Group Benefits

Why Should I Provide a Group Insurance Program to My Employees?

1. Total costs to the employer are generally in the range of 3-6% of payroll.
2. More cost effective than providing employees with raises since premiums do not effect EI, CPP, WCB.
3. Premiums are fully tax-deductible as a business expense
4. Provides an employer with the opportunity to provide Extended Health and Dental Care to all or selected classes of employees and their dependants.
5. Group insurance programs are available for companies with as few as 2 employees.
6. May be able to offer certain amounts of life insurance and disability insurance without medical exams.
7. Coverage covers the employees and their families on a 24 hour basis.
8. Will increase morale as this type of plan will show your employees that you care about them and their family.
9. Eases the burden of the company having to pay out large amounts if an employee is seriously injured or ill.
10. Employees will be more likely to obtain the medications and treatment that they need because they are not responsible for the entire cost, and thus will heal quicker and be more productive.
11. This type of program will assist you in attracting high quality employees and retaining valuable employees.
12. Plan design can also be tailored to meet various needs of company.
13. Most group insurance programs offer 24 hour employee assistance programs for health questions and concerns.

How Will Carruthers Financial Help Me Consider and Implement a Group Insurance Program?

1. Discuss with you the goals and concerns you have as the employer and provide you with the choices of benefits available and help you determine which benefits you wish to provide your employees. Also, if the employer wants we can conduct a confidential employee survey as to what benefits are most important to your workforce.
2. Discuss the various options you have with respect to benefits, and help you custom design a plan and make recommendations.
3. Alert you to cost containment measures that can be implemented at the start of the program to provide you with future protection against escalating costs with respect to claims exposure and inflationary pressures.
4. Obtain quotes from our various group insurance providers for at least two different plan designs to help you see the costs for various benefits which we will discuss with you, and will help you see more clearly the benefits you want to offer.
5. Once final plan design is agreed upon provide this information to the carriers to obtain final quotes.
6. Provide a spreadsheet to you comparing cost and benefits of the various options available from the different companies.
7. Recommendation of preferred carrier.
8. Review the contractual obligations of the plan with you before it is implemented.
9. Once the group insurance carrier is determined we will help you with all the paperwork involved to implement the program.
10. Offer an optional employee seminar to familiarize the employees with their group benefits, administration procedures, and measures they can take to help control costs of the program.
11. Meet with the group administrator to go over all procedures and help them register for computerized administration if this alternative is selected.
12. Perform introductory service calls to new enrolees to explain the benefits that are covered, procedures to follow and provide our contact information if they have any problems or confidential questions.
13. Meet with employer every year to discuss group renewal and determine if any changes are needed.
14. Assist with continued administration of the group.
15. Conduct a thorough market survey at employer's discretion, for instance every 3 or 5 years to confirm that the current carrier is remaining competitive both economically and benefit wise for our clients.

Group Insurance Benefits Available - A World of Options from Which to Tailor a Plan to Meet Your Needs

1. Life Insurance
2. Dependant Life
3. AD&D
4. Weekly Indemnity
5. Long Term Disability
6. Extended Health Care
   1. Semi Private/Private Hospital Coverage
   2. Prescription Drugs
   3. Vision Care
   4. Major Services
   5. Out of Province
   6. Travel Insurance
7. Dental Care Insurance
   1. Basic Service
   2. Major Restorative
   3. Orthodontics
8. Critical Illness
9. Cost Plus

GROUP LIFE INSURANCE

• provides basic life insurance to eligible employees
• benefit ranges usually from $10,000 - $500,000
• certain amounts are provided on a non-medical basis
• formula is generally a nominal flat amount or an amount linked to salary (i.e. 2x salary)
• most carriers decrease the life insurance by 50% for employees reaching age 65
• life insurance terminates at age 71 or when leaves employer unless employee has selected a conversion option at time was no longer eligible
• employees can apply for additional life insurance at a preferred group rate that they would pay for on a personal basis

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DEPENDANT LIFE BENEFITS

• provides nominal life insurance to spouse and children of employee
• Spouse Amount generally between $5000 to $25000
• Child Amount is usually 1/s of spouse's amount and typically starts from the 15th day following a live birth

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ACCIDENTAL DEATH & DISMEMBERMENT BENEFITS

• provides a portion of the overall coverage amount in the event an eligible employee suffers a loss specified in the policy due to accidental injuries
• benefit paid is usually a percentage of the AD&D benefit based on type of injury
• can select an amount that matches life insurance or is a lesser amount
• minimum is usually $25,000

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WEEKLY INDEMNITY

• provides short term disability coverage for an illness or injury that occurs while an eligible employee
• protection while on or off the job
• can select different waiting periods before benefit becomes payable generally options are:

  Accident = 0, 7, 14, consecutive calendar days
  Sickness = 3, 7, 14 consecutive calendar days

• benefits can be payable for 15, 17 or 26 weeks
• Formula for determining benefit amount is usually:

  -either 55% or 66.75% of earnings if the benefit is taxable
  -either 60-66.7% of earnings + graded formulas if benefit is to be non-taxable

• first day hospital protection can be selected
• for occupational coverage this benefit will be supplementary to Workers Compensation benefits
• there is an EI premium reduction for employers who offer this benefit through a group insurance program
• now WI provides a maternity sickness benefit consisting of 6 weeks for normal birth and 8 weeks for caesarian section

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LONG TERM DISABILITY BENEFITS

