Category: Benefits

Flexible Benefits were introduced in recognition of the fact that employees’ needs differ depending on their situation, and in response to requests for additional coverages such as day care, fitness club memberships etc. Certain core benefits may be required (e.g. life insurance, disability) and then there is a set dollar amount per employee to select other options. If employees do not use the full dollar amount to purchase benefits, some companies pay the balance to a cash account for the employee.

Other Benefits The perceived value of benefits depends on employees’ needs. Some things valued by employees include paid tuition, paid education leave, extra time off, flexible hours, and telecommuting.

Employee Group Life Insurance

Group Life Insurance provides insurance coverage at affordable group rates.   Coverage is typically a multiple of the employee’s base pay, or total direct compensation (salary plus bonus/commission).

Dependents’ Life Insurance 

Basic dependents’ life insurance is typically a set amount such as $10,000 for the spouse and $5,000 for each child.

Optional Life Insurance

Some insurance companies provide optional life insurance plans for the employee and/or spouse.  Premiums are at group rates, and depend on variables such as the insured’s age and gender.

Health and dental insurance, while popular with employees, is becoming increasingly expensive, and employers are looking for ways to control costs.  Many employers ask employees to share in the cost of premiums (e.g. 50/50; 60/40; 80/20) and some plans pay after the employee has reached a set deductible amount.

Goup Insurance covers many of the medical expenses not covered by the provincial health plan (OHIP).  The company pays a premium to an insurance company to cover the cost of benefits paid out, plus administrative services.

  Examples of Group Health Insurance:

•          prescription drugs
•          ambulance services
•          private or semiprivate hospital coverage (OHIP pays for a ward)
  
•          out-of-province/country emergency medical services
•          paramedical services (physiotherapy, massage, psychology, etc) 
•          eye glasses

Examples of Group Dental Insurance:

•          basic dental (checkups and fillings) – 80% to 100% of costs
•          major restorative (crowns) – 50% of costs
•          orthodontics – often for children only, and with a lifetime maximum

 

Another health and dental insurance option popular with some employers is an “Administrative Services Only (ASO)” contract with an insurance company.  The employer pays the insurance company to administer and adjudicate claims, but the claims are paid by the company.  This may be more cost-effective than the full group insurance plans, but companies bear the full risk of large claims.

Short Term Disability Insurance pays a portion of the employee’s salary if (s)he is disabled for a defined length of time (e.g. sixteen weeks).  Coverage may be provided through an insurance company, or covered directly by the company.   

 

Long Term Disability Insurance pays a portion of the employee’s salary if (s)he is disabled for a long time, or permanently. A typical plan would come into effect after the expiration of a waiting period, which may be covered by the company’s short term disability coverage. If the employee pays the premium, any benefit received is tax-free. If the employer pays the premium, the benefit is taxable.  Coverage is typically provided through a third-party insurer.

Pensions and other retirement savings plans are not required in Ontario, but if employers do provide them, most plans must be registered with the Financial Services Commission of Ontario (FSCO).  Pension plans are heavily regulated.  Legislation and issues around retirement savings plans are complex, and beyond the scope of this site.  The following provides some basic information, and useful links to help you do the research necessary before deciding on a retirement savings option.

Managing and administering your plans can be outsourced, and some of the links below refer to companies that will do this for you.

Pension Plans:

There are two types of registered pension plan: Defined Benefit, and Defined Contribution. 

In a Defined Benefit Pension Plan, the employer commits to providing a pension of a defined amount, based on a formula (typically employee’s age and length of service at retirement).  

In a Defined Contribution plan, the employee and/or the employer make regular contributions to the employee’s pension plan, and the employee decides how to invest the money within the options available in the plan.  At retirement the employee can use the funds to purchase a retirement plan (annuity, LIRA, etc.).

For the self-employed, or employees without a company pension plan, a pooled registered pension plan (PRPP) may be an option.

Deferred Profit Sharing Plans (DPSP’s):

In a DPSP, the company contributes to a plan on the employee’s behalf.  Plans must be registered with the Canada Customs and Revenue Agency (CCRA). 

Group Registered Retirement Savings Plans (GRRSP):

Employers may set up GRRSP’s on behalf of employees. Contributions made by payroll deduction are made on a pre-tax basis. GRRSP’s do not have to be registered with the Financial Services Commission of Ontario (FSCO). 

Tax Free Savings Accounts (TFSA):

Tax Free Savings Accounts allow Canadians to earn tax-free investment income, and contributions are not tax-deductible.  Employers may set up company plans, and make matching contributions.   Contributions made by payroll deduction are made on a pre-tax basis.

USEFUL LINKS: (for information purposes only: I do not endorse any organization)

Canada Revenue Agency PRPP information: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/prpp-rpac/menu-eng.html

The Benefits Alliance Group – independent member firms across Canada (my thanks to Gary Winch, of The Winch Group, Burlington, Ontario for this information): https://www.benefitsalliance.ca/

AON Benefits Consultants: http://www.aon.com/canada/products-services/human-capital-consulting/consulting/health_and_benefits.jsp

Hay Group Benefits Consulting: http://www.haygroup.com/us/services/index.aspx?id=2512

Mercer Investment and Retirement Consulting: https://www.mercer.us/what-we-do/wealth-and-investments/administration.html

AON Willis Towers Watson Benefits Consulting: http://www.towerswatson.com/services/Health-and-Group-Benefits

Greenshield Canada: https://www.greenshield.ca/en-ca

Manulife: http://www.manulife.ca/canada/canada1.nsf/public/homepage

Sun Life: http://www.sunlife.ca/

 EAP benefits are becoming more prevalent, and are valuable in helping employees work through problems at home or at work. Typically, the employer pays the full premium, which is calculated on a per-person per-month basis.

Services covered by an EAP may include:

• legal assistance
• financial advice
• child-care and elder-care referrals
• referrals to paramedical professionals
• initial consultation with a professional

USEFUL LINKS: (for information only: I do  not endorse any of these services):

Sheppell Canada: http://www.shepell.com/en-ca/

Ceridian Canada: http://www.ceridian.ca/en/solutions/engaging-talent/employee-assistance-program.html

 Sun Life EAP: http://www.sunlife.ca/canada/v/index.jsp?vgnextoid=7eb0e25cabdb1110VgnVCM1000002dd2d09fRCRD&appInstanceName=default&vgnLocale=en_CA