Traditional Fully Insured Plan
Clients' Edge Employee Benefits offer a traditional fully insured plan as one of our group products. A fully insured plan has a cost that is made up of 12 to 15 months' worth of guaranteed monthly premiums, which are recalculated on the anniversary of the plan.
The performance of the carrier's client pool, the group's demographics, trends, inflation, commissions, and a risk, administrative, and profit component all impact premiums.
Built into the monthly premium is also a pooling charge. The claims by an employee or dependent do not adversely affect the premium renewal calculation. This pooling typically occurs at levels between 7,500 and 15,000 per employee depending on the size of the insured group.
What Does a Group Plan Include
The group plan includes the following healthcare:
- A prescription drug (generic or brand)
- Private or semi-private hospital
- Private duty nursing
- Ambulance services
- Paramedical professionals including physiotherapists, chiropractors, osteopaths, naturopaths, podiatrists, psychologists, speech therapists, registered massage therapists, and acupuncturists
- Accidental dental
- Out of province/out of country emergency medical assistance
- Medical supplies and services
- Vision care
- Dental care – primary, minor treatment, foremost restorative, and orthodontics
- Survivor benefits – to extend coverage for typically 24 months after the death of the plan member
The list of plan coverage may vary. The maximums for each, with employee and employer co-payments for each, often range from 70% to 100% covered by the plan.
Most shared plans include:
- 80% drug coverage
- 100% other extended health care
- $300 – $500 per paramedical practitioner
- $150 – $250 for vision care
- 80% of dental care essential
- Minor treatment only to a maximum of $1,500 per year
In place of co-pays included in the plan design, there may be a cost-sharing arrangement between the company and employee for the premiums through payroll deductions. We will work with the plan sponsor to create the most valuable plan.
Administrative Services Only Plan (ASO)
An ASO plan is essentially a self-funded plan in which the plan sponsor is not charged a premium. This type of arrangement has no insurance element since the insurance carrier is simply acting as the plan administrator.
As the employer assumes total liability for all claims incurred under this arrangement, often, the plan will include the option of purchasing stop-loss insurance from the carrier.
Then the employer is only liable for the health claims for each employee up to the stop-loss level (commonly ranging from 1500 to 10,000 per employee per year) in exchange for a stop-loss insurance premium(C).
ASO Plan Details
Often A + B + C is less than the cost of the traditionally insured plan. Typically, the ASO plan is funded with similar dollars paid in premiums to the traditionally insured plan. The employer must add to the funding when an ASO plan is in a deficit position.
The plan coverage under this arrangement or the traditionally fully insured plan could be the same as often the employees would never know if the plan is fully insured or ASO.
We understand that this is a lot of information, and you may require an expert’s assistance. So, connect with us now.
Group Pooled Insurance Benefits
Group basic life insurance – the contract pays a death benefit only, with no build-up of cash values.
Accidental Death and Dismemberment (AD&D)
If the employee dies in an accident or suffers specified injuries or losses, an additional benefit is paid, most commonly the same as the death benefit.
Dependent Life Insurance
When the employee's spouse passes away, the benefit amount is $5,000 or $10,000, with 50% of those sums going to the employee's child.
Short-term Disability (STD or W.I.)
The contract provides the employee with a weekly benefit for a brief period before a longer-term agreement is formed. Most STD plans start paying out on the first day of an accident or the ninth day of sickness, and they can last up to 17 weeks before beginning LTD.
Long-term Disability (LTD)
The agreement provides the employee with a monthly stipend to help them when they are ill or injured and unable to work. Most LTD plans stipulate that payments begin 120 days after a person stops working.
Critical Illness Insurance
The contract pays a lump-sum benefit after diagnosing a significant illness or condition. Even though there are no rules concerning the spending of the cash benefit, its purpose is to ease the financial burden of paying debts, altering the home, or receiving additional medical attention. (Canadians under 65 are ten times more likely to suffer a critical illness and be unable to work than to die.)
Employee Assistance Program (EAP)
This program assists employees and their families access resources for help in anything that might interfere with their workplace wellbeing.
The rationale behind the program is a happier and healthier employee could result in lower health claims and disability claims and time away from the workplace. With the increasing demands of modern living, this benefit should be a must in any benefits program. The cost is relatively inexpensive, and given the impact the program could have on an employee’s welfare.
Funding and Tax Treatment of Group Pooled Insurance Benefits
Unlike health and dental benefits, which are tax-deductible to the employer and tax-free to the employee (except in Quebec), pooled gifts are tax-deductible to the employer as a payroll cost and a taxable benefit for the employee. Often, the pooled insurance benefits are paid for by the employee through payroll deduction.
