



Wendy Matton

Wendy has nearly 40 years of experience in the financial services sector. She began in banking and moved on to Bay St. trading in fixed income, currency and commodities, to management. The next phase was spent in sales and advisory roles as an independent financial and insurance advisor. She has spent the last 15 years as a consultant in the employee benefits industry. Wendy enjoys going on gal-pal road trips with her daughter visiting theatres and B&Bs across Ontario. When not hosting a “Scuff ‘n’ Scoff” with her hubby and musical friends, her most treasured moments are outdoors, back in the hills of Newfoundland on a ski-doo or on a pristine lake with her dad, in a canoe.
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