insuranceataglance.ca CEO Adam Niman Discusses Cannabis and Insurance Coverage

insuranceataglance.ca is an insurance aggregator that collects details from major Canadian insurance providers and lets users search for the least expensive premiums best on their needs and biographical details. Founder and CEO Adam Niman visits the Midas Letter set to answer questions about insurance and cannabis consumption. Niman provides information about the ways in which cannabis consumption impacts life insurance plans. Niman discusses benefit plans and reveals that many insurance companies are allowing cannabis coverage for medical consumption. Niman walks through the Medical Expense Tax Credit and its application to the medical cannabis space.

Transcript:

James West:   Adam Niman joins me, now. He’s the CEO and founder of insuranceataglance.ca, and Adam is an expert on cannabis and insurance. Adam, welcome.

Adam Niman:   Thank you very much for having me.

James West:   Adam, tell me about – so you are in the business of creating policies for cannabis users in the medical realm?

Adam Niman:   No, no, no. So I just broker insurance policies. So because I’m open about my activity in the industry, people are more likely to speak to me and ask me questions with regards to how their conception of cannabis works in the context of not only life insurance policies, but also, most importantly, benefit plans.

So if you are a recreational smoker of cannabis and you don’t smoke too much, you can get a non-smoking policy, even though a few years ago they would consider you a smoker and you would pay twice the healthy rate compared to a non-smoking individual.

James West:   Okay, so I smoke cannabis as a medical method of delivering cannabinoids to my bloodstream; I can get deemed a non-smoker by an insurance policy?

Adam Niman:   So with insurance is about health, and with health, everything is a matter of degree, right? So if you smoke too much, or you have a prescription that says you smoke 2-3 grams a week, the insurance company is going to look at that and probably want you to pay a little bit more. But if you’re a normal, healthy individual, and you smoke recreationally, you know, 1-3 times a week and you control your consumption, technically, based on what the science says, it really doesn’t have any, what we know, adverse long-term effects compared to that of a non-smoking individual. So they will charge you a healthy non-smoking rate.

A few years ago that changed so people have policies that they were honest about their marijuana smoking, and it’s been a few years since, they should go back; they could probably save some money.

James West:   Right. Interesting. Okay, so, are we at the point yet in Canada where employers are making the coverage of cannabis a benefit by default? Or is that something specialized and rare at this point?

Adam Niman:   So it’s happening slowly, mainly because of how much insurance there is in the space, and also mainly because how many people are using it to manage illness and chronic illness. What I’m seeing right now is, a lot of insurance companies are allowing people to claim and consume cannabis for certain medical conditions, as long as it’s approved by a doctor. In some cases what I’m seeing is, if people have cancer, serious chronic pains, they can claim to have cannabis covered under their plan, as long as it’s approved for by a doctor.

The issue with cannabis is, it’s not like, you know, if you’re a diabetic, you know, you need insulin. If, God forbid, you have cancer, there’s very specific treatments; you know, radiation, chemotherapy. But it’s not like cannabis cures Problem X or Problem Y; it’s more of a pain management tool, and because it’s a pain management tool, they would basically claim as much as possible.

James West:   I’m in pain right now.

Adam Niman:   There you go! So, and at the end of the day, all benefits plans are, is on a shared basis, your employer financing everyone’s medical expenses. So if everyone could claim as much cannabis as they would, they would, just because it’s now tax-free, and I can claim it under the plan. So what’s happening is, they’re capping it, they’re only allowing it for certain conditions, but the best place to claim it would probably be through a health care spending account, where, you know, there’s no rules; you’re just allotted a dollar amount, and as long as you, you know, spend less than that dollar amount, as long as it’s a medical expense and if you have a prescription for medical cannabis, you can claim it through your health care spending account.

James West:   Okay, and is that health care spending account a part of some companies’ standard offering, or is that, all companies offer that?

Adam Niman:   No, so a lot of large companies will offer a spending account in addition to a benefits plan. Smaller companies, they usually don’t offer spending accounts. In my mind, if you’re a big business, you know, you look at benefits plans as, you know, cost of doing business. People like the idea of having a massive benefits plan, being covered by one of the large insurers; but smaller companies, generally speaking, they look at benefits plans as just a cost. It’s much harder for them to cover those premiums, given all the pressure on small business these days. So they’re much less likely to offer these sorts of spending accounts, because at the end of the day, all it is, is the employer paying for people’s medical expenses.

So you know, I am developing a health care spending account platform for small business called Kibono; you can check it out, kibono.ca. It’s still our first version of the product, but the idea is, if you’re a small business owner, without going through a broker, you can set up your own health care spending account for yourself, for your employees, and if you’re a sole proprietor, just for yourself; and you can claim your medical expenses on a routine, pay-as-you-go basis.