Optional Top-up Products
Here are the optional top-up products that can be beneficial for you:
- Optional basic life insurance
- Optional basic spousal life insurance
- Optional accidental death and dismemberment (AD&D)
- Optional critical illness insurance (CI)
Many companies include group pooled insurance benefits such as life, dependent life, AD&D, STD, LTD, and CI. These would be mandatory benefits provided to all employees. Participation in these benefits would be required even when the employee opts out of health and dental due to having a plan with their spouse.
Typically the cost of the mandatory pooled benefits is very cost-effective and does not require medical evidence of insurability. Conversely, their coverage is often limited. The optional top-up products provide more coverage to the employee and their family.
They are typically paid for through payroll deduction after completing the application and providing the required medical evidence. The cost is often age, gender, and smoking status banded.
The Health Spending Account (HSA)
The company contributes to a Health Spending Trust Account for its employees. The contribution is tax deductible and is a 100% tax-free benefit to the employee.
How Does It Work
Sam owns a consulting company and pays $30,000 per year in premiums to provide medical expense benefits to his ten employees. Alternatively, he could contribute $250 per month ($3,000 per year) to an HSA. Each employee chooses when and how to spend their health care dollars.
One can spend it all on glasses and dental, one can spend it on drugs and massages, and one can save it up for many years and spend it later on laser eye surgery or orthodontics for children.
If the company's objective is to spend less than $30,000 per year, then the employer would fund less than $250 per month per employee to the HSA. There is no plan design, strictly dollars.
The downside of a stand-alone health spending account to some employees is the lack of an insurance element. What if I need 20,000 prescription drugs, being hospitalized, want a semi-private room, or need medical attention outside of Canada?
Catastrophic health insurance within and outside Canada can be added by each employee independently. The premium for this insurance component can be funded by the health spending account dollars provided by the employer. Depending on the coverage, the deductible, and the carrier selected, the cost could range from $10 – $60 per month for single coverage to $20 – $80 per month for family coverage.
What is a Medical Expense
The list follows the rules governing the medical expenses defined by CRA and can differ by the province of service. Please verify the list from the CRA website to confirm eligibility.
The items could include services provided by the following licensed medical practitioners:
- Acupuncturist, traditional Chinese medicine practitioner
- Chiropodist, podiatrist
- Dental hygienist, technician, dentist
- Licensed dietician
- Registered nurse
- Occupational therapist
- Optician, optometrist
- Pharmacists – therefore, prescription drugs, dispensing fees
- Physician, surgeon (including outside of Canada) – excluding purely cosmetic surgery
- Psychologists, social workers, speech pathologists
- Registered massage therapist
As such, the items eligible would be prescription drugs, Provincial Health Plan (i.e., Trillium plan in Ontario), drug deductible, prescription glasses, medical surgeries, fertility treatments, orthodontics, dental implants, care for an elderly parent or special needs child, and more.
Hybrid/flex/cafeteria Style Plans
Whether your priority is budget certainty, risk aversion, plan member choice, or lowest cost, we will tailor the benefits solution that could utilize one or more of the 5 group products:
- Traditional fully insured health and dental group plan
- ASO – administrative self-insured plan
- Group pooled insured benefits
- Other top-up products
- Health spending account
Group Retirement Programs
After dialogue with company leadership in charge of your retirement programs and running our CEEB Group Retirement Diagnostic, we will provide you best options. Our Group specialization covers a full range of retirement program structures, including:
- Defined Contribution (D.C.) Pension Plans
- Defined Benefit (D.B.) Pension Plans
- Group Registered Retirement Savings Plans (RRSP)
- Employee Profit Sharing Plans
- Deferred Profit Sharing Plans
- Non-Registered Savings Plans, which could include tax-free savings accounts
- Executive Retirement Arrangements, including Retirement Compensation Arrangements (RCA) and Individual Pension Plans (IPP)
The CEEB Retirement Diagnostic
As with our Group Benefit reviews, we start with getting a sense of your company culture and end with a shortlist of the most sensible options for your specific group. This process is conducted as follows:
- Discuss your firm’s objectives and existing concerns
- Survey current corporate policy and compare it with expressed objectives
- Place particular focus on CAP guidelines
- Consider supplier performance
- Analyze fund selection in light of employee trends, investment goals, and projected needs
- Investment goals and procedures
- Communication resources to help your employees make better use of their plans
Based on the review results, Clients' Edge Employee Benefits can tailor a plan and financial arrangement that meets your corporate needs.
If you are looking for individual insurance products, here are the details you should know.