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AR 272/96 ABC BENEFITS CORPORATION REGULATION

(Consolidated up to 38/2015)

ALBERTA REGULATION 272/96

ABC Benefits Corporation Act

ABC BENEFITS CORPORATION REGULATION

Table of Contents

                1      Definitions

Part 1
General Provisions

                2      Composition and appointment of Board

                3      Eligibility


                4      Nominating committee

             4.1      Notice of expiry of first or 2nd term

             4.2      Provision of names to Board

                5      Remuneration and expenses

                6      Audit committee

                7      Conduct review committee

                8      Winding-up

                9      Appointment of actuary

              10      Financial statements

              11      Audit function

Part 2
Alberta Blue Cross Plan

              12      Alberta Blue Cross Plan

Part 3
Payment in Lieu of Taxes

              13      Interpretation

              14      Payment to the Crown in right of Alberta

              15      Taxable amount defined

              16      Payment to the Crown in right of Alberta

              17      Refund from the Crown in right of Alberta

              18      Duty to file annual return

              19      Duty to keep records

              20      Penalties and interest

              21      Application of tax Acts

              22      Application of section 149(10) of the
Income Tax Act (Canada)

              23      Use and disclosure of information

Part 4
Expiry

              24      Expiry

Definitions

1   In this Regulation,

                               (a)    “Board” means the board of the Corporation;

                              (b)    “Corporation” means the ABC Benefits Corporation;

                               (c)    “nominating committee” means the nominating committee established under section 4.

Part 1
General Provisions

Composition and appointment of Board

2(1)  The Board shall consist of not fewer than 5 and not more than 9 members.

(2)  The members of the Board shall be appointed by the members of the Board then in office from a list of persons nominated by the nominating committee.

(3)  In making appointments to the Board, the Board

                               (a)    shall make its best efforts to ensure that the membership of the Board represents a broad and diverse cross‑section of Albertans, and

                              (b)    shall ensure that the membership of the Board meets the requirements of the Canadian Association of Blue Cross Plans respecting public directors.

(4)  A member of the Board shall be appointed for a term of not more than 3 years.

(5)  A member of the Board is eligible for reappointment, but no person shall serve more than 3 consecutive terms on the Board.

(6)  Repealed AR 38/2015 s2.

(7)  Despite the expiry of the term of office of a member of the Board, the member remains in office until

                               (a)    the member is reappointed or a successor is appointed, or

                              (b)    a period of 4 months passes after the expiry of the term of office,

whichever happens first.

(8)  Notwithstanding subsection (1), a vacancy in the membership of the Board does not invalidate the constitution of the Board or impair the right of members of the Board to act.

AR 272/96 s2;38/2015

Eligibility

3(1)  The following persons are not eligible to become or remain members of the Board:

                               (a)    a person who has, within the preceding 5 years, been convicted of an indictable offence;

                              (b)    a person who is an officer or employee of the Corporation;

                               (c)    a person who has the status of bankrupt;

                              (d)    a person who

                                        (i)    is a dependent adult as defined in the Dependent Adults Act or is the subject of a certificate of incapacity under that Act,

                                      (ii)    is a formal patient as defined in the Mental Health Act, or

                                     (iii)    has been found to be a person of unsound mind by a court elsewhere than in Alberta.

(2)  A member of the Board ceases to hold office when

                               (a)    the member dies or resigns,

                              (b)    the member becomes ineligible under subsection (1), or

                               (c)    the member’s appointment expires, subject to section 2(7).

(3)  A resignation of a member of the Board becomes effective at the time a written resignation is sent to the Board or at the time specified in the resignation, whichever is later.

Nominating committee

4(1)  There is hereby established a nominating committee consisting of the following persons:

                               (a)    the current Chair of the Board, or if there is no Chair then in office, the current Chair of the Corporation’s Governance and Compensation Committee;

                              (b)    one person appointed by the regional health authorities referred to in section 3 of the Regional Health Authorities Act;

                               (c)    one person who is a member of the Institute of Chartered Accountants of Alberta and is appointed by the Council of the Institute;

                              (d)    one person appointed by the Alberta Association of Municipal Districts and Counties.

