Employee Benefits
Why Employee Benefits
Employee benefits represent a major investment on behalf of employers. On top of that, group insurance premiums are rising for drugs, medical services and supplies and dental care.
So, why have a benefit plan at all? Well, we think a well-constructed benefit plan can actually help your business save money in the long run.
Employees look at their benefit packages as a key part of their overall compensation. Their benefits can provide employees the comfort of knowing routine and unexpected medical expenses and dental care will be covered for themselves and their dependents. Also, the right mix of benefits can also help ailing employees return to work much quicker.
Quite simply, employee turnover tends to be much lower when employees feel they are well looked after when it comes to wages and benefits.
Traditional Group Plans
The starting point for any group insurance plan is with a standard or traditional group plan structure. These type of plans are familiar to most employers and employees and include the following benefits:
- Group Life Insurance
- AD&D or ASI
- Dependent Life Insurance
- Short Term/Long Term Disability
- Extended Health Care
- Dental Care
- Employee & Family Assistance Programs (EFAP)
- Group Critical Illness
- Disability Case Management
All plans are revisited each year to determine whether the costs are in line with level of benefits being received and to ensure employees’ needs are still being met.
ASO (Administrative Services Only)
Another plan option available is to utilize an Administrative Services Only, or ASO, plan for Health and Dental benefits.
Under this type of plan, employers are responsible for paying claims with lower administrative charges from the insurance companies to adjudicate these claims. The employer takes on all the risk however, rather than the insurance company. If claims are excpetionally high one year, the employer will have to cover these expenses fully.
ASO plans are better utlilized for larger-sized groups that are well established and have a stable history with regards to claims and rates.
Health Care Spending Account
Health Care Spending Accounts provide cost certainty for employers and give employees flexibility when it comes to how they utilize their claims. Under a typical HCSA, an employee will be allotted an annual amount that may be used toward any eligible health and dental expenses. There are usually no annual maxiums under any particular benefit. So, if an employee wants to use the entire amount on massage therapy or on dental care, that is their prerogative.
Typically an HCSA will offer separate amounts for employees who are enrolled for Single and Family coverage.
The drawback of an HCSA is the amounts can be tapped out quickly by a few high claims, especially if there are several dependents on the plan.
HCSA’s are often used to augment an existing traditional benefit plan. For example, a company may offer the full Extended Health Care benefit and include a small HCSA to cover additional expenses not covered by the core plan.
Lastly, a hybrid between a traditional group plan (with Life Insurance, LTD, Drug Coverage, Travel Insurance) and an HCSA (for all other Health and Dental expenses) is available through one of our carriers. Again, the benefit to the employer is cost certainty going forward while employees enjoy flexibility with their claims and still know that if they are prescribed expensive drugs or have an emergency will travelling, that it will not drain the funds from their HCSA account.
Cost Plus Agreements
Cost Plus Agreements allow for additional eligible expenses incurred by an employee to be processed by the insurer. The total claim amount is charged by the insurer to the business plus a small administration fee. The total amount is then reimbursed directly to the employee from the insurer once the claims have been processed and approved.
This type of agreement are used to augment coverage when plan maximums have been reached. For example, Major dental coverage usually only covers 50% of eligible costs. A cost plus plan can be used to cover the remaining balance for the employee.
Flex Benefits
Want to provide your employees with more choices and options? A flex benefit plan can be an excellent option.
Employees are offered a menu with various levels of coverage. Each schedule of benefits offered has a different cost attached to it. For example, some employees may want most of their premiums directed toward dental care or have more paramedical coverage and choose packages with higher annual maximums for those particular benefits.
These plans can make billing and payroll deductions a little more challenging however as plan members will have various amounts of premiums charged to them based on their choice of benefits.
Individual / Solo Plans
Individual plans are offered by several insurers. While not as comprehensive as typical group plans, there is still good coverage available for individuals and their dependents.
These type of plans are ideal for sole proprietors as the premiums paid may be deducted as a taxable business expense. There are often various levels of coverage available as well. With the more coverage being offered, the more expensive the premiums are.
For individual business owners, personal plans can also be used in concert with a Cost Plus plan to reimburse the expenses not covered under the solo plan. It is recommended you speak with an accountant to determine what set up is most tax effective for you.
Group Retirement Plans
One area of benefits that has a more controlled inflation rate is group retirement savings. This might include a Group RRSP or a Defined Contribution plan. In both cases, the future cost of these benefits are driven by wages which tend to increase incrementally, making it easier to budget for.
The cost associated with a group savings plan can be determined by the employer. For example, bonuses can be deposited into a Group RRSP plan but the employer controls the amount of the bonus. A matching program can also be put into place whereby the employer agrees to match up to certain percentage of what the employee contributes.
Group RRSPs can be set up as well on the voluntary basis. This arrangement is beneficial to the employee as the contributions they make to their plan come off their paycheques and are paid in pre-tax dollars.
Other than a matching program, there is very little cost to the employer in implementing a group RRSP or even a Defined Contribution pension.
These type of plans are ideal for sole proprietors as the premiums paid may be deducted as a taxable business expense. There are often various levels of coverage available as well. With the more coverage being offered, the more expensive the premiums are.
For individual business owners, personal plans can also be used in concert with a Cost Plus plan to reimburse the expenses not covered under the solo plan. It is recommended you speak with an accountant to determine what set up is most tax effective for you.
“Being a proud, long-standing client of MacNeil Benefits, I have found them all to be very professional in dealing with all my benefits needs. I have developed a great rapport with them and have highly recommended them to several of my colleagues.”