Many Canadian employees are in for a surprise on their 65th birthday, and it has nothing to do with a cake.

That is because employers are legally permitted to cut or reduce employee benefits and insurance for workers once they reach the age of 65, even if they are continuing to work in the same jobs.

"Before 2006, employees 65 and over were not protected from age discrimination, and mandatory retirement was permitted," Ontario Human Rights Chief Commissioner Renu Mandhane explained. "Unfortunately, when the legislature prohibited mandatory retirement in 2006, subsection 25(2.1) [of the Ontario Human Rights Code] was also enacted, allowing employers to reduce or cut the benefits of employees aged 65 and over."

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Furthermore, while employers are not legally required to provide employee-benefit plans, those that do cannot discriminate on the basis of age under the Ontario Employment Standards Act, but only if the employee is between the ages of 18 and 65. "The legislation does not cover those over the age of 65," said Gloria Yip, a spokeswoman for the Ontario Ministry of Labour.

Legislation pertaining to employee-benefit programs is relatively consistent across all provinces and territories, and puts no legal burden on employers to provide health-care coverage for employees aged 65 and older, even if they provide benefits for younger employees in identical roles.

In a recent survey of 170 Canadian employers by the human-resource solutions provider Aon Hewitt, only 30 per cent of respondents had a formal policy governing benefits for older workers, and less than 10 per cent are making any over-65-related adjustments to benefit plans.

Furthermore, 84 per cent do not offer long-term disability insurance to workers over the age of 65.

At the same time, however, more Canadians are working past the age of 65. According to Statistics Canada there were nearly 750,000 Canadian employees over the age of 65 in 2016, compared with approximately 580,000 in 2012. Though only 10 per cent of employers surveyed by Aon currently employ a work force where more than 5 per cent of employees are over the age of 65, more than half expect their over-65 employee population to surpass 5 per cent within the next five years.

"They are healthier and they live longer, that's one element," said Anthony Perlman, the senior vice-president and national practice leader for health and benefits at Aon Hewitt Canada. He also said many Canadians remain in the work force beyond the age of 65 after discovering that they haven't saved enough for a comfortable retirement.

Employers are also more eager to employ those over the age of 65, he said, because "the generation that's coming into the work force is not as significant [in numbers] as it was when boomers were growing up, so there's a gap in resources and abilities."

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As a result, insurance providers, including Aon, are beginning to offer plans that extend coverage up to the age of 70, Mr. Perlman said. "My belief is that we're going to see changes over the next 12 to 24 months in and around our sector," he said.

In the meantime, however, the insurance policies of many Canadian employees will become null and void after their 65 birthday, even if they work in the public sector.

After 38 years working as a teacher for the Grand Erie District School Board, for example, Wayne Steven Talos lost his employee benefits on his 65th birthday.

Then, less than 30 days after losing medical coverage for himself and his dependents – which included coverage for prescription drugs, equipment, paramedical services, travel insurance and life insurance – Mr. Talos's wife, Dianne, was diagnosed with ovarian cancer.

Mrs. Talos was eventually approved for medical coverage through Ontario's Trillium Drug program, but her husband's loss of coverage meant she had to wait nearly three months for approval before being able to receive a particularly expensive cancer treatment called Neupogen.

"I don't know what would have happened if she couldn't have gotten [approved for the] Trillium [program]," said Jamie Melnick, who represented Mr. Talos in his Ontario Human Rights Tribunal case against the Grand Erie District School Board.

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Though section 15 of the Canadian Charter of Rights and Freedoms guarantees Canadians protection from discrimination, specifically on the basis of age, the Grand Erie school board and other employers remain protected under section 1, which says the charter is subject to reasonable limits. They argue that it is cost prohibitive to provide benefits to employees over the age of 65, thus constituting a reasonable limit.

"One of the challenges that employers have been faced with over the last several years is the rising cost of drugs," said Karen Voin, the assistant vice-president of group benefits and anti-fraud for the Canadian Life and Health Insurance Association Inc., a non-profit association representing 99 per cent of Canada's life- and health-insurance companies.

Ms. Voin said Canada's small and medium-sized businesses, which employ 90 per cent of the country's working population, can't afford to extend coverage for employees over the age of 65.

"They all have their needs and their budget constraints, so they need to look at what's going to be best to allow them to sustain a benefit program for a majority of their employees."

While representing Mr. Talos before the Ontario Human Rights Tribunal, however, Mr. Melnick sought to prove the opposite.

"No disrespect to anyone's opinion, but I think that's just apocalyptic demography," he said. "There are no empirical studies that bear that out, and no evidence was put before our tribunal that actually shows that."

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Mr. Talos's tribunal case required 12 full days of hearings over the course of two years, ending in September, 2016. A verdict is expected in the next couple of months, but whatever the decision, Mr. Melnick would not be surprised if an appeal were to follow.

Though his wife ultimately lost her fight against ovarian cancer this summer, Mr. Talos intends to see the case through, no matter how far it goes. "So we'll go to Divisional Court, then the Ontario Court of Appeal, and then you would apply for leave to appeal at the Supreme Court of Canada," Mr. Melnick said.

"I think the case has enough social importance that it could go that far."