(2)  The Chair of the Board shall give the nominating committee reasonable advance notice of the expiry of the term of a member, and the nominating committee shall provide a list of at least 2 nominees to the Board within a reasonable time before the expiry of the term.

(3)  When a vacancy occurs unexpectedly, the Chair of the Board shall notify the nominating committee, and the nominating committee shall, within 60 days of being so notified, provide a list of at least 2 nominees to the Board.

(4)  In making nominations, the nominating committee

                               (a)    shall make its best efforts to ensure that the persons nominated are such that the membership of the Board will represent a broad and diverse cross‑section of Albertans, and

                              (b)    shall ensure that the persons nominated meet the requirements of the Canadian Association of Blue Cross Plans respecting public directors.

(4.1)  The nominating committee may establish terms of reference and, subject to the Board’s approval, nominating policies relating to its process and procedures for nominating persons pursuant to this Regulation.

(5)  Despite section 2(2), if the nominating committee fails to provide nominees as required by this section, the Board may appoint a person it chooses.

AR 272/96 s4;232/2001;38/2015

Notice of expiry of first or 2nd term

4.1(1)  A notice to the nominating committee under section 4(2) relating to the expiry of a Board member’s first or 2nd term must be accompanied by a review and assessment of the member where the member is willing to be reappointed for a further term.

(2)  If, in the opinion of the nominating committee, there is no reason not to nominate the member referred to in subsection (1), the nominating committee may nominate the member and need not nominate any other person, despite section 4(2) and (3).

AR 232/2001 s3

Provision of names to Board

4.2   The nominating committee must provide the names of nominees to the Board in accordance with

                               (a)    this Regulation, and

                              (b)    the terms of reference and nominating policies of the nominating committee.

AR 232/2001 s3

Remuneration and expenses

5   Members of the Board are entitled to be paid remuneration and reasonable expenses for carrying out their duties as members in the amounts set by the Board in the by‑laws.

Audit committee

6(1)  The audit committee to be established by the Board must consist of at least 3 persons, and all members of the audit committee must be members of the Board.

(2)  The audit committee must

                               (a)    review the annual financial statements of the Corporation before they are approved by the Board,

                              (b)    ensure that appropriate internal control procedures are in place,

                               (c)    meet with the chief internal auditor of the Corporation, or the officer or employee of the Corporation acting in a similar capacity, and with management of the Corporation, to discuss the effectiveness of the internal control procedures established for the Corporation,

                              (d)    review the investments and transactions that could adversely affect the well‑being of the Corporation that the auditor or any officer of the Corporation brings to the attention of the committee,

                               (e)    meet with the auditor of the Corporation to discuss the annual financial statements, and

                               (f)    meet with the actuary of the Corporation to discuss the valuation of the policy liabilities prepared by the actuary under section 9(3).

(3)  The audit committee must report on the annual financial statements to the Board before the Board approves the statements.

(4)  The audit committee may call a meeting of the Board to consider any matter of concern to the committee.

AR 5/2006 s3

Conduct review committee

7(1)  In this section, a person is a related party with respect to the Corporation if the person

                               (a)    is a member of the Board or a senior officer of the Corporation appointed in accordance with the bylaws,

                              (b)    is a spouse, adult interdependent partner or child under the age of 18 years of a person referred to in clause (a), or

                               (c)    is a corporation or an unincorporated body that is controlled by a person referred to in clause (a) or (b).

(2)  For the purposes of this section,

                               (a)    a corporation is controlled by a person if

                                        (i)    securities of the corporation to which are attached more than 50% of the votes that may be cast to elect directors of the corporation are held, other than by way of security only, by or for the benefit of that person, and

                                      (ii)    the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the corporation,

                                  and

                              (b)    an unincorporated body is controlled by a person if the person holds or beneficially owns more than 50% of the beneficial interest, however designated, into which the body is divided and the person is able to direct the affairs of the entity.

(3)  Despite subsection (2), a person controls a corporation or an unincorporated body if the person has, in relation to the corporation or unincorporated body, any direct or indirect influence that, if exercised, would result in control in fact of the corporation or unincorporated body.