• provides disability protection for employees who are off work for longer periods of time with a disease or injury
• for most groups will be able to apply up to a certain level without providing any medical information
• waiting period options of 90, 120, 180 or 365 days
• disability definition can be based on own job at first and then any job after a certain period of time
• taxable benefit formula = 66.67-75% of earnings
• non taxable 60-66.67 of earnings + graded formulas
• can select benefit periods from 2 years, 5 years or to age 65
• can include cost of living adjustments to protect benefit from being eroded by inflation
• usually include a conversion privilege
• may have a pre-existing condition exclusion for a limited period (usually 90 days)

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EXTENDED HEALTH

• cover eligible medical expenses that are not reimbursed by provincial health care program
• generally provided on a co-insurance basis where the employee pays a certain predetermined percentage of the cost or benefits are payable at 100% after the employee has first paid a deductible
• semi private or private hospital can be selected
  • most plans will cover either all or a portion of the following benefits
  • ambulance
  • acute/convalescent care
  • private duty nursing (annual maximum selected during design)
  • medical supplies
  • hearing aids
  • orthopedic shoes
  • Paramedical practitioners: chiropractors, naturopaths, osteopaths, speech therapists, dieticians, acupuncturists, massage therapist, chiropractors, physiotherapists, psychologist, social workers
• out of country coverage usually included and covered at 100%
• select a vision benefit that will provide $100, $150, $200 or $250 every 24 months per person
• select prescription drug coverage with either manual reimbursement or drug card for either generic or brand name drug coverage, can also select unlimited prescriptions or an annual drug limit
• for drug coverage can have a deductible, co-insurance, or have employee pay a certain amount per prescription

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DENTAL COVERAGE

• depending on size of group may be able to select between basic, major and orthodontic benefits
• BASIC: typically covers oral exams, x-rays, fluoride, sealant, fillings, extraction, endodontics, periodontics, oral surgery, injections and anaesthesia
• MAJOR: typically covers crowns, onlays, dentures, bridgework and denture related surgery
• ORTHODONTICS: usually covers diagnostic orthodontic services and orthodontic appliances for children under 18, in some circumstances may be able to add adult orthodontic
• usually institute an annual maximum of $1000, $1500, $2000, $2500 per person per year
• recall can usually select between every 6, 9 or 12 months for routine dental recall
• usually institute a deductible and various co-insurance levels for the different types of dental coverage

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CRITICAL ILLNESS INSURANCE

• can offer a basic lump sum benefit, usually a percentage of life insurance or AD&D benefit
• will pay a lump sum within a certain period after a person has been diagnosed when a critical illness
• covered conditions usually include: heart attack, stroke, life threatening cancer, kidney failure, Alzheimer's disease, blindness, coma, coronary artery bypass surgery, deafness, loss of speech, major burns, multiple sclerosis, muscular dystrophy, organ transplant, paralysis, Parkinson's disease
• the payment can be used by the insured in any manner they wish, for instance they can use the money to alter their home, seek special medical treatment or pay off debts

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COST PLUS BENEFIT

• a tax effective way to top up your group insurance coverage for employees or certain key employees using pre-tax business dollars
• most group insurance programs either offer this benefit automatically on their contracts or the employer can request it to be added with no additional charge
• there is no additional monthly cost added to the group insurance premium for this benefit instead there is an administration charged by the company at the time of claim submission and this charge is a tax deductible expense to the client
• the employer can offer this benefit to all employees or to specific classes of employees such as senior staff
• this benefit once instituted will also extend to the eligible dependants of a person covered for Cost Plus
• expenses reimbursed via Cost Plus must meet the definition of eligible medical expenses (Please see Revenue Canada document) and not be reimbursed through another means
• can also use this benefit for the portion of an expense that is not covered through the group insurance program, for instance an item that is only covered at 50% you can Cost Plus the 50% that was not reimbursed
• the benefit that the employee receives is not taxable
• the total benefit amount, including the administration fee and associated taxes is tax deductible as business expense

Note: before implementing a Cost Plus plan you should discuss your eligibility with your independent tax advisor to confirm that it is appropriate for your situation.

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This material is for informational purposes only and should not be construed as legal or tax advice. Every effort has been made to ensure its accuracy, but errors and omissions are possible. Individual circumstances may vary and specific legal and tax advice is recommended.

This strategy is based on current tax legislation. Future tax changes and market conditions may affect this program.

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Is Your Company a Good Candidate for a Group Insurance Program?

1. Your company is financially stable and has been in existence for over two years
2. Your company has few if any employees engaged in high-risk occupations
3. Low employee turnover.
4. Employees are dispersed among a number of age groups, younger employees tend to have less claims which can help keep renewals down.
5. You have a number of employees who are working at least 24 hours/week throughout the year.
6. You as the employer are willing to contribute to at least 25% of the cost of the entire program.
7. You are in an industry that is eligible for group insurance programs.
8. You must have participation from the required number of employees to meet the contractual obligations of the plan.
9. Employees are currently healthy and not struggling with major health issues.

Group insurance programs where the employer pays 100% of the premium must have 100% of employee participation

Group insurance programs where the employer pays less than 100% of the premium usually must have at least 75% employees enrolled

Employees are generally only able to waive Extended Health Care and Dental Care if they are covered under a spousal program that provides these benefits to them.

This material is for informational purposes only and should not be construed as legal or tax advice. Every effort has been made to ensure its accuracy, but errors and omissions are possible. Individual circumstances may vary and specific legal and tax advice is recommended.

This strategy is based on current tax legislation. Future tax changes and market conditions may affect this program.