James West:   Okay, so what is the status in terms of general insurance? General medical insurance? So if I have a policy, let’s say, with SunLife through my company, do I have to right now go and get a special addition to my policy that allows my cannabis usage to be covered if I want that for myself and all my employees?

Adam Niman:   So, I haven’t looked at to what each company is doing yet, and I’m going to be doing that, but from what I’ve seen through the emails that I’ve been getting, is that all the insurance companies have basically opened it up. Each company is a little bit different. You know, I was just looking, before you decided to throw this interview on me, just looking at SunLife as an example, and they have designated it for certain categories. You know, if you have cancer, if you have MS, and they have maximums, right?

I saw maximums that employers can select, anywhere from $1,500 a year to $5,000 a year.

James West:   Wow. $5,000 a year worth of weed? [laughter]

Adam Niman:   That’s a lot. It just goes to show you, they really don’t understand the space too much, but at the end of the day, you know, when you’re dealing with pain management, you know, why are opioids so ubiquitous? Just because people didn’t feel like doctors were taking their pain seriously, and they were pushing doctors and pushing pharmaceuticals to give people more leeway with regards to managing pain. You know, when someone’s in pain, the last thing you want to do is tell them that they’re wrong and they need less of something.

So, same thing as with marijuana right now; you know, people want access to it, people want to get away from the opioids, and at the end of the day, you know, if someone’s sick, there’s no amount of money you can throw at them to make them feel better; but, $1,500, $5,000 a year, that buys a lot of marijuana.

James West:   Yeah, for sure, for sure. So then, in terms of, in terms of, like, taxation of your health benefits, is there anything likely to happen where, okay, your insurance company doesn’t allow it as part of your policy, but the government will allow it as a tax deduction because it’s a medical expense?

Adam Niman:   So there’s something called the Medical Expense Tax Credit. You take a deductible, which is either 3 percent of your net income or around $2,100, I can’t remember what the amount is for 2019, but after you hit that deductible, the government will give you 20 percent back as a non-refundable tax credit on any of your medical expenses.

So that’s a lot of money. You know, if you’re making $50,000 a year, the deductible is $1,500 – you know, chances are, I don’t know, you’re not spending $1,500 in a year on medical cannabis. And the likelihood, even if you do, how much more than $1,500 are you spending? A few hundred dollars? Then all you’re getting back is the combined first bracket provincial and federal rate on your taxes, which is basically 20.5 percent. So usually I need to spend anywhere from $1,500 to $2,000 to get that benefit, but if you’re an employee and you have no benefits and you’re going to the dentist, have other drugs, and all your medical expenses add up to a large amount that gets north of that deductible, you should definitely claim it on your taxes, and if you spent enough, you will get that credit.

James West:   Sure.

Adam Niman:   If you’re self-employed, through platforms like Kibono or a health care spending account or your own employer’s benefits plan, you’re much better off claiming it through the benefit plan, because then the expense is reimbursed to you on a tax-free basis. The annoying part about the Medical Expense Tax Credit is that what you don’t realize is that you’re spending after-tax dollars, and you have to hit a certain amount to get anything back. So there’s kind of an imbalance between self-employed and employees, but nevertheless, there are a few options available to people who are business owners, self-employed, employees, or otherwise.

James West:   Interesting. Do you think that the issue the government seems to be afraid of is, they don’t want to reimburse medical users for the excise tax, because it would cause a flood of recreational users to claim medical requirements, thereby undermining the entire taxation economics for the government; do you think that’s a factor in where the allowance of deducting cannabinoids as medicine is?

Adam Niman:   I think it’s so new that people – I personally think it’s so new that the government is battling, they want to make it available; well, half the government wants to make it as available as possible, and the other half is kind of pushing back on it. And I think that’s the case with a lot of issues. It’s like, it’s impossible for me to say that I think the excise tax issues are going to create problems. Listen: at the end of the day, you know, built into a lot of people’s benefit premiums, there’s a premium tax, there’s retail sales tax. If you do administrative services, there’s harmonized sales taxes. So you know, a $0.01 per gram excise tax on the cannabis, I don’t think, is a big deal in the context of the taxes that are already being charged, to claim it through benefits plans.

So I don’t know if that’s factoring into anything. And I don’t know, I’m not in a position to say, so I’m really not sure.

James West:   Sure. All right, Adam, well, that’s very enlightening. We’re going to have you back very soon to learn more about insurance in cannabis.

Adam Niman:   Thank you. With a warning, hopefully.

James West:   Well, with a little warning. But thanks for joining me today.

Adam Niman:   My pleasure. Thanks, James.

Original article: insuranceataglance.ca CEO Adam Niman Discusses Cannabis and Insurance Coverage

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