(4)  The conduct review committee to be established by the Board must consist of at least 3 persons, and all members of the conduct review committee must be members of the Board.

(5)  Officers and employees of the Corporation are not eligible to be members of the conduct review committee.

(6)  The conduct review committee must

                               (a)    establish procedures for the review of transactions with related parties of the Corporation,

                              (b)    review all proposed transactions with related parties of the Corporation, and

                               (c)    review the practices of the Corporation to ensure that any transactions with related parties of the Corporation that may have a material effect on the stability or solvency of the Corporation are identified.

(7)  After each meeting of the conduct review committee, the committee must report to the Board on all transactions and other matters reviewed by the committee.

(8)  In this section, “unincorporated body” means a trust, partnership, fund or other unincorporated association or organization.

AR 5/2006 s3

Winding‑up

8   If the Corporation is wound up, the property of the Corporation must be used

                               (a)    firstly, to pay all costs incurred in the winding‑up of the Corporation, and

                              (b)    secondly, to discharge all liabilities of the Corporation,

and the balance, if any, must be disposed of by order of the Lieutenant Governor in Council.

AR 272/96 s6;5/2006

Appointment of actuary

9(1)  An individual is not eligible to be appointed or remain an actuary under section 4.2(b) of the Act unless that person is

                               (a)    ordinarily resident in Canada, and

                              (b)    a Fellow in good standing of the Canadian Institute of Actuaries.

(2)  Where the actuary appointed by the Corporation under section 4.2(b) of the Act is not an individual, the actuary must appoint an individual who is responsible for acting on behalf of the actuary and has and maintains the qualifications set out in subsection (1).

(3)  The actuary shall value the policy liabilities with respect to the Alberta Blue Cross Plan in accordance with generally accepted actuarial standards.

AR 5/2006 s3

Financial statements

10   In addition to the requirement of section 9.1(2) of the Act, Alberta Government funded programs, as defined in section 13(1)(b), must be reported as segregated information in the notes to the Corporation’s financial statements.

AR 5/2006 s3

Audit function

11   The Corporation and its auditor must certify

                               (a)    that the expenses and income in respect of the operations of the Corporation were allocated in accordance with the policy established by the Corporation under section 9.1(3) of the Act, and

                              (b)    that the allocation of expenses and income was fair and reasonable.

AR 5/2006 s3

Part 2
Alberta Blue Cross Plan

Alberta Blue Cross Plan

12(1)  In this section,

                               (a)    “group plan” means a single contract between the Corporation and an employer or an association in which the well‑being of a number of persons is covered and a subscription rate is charged;

                              (b)    “individual health plan” means a contract between the Corporation and an individual or an individual and the individual’s dependants in which the well‑being of the individual or the individual and the individual’s dependants is covered and a subscription rate is charged;

                               (c)    “subscription rate” means the amount the Corporation charges in respect of a group plan or an individual health plan and which amount is not subject to adjustment by the Corporation except as authorized by the terms of the group plan or the individual health plan.

(2)  The Alberta Blue Cross Plan constitutes all of the present and future programs and services of the Corporation relating to

                               (a)    administering, marketing and distributing health benefit plans and services and related or associated benefit plans and services that are underwritten or sponsored by third parties, including governments,

                              (b)    providing, marketing and distributing insurance benefits, including life, disability and critical illness insurance that are underwritten by an insurance company licensed in Alberta, and

                               (c)    underwriting, administering, marketing and distributing the following health benefit plans and services and related or associated benefit plans and services:

                                        (i)    group plans that provide for any or all of the following:

                                              (A)    prescription drug benefits;

                                              (B)    health benefits and services;

                                              (C)    dental benefits;

                                              (D)    vision benefits;

                                               (E)    out of province emergency travel coverage, where adequate reinsurance arrangements exist with an insurer authorized to carry on insurance business in Canada;

                                               (F)    health spending accounts;

                                              (G)    employee assistance benefits;

                                              (H)    expatriate benefits;

                                      (ii)    individual health plans that provide for any or all of the following:

                                              (A)    prescription drug benefits;

                                              (B)    health benefits and services;

                                              (C)    dental benefits;

                                              (D)    vision benefits;

                                               (E)    out of province emergency travel coverage, where adequate reinsurance arrangements exist with an insurer authorized to carry on insurance business in Canada;

                                               (F)    health spending accounts.

