Employee Benefit Programs
Alternatives to employee group
benefit plans?
One way employers have put the brakes on the employee revolving door is through the implementation of group benefit plans. The drawback to these plans typically come at renewal time when looking at employee claims experience which inevitably lead to steady increase in costs over time. If you are running a cost sensitive budget the cost creep can eventually make businesses scream uncle. Read More
A Health Spending Account (HSA) may or may not be part of your current group benefit plan. These escrow accounts act as a safety net for costs not covered under a group plan and are great saviours for deductibles and other fees not covered. The additional upside of HSA’s is that they are also a deductible expense to the employer and tax-free benefit to the employee. Having a group plan paired with an HSA provides a nice complete package for employees – however the costing to run both may still prove to be challenging.
The solution to cost creep may be running an HSA exclusively. Read More
This provides the employer with cost certainty year over year and removes the benefit limits laced within group benefit plans. As an upside the employee no longer needs to fret about benefit limits and instead can allocate funds towards areas of required treatment or interest. If we think about an HSA as a base car model – we can also add options and features to it such as:
- Emergency Medical & Travel
- Expedited Medical Services (i.e. CT and MRIs within 3 days, access to 10 specialists within 21 days).
- Disability, Critical Illness and Life Insurance
- Taxable Wellness Accounts (ie. gym memberships).
Running a group employee plan or HSA requires the employer to weigh the pro’s and con’s of each and ultimately decide which approach (or perhaps both) may be the best solution for his staff and business.
Stitching together the golden parachute for star or key employees
Group benefits can add value for employees, however, it may not be enough. The solution? Privately owned disability insurance for different classes of employees (deductible to your corporation).
So long as there are two or more employees earning T4 income (for each class) – the employer can deduct this expense. The upside of these plans which are referred to as Income Loss Replacement Plans (ILRP) is they are based on the employee’s gross NOT net salary. Since the employer is deducting these premiums, the benefits received while on claim makes them taxable to the employee. The upside to this taxation makes the monthly benefit count towards RRSP contribution limits. The same cannot be said via traditional group benefits or net salary-based disability insurance.
The true benefit of ILRP’s lies in their portability. Read More
If a key employee decides to leave the employer – they can take the insurance contract with them. If during the employment tenure the employee has become uninsurable due to health changes – this could be their one and only option to maintain coverage.
A similar approach can be weighed with life insurance, however, unlike disability insurance – life insurance with an investment core can offer the employee with additional tax deferred savings vehicles beyond mainstream TFSAs, RRPSs and Group Pensions.
Rewarding employment tenure and good health with a tax-free bonus
Key employees are vital to a small business. These same star figures could also become potential successors to your lifelong enterprise. If these same individuals experienced a critical illness or died their absence would be felt beyond physical and likely fiscally as well.
If the opposite were true and the employee stayed healthy all the way up to retirement – it would be nice to reward these healthy outcomes by way of compensation too. This scenario of providing a guaranteed payment to protect the employer against employee illness and death and also rewarding the employee’s healthy outcome sounds utopic. This utopia is achievable through shared ownership critical illness which guarantees one of the following tax-free payment:
- A covered condition (typically 20+ illnesses) – protecting the employer
- Death – protecting the employer
- Employee, Key Person stays healthy. Rewarding them.
Fast tracking medical care beyond Canadian healthcare borders
Canadians value and remain grateful for universal access to healthcare and unlike other international jurisdictions you likely won’t hear someone being turned away from care within our borders. No system is perfect and our Canadian healthcare is no exception to this rule as it often finds itself in the cross hairs of long surgical and general care wait times. Having an employee, business partner or owner waiting for treatment can be costly to your business. Read More
Private practice clinics face similar treatment and diagnostic testing wait times. These wait times hinge on the severity of your ailment or injury and it is not uncommon to wait months to over a year for certain procedures. To ensure you, your partner, employees, or your family return to life as quickly as possible there are options which could have you flown to the US or Europe at a hospital of your choice within days of diagnosis.
Access to expedited treatment is not only cost effective but it provides the best path towards improving quality of life. From a time loss at work perspective – expedited services has your key personnel back to work minimizing revenue loss.
Insurance Explained
Ever wondered what the difference is between term and permanent life insurance? What does Critical Illness cover and not cover? What exactly is disability insurance? Below is a great link to a reputable site providing video explanations of most policies available on the market.
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A great pool of articles related to all things business, insurance, investments and some handy financial and business calculators too.
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