Oliver Insurance Services - Providing Insurance Solutions Since 1988

Group Insurance / Employee Benefit Plans

Why do employers arrange for group insurance for their employees?
Many employers have an employee benefit plan in place for several reasons, such as:
  • Easier to hire and retain better employees.
  • Helps prevent loss of key employees to a competitor.
  • Provides a better benefit that often cannot be found in the individual market.
  • A benefit that employees appreciate.
  • Often is more appreciated than an actual raise in pay, which might put the employee in a higher tax bracket.
  • Benefit costs can be expensed from the company's income.
Oliver Insurance Services is committed to offering our clients excellent service year round. We will shop the market on a tender basis to find you the best value. We represent many reputable companies including Accerta, Blue Cross, Empire Life, Equitable Life, Great-West Life, Greenshield, Manulife, Sun Life, The Co-operators, Wawanesa Life and other fine companies. We provide suggestions for "cost containment" now and in the future.

Benefit plans can be customized in many cases to fit your needs and your budget. Group plans are available to a group as small as 3 people. The most common elements of a group plan are as follows:

Life Insurance: Most groups have a flat dollar amount of life insurance or they have a multiple of the employee's annual earnings.

Accidental Death and Dismemberment (A.D. & D.): This benefit is always equal to the amount of life insurance in a group plan. Accidental death will pay out an amount equal to the life insurance if the employee dies as a result of an accident. This is in addition to the regular life insurance. Dismemberment is a benefit that pays out when there is a loss of or loss of use of a limb etc. There are also partial benefits for loss of fingers or toes etc. It may also cover sight and hearing.

Short Term Disability (STD): Typically, the employee would be eligible to collect on this benefit at the end of the elimination period, if they have satisfied the definition of disability as written in the contract. Frequently on a group plan this is the 1st day after an accident and the 8th day of a sickness. However these elimination periods can be longer. It normally covers the employee on and off the job. STD benefits can pay up to a 2 year benefit period although 17 weeks is most common. The definition of disability is always written in the contract. The definition of how much will be paid will be written in the contract. It is frequently 50%, 60% or 67% of pre-disability earnings, but other definitions are also used.

This benefit can be taxable or tax free when received. If it is deemed that the employee is paying the STD premium through payroll deduction, it will be tax free. If the employer is paying the premium, it will probably be taxable when the benefit is received.

It is common that STD benefits are offered up to a certain limit without any medical questions asked. In order to go above that limit the insurance company will medically underwrite it. This means they will ask medical questions, and possibly decline the extra amount without the supporting medical evidence. In order to keep premiums affordable on group plans, there is usually a "second payor clause" built in. This means that benefits may be offset by W.S.I.B., Employment Insurance and certain other benefits.

If you have an existing group benefit plan with a disability benefit, you should read your contract or employee booklet for specific details on your policy.

Long Term Disability (LTD): This benefit normally covers employees on and off the job (24 / 7) for sickness and injuries. The employee may be eligible to collect if he / she satisfies the definition of disability in the contract and has satisfied the "Elimination Period". This is usually at least 17 weeks and can be longer. If an employer has STD, these are usually dovetailed together so there is no gap or overlapping with the LTD. LTD benefits are usually arranged based on a percentage of pre-disability earnings. The definition of disability is always written into the contract.

The definition of how much will be paid will be written in the contract. It is frequently 50%, 60% or 67% of pre-disability earnings, but there are other definitions used also. It is common that LTD benefits are offered up to a certain limit without any medical questions asked. In order to go above that limit they will medically underwrite it. This means they will ask medical questions and possibly decline the extra amount, without the supporting medical evidence. In order to keep premiums affordable on group plans, there is usually a "second payor clause" built in. This means that benefits may be offset by W.S.I.B., Employment Insurance and certain other benefits.

If you have an existing group benefit plan with a disability benefit, you should read your contract or employee booklet for specific details on your policy.