AR 5/2006 s3

Part 3
Payment in Lieu of Taxes

Interpretation

13(1)  In this Part,

                               (a)    “Act” means the ABC Benefits Corporation Act;

                              (b)    “Alberta Government funded programs” means programs for which funding is directly received from the Government of Alberta, but does not include the employer group plan for the employees of the Alberta Government;

                               (c)    “cumulative account balance at the end of the immediately preceding year” means the amount determined by the formula

                                       A ‑ B

                                       where

                                         A    is the aggregate of the taxable incomes from the operation of Alberta Government funded programs in any of the 10 taxation years immediately preceding the year in respect of which the calculation is made, and

                                         B    is the aggregate of the absolute values of the non‑capital losses from the operation of Alberta Government funded programs in any of the 10 taxation years immediately preceding the year in respect of which the calculation is made

                                       except that A and B are deemed to be nil for taxation years ending prior to 2005;

                              (d)    “Minister” means the President of Treasury Board and Minister of Finance;

                               (e)    “tax Acts” means

                                        (i)    the Income Tax Act (Canada) and the regulations made under that Act, and

                                      (ii)    the Alberta Corporate Tax Act and the regulations made under that Act.

(2)  Words and phrases used in this Part and not defined in the Act or this Part have the meaning given to them in the tax Acts.

(3)  For the purposes of this Part, the reference to “this Act” in section 245(1) and (4) of the Income Tax Act (Canada) must be read as if it were a reference to the ABC Benefits Corporation Act.

AR 5/2006 s3;68/2008;31/2012;62/2013

Payment to the Crown in right of Alberta

14(1)  Each taxation year the Corporation shall make a payment to the Crown in right of Alberta calculated under subsection (2), unless the Corporation is entitled to a refund under section 17.

(2)  The payment amount is equal to that proportion of the taxable amount that the Corporation would be required to pay as tax for that year pursuant to

                               (a)    Parts I and I.3 of the Income Tax Act (Canada), and

                              (b)    the Alberta Corporate Tax Act,

if the Corporation were not exempt from taxation under section 149 of the Income Tax Act (Canada) and section 35 of the Alberta Corporate Tax Act.

AR 5/2006 s3

Taxable amount defined

15(1)  The taxable amount or loss for a taxation year is the amount calculated by the formula

A ‑ B + C ‑ D + E

where

                                 A    is the amount that would be taxable for the year under the tax Acts;

                                 B    is the amount, if any, of taxable income for the year from the operation of Alberta Government funded programs during the year;

                                 C    is the absolute value of amount, if any, of the non‑capital loss for the year from the operation of Alberta Government funded programs during the year;

                                 D    is, where a non‑capital loss amount is included in this calculation pursuant to C,

                                        (i)    the value of C if the cumulative account balance at the end of the immediately preceding year is zero or negative;

                                      (ii)    zero, if the cumulative account balance at the end of the immediately preceding year is positive and equal to or greater than the value of C;

                                     (iii)    the difference between the value of C and the cumulative account balance at the end of the immediately preceding year if the cumulative account balance at the end of the immediately preceding year is positive and less than the value of C;

                                 E    is, where an amount is included in this calculation pursuant to B and the cumulative account balance at the end of the immediately preceding year is negative,

                                        (i)    the lesser of

                                              (A)    the value of B, and

                                              (B)    the absolute value of the cumulative account balance at the end of the immediately preceding year,

                                           or

                                      (ii)    the value of B where the value of B and the cumulative account balance at the end of the immediately preceding year are equal.

(2)  The taxable income or non‑capital loss in respect of the operation of the Alberta Government funded programs during the taxation year referred to in subsection (1) shall not include any investment income or losses or any capital gains or losses.

(3)  The Corporation must, in a fair and reasonable manner, allocate its revenues and costs for the taxation year and its assets, liabilities and equity at the end of the year, between the operation of the Alberta Government funded programs and its other operations.

