Alberta employers will soon need to adjust to significant changes in how health and prescription drug benefits are funded for employees aged 65 and older.

Beginning October 1, 2026, the province's Health Statutes Amendment Act, 2025 (No. 2)—commonly referred to as Bill 11—will shift more responsibility for eligible prescription drug and supplemental health costs to private benefit plans.

While the legislation aims to ensure older employees continue to have access to workplace health coverage, it also introduces new financial considerations for employers and plan sponsors.

What Is Changing?

Bill 11 introduces two major changes that employers should understand.

First, the Alberta government will become the payer of last resort for prescription drugs and certain supplemental health benefits. This means provincial programs will only pay when private coverage is unavailable or an individual is not eligible for employer-sponsored benefits.

As a result, eligible claims that were previously paid by the province will now be submitted to private workplace benefit plans first.

Second, employers will no longer be permitted to terminate or reduce health and drug coverage for active employees aged 65 and older based solely on age.

It's important to note that the legislation does not require employers to provide a minimum level of coverage, nor does it prevent age-based differences in retiree benefit plans.

Employers Could See Higher Benefit Costs

One of the most immediate impacts of Bill 11 is expected to be increased benefit costs for employers.

According to Hub International, organizations could see drug and health claims for active employees rise by 2% to 5% as costs shift from provincial programs to employer-sponsored plans.

Sun Life has also advised plan sponsors that the impact will vary depending on plan design, workforce demographics, and where employees live.

"As eligible costs shift from provincial to private coverage, your plan costs and claims experience may change, affecting your rates," Sun Life noted in its guidance to employers.

For organizations already managing rising operating expenses, the additional claims costs may require a closer review of benefit plans and long-term budgeting.

Could Hiring Decisions Be Affected?

Some employers have expressed concern that the legislation could influence hiring and workforce planning decisions.

Peter Hurd-Watler, owner of a Calgary-based startup that partners with small businesses, told CBC News that health-care costs were previously not a significant consideration when hiring older workers because many benefits were funded by the province.

"With the advent of this bill … we would have to seriously consider that, and that would be a new variable in our hiring decisions."

He also warned that increased benefit costs could affect business 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."

While it remains to be seen how organizations will respond, the legislation introduces a new financial factor that some employers may need to account for during workforce planning.

An Aging Workforce Adds to the Conversation

The timing of Bill 11 coincides with a growing number of older Canadians remaining in the workforce.

According to Statistics Canada data cited by CBC News, labour force participation among Canadians aged 65 and older increased from 14.2% to 15.2% between 2021 and 2025. In Alberta, participation has remained between 17% and 18%during that same period.

As more employees choose to work beyond traditional retirement age, benefit plan design is becoming an increasingly important consideration for employers.

The legislation reflects changing workforce demographics while also raising questions about how organizations can continue supporting experienced employees in a financially sustainable way.

Balancing Costs and Workforce Inclusion

Some economists have cautioned that shifting more health costs to employers could create unintended consequences.

Erin Strumpf, an economics professor at Mc Gill University, noted that increasing employer responsibility for health-care costs could discourage some organizations from hiring workers who are statistically more likely to require medical care.

"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 also suggested that some employers facing higher benefit costs may respond by reducing the generosity of their health plans overall.

"Employers have to find that money somewhere or they start, you know, trimming back a little bit the generosity of their insurance coverage."

These concerns highlight the challenge employers may face in balancing rising benefit costs with efforts to recruit and retain experienced employees.

Preparing for the Changes

With the legislation taking effect on October 1, 2026, employers may wish to begin reviewing their current benefit plans, projected claims costs, and workforce demographics.

Working with insurers and benefits advisors can help organizations better understand how Bill 11 may affect their plans and identify opportunities to manage future costs.

As Alberta's workforce continues to age, these changes serve as a reminder that employee benefits remain an evolving area of workforce strategy. Organizations that proactively assess the financial and operational impacts of Bill 11 may be better positioned to adapt while continuing to support employees at every stage of their careers.

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