Critical Illness Insurance (C.I.): C.I. has become a popular addition to the Group Benefits plans in recent years. Similar to individual CI, it pays out a tax free lump sum if you survive 30 days after diagnosis of a life threatening illness (Examples include cancer, heart attack, strokes etc.). If an employee gets diagnosed with a major illness, imagine how much financial relief this benefit could bring to his / her family. This benefit pays in addition to the disability benefits and compliments the disability benefit quite nicely.

Extended Health Benefits (EHB): EHB has several components to consider such as: Drugs, Medical Supplies, Professional Services, Ambulance, Out of Country travel insurance, and Eye Glasses.
  • Drugs: The cost of prescribed drugs is escalating and this is probably the number 1 benefit that employees are looking for. These plans can be set up several ways. They can have an annual deductible. They can have a co-insurance where the cost of prescriptions are covered up to a certain percentage (70, 80, 90%) or with a deductible per prescription such as $10 or the amount of the dispensing fee. There are several options to consider. They can have a spending cap of x dollars per year. This is one way to have some future cost containment.
  • Medical Supplies: This benefit covers things that OHIP does not cover such as Walking Casts, Diabetic Supplies etc.
  • Professional Services: Optometrists, Chiropractors, Massage Therapy, Chiropodists, Speech Therapists and other professionals are often covered under this benefit. It is common to have spending caps on these on either a per profession basis or as an overall benefit maximum per year.
  • Private Duty Nursing: Many plans are offering a stipend to assist an employee when they are at home and need extra nursing care. Many of these plans offer up to $5000 or $10,000 per year.
  • Ambulance: Many plans are offering coverage for land or air ambulance.
  • Out of Country travel insurance: Many plans include some out of country coverage, emergency medical insurance. This is great for employees that might attend meetings out of country or if they simply want to take a vacation.
  • Vision Care: Many plans offer coverage for eye glasses as an option. There are usually spending caps. For example, it is common to see a limit of $200 per 24 months as a limit.
Dental Benefits: There are 3 main components to dental insurance. The industry has accepted some standard terminology to describe what is covered. The basic terms are Basic, Major and Orthodontics.

Basic: This will cover X-rays, cleanings and fillings, periodontal and endodontal check-ups. An employer may choose to include basic dental only in the plan and they may make several choices usually including how often check-ups can be completed (example 6 months, 9 months or annually) and they may choose what percentage (co-insurance) the plan will cover (example 50% - 100%). There is usually an annual spending cap per employee. This will usually cover relining or re-basing maintenance on Dentures also.

Major: This is only available if you have Basic coverage in place, and is sometimes limited to groups of 5 or more employees. Major will cover Crowns, Bridges and Dentures. It is common for Major dental to have a spending cap or a combined (with Basic) spending cap. Also the co-insurance may be different than Basic.

Orthodontics: Most insurers only offer this benefit on larger groups. They want to spread the risk further. This benefit will have an annual spending cap or a lifetime maximum per person. It can have a co-insurance also.

Group RRSP: Many small business owners cannot justify a Registered Pension Plan (RPP). However, a group RRSP is very simple and economical to administer, can be voluntary for the employees and the group buying power will often be reflected with no annual service fees and access to investment funds that are not normally available to individuals or they will be offered with lower Management Expense Ratios (MER's) than individual investment products. Employers have lots of flexibility with regards to contributions to a group RRSP. The employer may arrange a matching contribution arrangement to pay into each employee's RRSP, or may choose to pay an annual bonus and save some income tax for the employee, or not contribute at all. Some employers have found offering a Group RRSP to be a very effective way of keeping their long term employees happy.

These are the main features that are included in a group benefit plan. Oliver Insurance Services would be happy to meet with employers and discuss how we may assist you with a plan design that is affordable, manageable, and cost effective. If you would like us to do a side by side comparison for you, we would be happy to provide this service too.
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Oliver Insurance Services - Providing Insurance Solutions Since 1988
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