AR 5/2006 s3

Payment to the Crown in right of Alberta

16(1)  Where the Corporation is required to make a payment to the Crown in right of Alberta in respect of a taxation year, it must make monthly instalments in respect of the payment in accordance with the tax Acts, except that instalments are required for the first taxation year to which this Part applies.

(2)  Not later than the last day of the 2nd month following the end of a taxation year, the Corporation must

                               (a)    calculate the actual amount that it must pay to the Crown in right of Alberta for the year, and

                              (b)    if the actual amount required to be paid to the Crown in right of Alberta is greater than the total of the instalments paid by the Corporation in the year, pay the difference to the Crown in right of Alberta.

AR 5/2006 s3

Refund from the Crown in right of Alberta

17(1)  The Corporation is entitled to receive a refund from the Crown in right of Alberta

                               (a)    where the total of the instalments paid by the Corporation in a taxation year is greater than the actual payment calculated under section 16(2) for that year,

                              (b)    where the Corporation elects, in accordance with the tax Acts, to carry back to a previous taxation year a loss reported on a return filed under section 18, or

                               (c)    where, after the Corporation has paid an amount required under this Part for a taxation year, it is assessed a tax pursuant to

                                        (i)    Parts I and I.3 of the Income Tax Act (Canada), or

                                      (ii)    the Alberta Corporate Tax Act.

(2)  The amount of a refund under subsection (1) is the difference between

                               (a)    the amount actually paid by the Corporation under this Part for the year, and

                              (b)    the amount required to be paid by the Corporation under this Part for the year.

(3)  If the Corporation is entitled to receive a refund under this section, it is entitled to interest in the amount that would be payable and on the terms that would apply if a refund were payable to the Corporation under the Alberta Corporate Tax Act.

AR 5/2006 s3

Duty to file annual return

18   Not later than the last day of the 6th month following the end of each taxation year, the Corporation must file with the Minister a return or returns that it would be required to file if it were not exempt from taxation under section 149 of the Income Tax Act (Canada) and section 35 of the Alberta Corporate Tax Act.

AR 5/2006 s3

Duty to keep records

19   The Corporation must keep all records in support of the calculation of payments or refunds under this Part in respect of a particular year for at least 6 years after the end of that year.

AR 5/2006 s3

Penalties and interest

20(1)  If the Corporation fails to comply with an obligation

                               (a)    under the tax Acts that would have applied to it if it were not exempt from taxation under those Acts, or

                              (b)    under this Part,

it is subject to the penalty or interest, or both, that is payable under the tax Acts for that type of failure.

(2)  Any penalty or interest payable pursuant to this section must be paid to the Minister within the same time or times by which the penalties and interest are payable under the tax Acts.

AR 5/2006 s3

Application of tax Acts

21(1)  The Minister

                               (a)    may take any action with respect to returns and payments required under this Part that the Canada Revenue Agency or the Minister is authorized to take with respect to returns and payments of tax under the tax Acts, and

                              (b)    is subject to the obligations of the Canada Revenue Agency and the Minister under the tax Acts with respect to the administration of this Part.

(2)  Except as modified by this Part, the Corporation

                               (a)    is entitled to the benefit of the rights, processes, procedures and remedies available to taxpayers under the tax Acts, and

                              (b)    is subject to the obligations of taxpayers under the tax Acts.

(3)  A decision of the Minister that under the tax Acts would be subject to appeal to a court may be appealed to the Court of Queen’s Bench of Alberta.

AR 5/2006 s3

Application of section 149(10) of the
Income Tax Act (Canada)

22   Subsection 149(10) of the Income Tax Act (Canada) applies when this Part comes into force.

AR 5/2006 s3

Use and disclosure of information

23   Section 77 of the Alberta Corporate Tax Act applies to information in the custody or under the control of the Minister.

AR 5/2006 s3

Part 4
Expiry

Expiry

24   For the purpose of ensuring that this Regulation is reviewed for ongoing relevancy and necessity, with the option that it may be repassed in its present or an amended form following a review, this Regulation expires on June 1, 2025.

AR 272/96 s8;232/2001;5/2006;38/2015