Employee Benefits

Life (ML)

Group Life Insurance provides coverage for plan members and their families against the loss of income in the event of a plan member’s death. It allows plan members to know their loved ones are financially protected.

Common types of Group Life Insurance benefits available include: Employee Basic, Employee Optional, Dependent Basic and Dependent Optional.  Employee Basic and Optional provide financial assistance to the designated beneficiary, payable upon the plan member’s death.

​

 Employee Basic

• Available to groups of all sizes

• Minimum coverage is $10,000 and the maximum is determined by group size and a multiple of the plan member’s salary

• Plan sponsor selects coverage amount – usually a flat amount or a multiple of the plan member’s salary

• Coverage can be provided without the plan member providing medical evidence based on the size of the group and coverage on the plan - subject to Manulife approval

• Premium is normally funded by plan sponsors. Payroll deduction is also an option. 

 

Employee Optional

• Available to groups based on number of employees

• Coverage is intended to supplement the plan member’s Basic plan coverage

• Minimum coverage is $10,000 and the maximum is determined by group size and a multiple of the plan member’s salary

• Coverage plans are usually a flat amount or a multiple of the plan member’s salary

• Evidence is required from first dollar. A non-evidence amount may be available for larger groups, based on Manulife approval, and require that a plan member’s application be received within 31 days of eligibility

 

Dependent Basic and Optional

• Coverage for a plan member’s spouse and/or dependent children

• Coverage amounts are typically lower than that of the plan member

• Plan member is the beneficiary

​

​

Accidental Death and Dismemberment (AD&D)

The Accidental Death and Dismemberment (AD&D) benefit provides valuable protection to plan members at a low cost. AD&D provides financial assistance if a plan member suffers a loss of life, use of a limb, sight, hearing, and/or speech due to an accident.

The death benefit is payable to the plan member’s beneficiary. The dismemberment benefit is payable to the plan member.

​

Five types of AD&D are offered:

​

Employee Basic

• Available to groups of all sizes

• Minimum coverage is $10,000 and the maximum is determined by group size

• Plan sponsor selects coverage amount – generally the same as the schedule for the employee Life Insurance benefit – usually a flat amount or a multiple of the plan member’s salary

• Plan sponsors typically fund the premium. Payroll deduction is also an option

 

Employee Optional

• Available to groups of 25 lives and above (Signature, Corporate and Trustee)

• Coverage is intended to supplement the plan member’s Basic plan coverage

• Minimum coverage is $10,000 and the maximum is $250,000

• Coverage plans are usually a flat amount or a multiple of the plan member’s salary

 

Employee and Dependent Optional

• Coverage for a plan member, his or her spouse and/or dependent children

• Available to groups of 100 lives or more

• Minimum coverage is $10,000 for the plan member and a lesser percentage for the spouse and child (eg. 40% of plan member amount for Spousal and 5% of plan member amount for Child coverage)

• Coverage amount maximums are higher for the plan member ($250,000) than for dependants (eg. spouse 60% of plan member amount and child 15% of plan member amount)

​

Short Term Disability (GB.CA) REWORD FROM HERE DOWN - taken from group benefits.ca

The Short-Term Disability or Weekly Indemnity benefit is designed to compensate an employee for income lost as a result of short-term absences from work from an accident or sickness. Employers that provide a Short-Term Disability plan may opt out of the Employment Insurance Sickness Benefit and therefore qualify for a reduced E.I. premium rate. To be eligible to opt out, the STD plan must be at least equal to or better than the E.I. plan.

​

The benefit schedule is generally based on a percentage of the employee's pre-disability weekly gross earnings. When determining an appropriate benefit schedule, the tax status of the STD benefit must be considered. Unless the plan member is paying the entire STD premium, the benefit will be taxable when received. The STD benefit will also be non-taxable when the employer pays the premium on behalf of an employee, but the amount of the paid premium is treated as taxable income to the employee.

​

A STD plan which is taxable should be based on a higher percentage of the employee's pre-disability gross earnings than a plan that is non-taxable. A taxable LTD plan will often be based on a schedule as high as 75% of pre-disability gross earnings whereas a non-taxable plan will generally not exceed 67%.

​

Long Term Disability (GB.CA)

An extended illness or injury can create a significant financial hardship. Although employees will often express a greater demand for more visible benefits, a Long-term Disability benefit is far more important in protecting the financial well-being of employees. Very few employees will ever be forced to sell their homes because they need eyeglasses or dental work. However, a loss of income can have much more serious repercussions.

​

The benefit schedule is generally based on a percentage of the employee's pre-disability gross earnings. When determining an appropriate benefit schedule, the tax status of the LTD benefit must be considered. Unless the plan member is paying the entire LTD premium, the benefit will be taxable when received.

An LTD plan which is taxable should be based on a higher percentage of the employee's pre-disability gross earnings than a plan that is non-taxable. A taxable LTD plan will often be based on a schedule as high as 75% of pre-disability gross earnings whereas a non-taxable plan will generally not exceed 67%.

​

When the total income received exceeds the all source maximum, the benefit payable is reduced by the excess amount. For taxable benefits, the all source maximum is generally based on 85% of pre-disability gross earnings. For non-taxable benefits, the all source maximum is usually based on 85% of pre-disability net (after-tax) earnings

​

In the case of non-taxable LTD plans, it is often useful to use a graded benefit schedule to avoid paying for a disability benefit that is in excess of the maximum benefit that can be received (as a result of the 85% all-source maximum). For example, a common schedule would be 66.7% of the first $2,500 of gross monthly insurable earnings and 50% for all earnings in excess of $2,500. Otherwise, employees may be paying for an LTD benefit beyond that which they are eligible to receive

​

Extended Health Care (GB.CA)

Extended Health Care benefits, also referred to as major medical benefits, are designed to supplement existing provincial hospital and medical insurance plans. The benefit provides for reimbursement of expenses and services not covered by existing government plans.

Extended Health Care benefits can be divided into several categories which include:

• Hospital coverage

• Drug coverage

• Medical supplies and equipment

• Paramedical services

• Out-of-province coverage

• Other health care benefits (Private Duty Nursing, Accidental Dental, Convalescent Hospital Care, Ambulance Services, Vision Care)

 

The plan may include a deductible (e.g. $25 for employees with single coverage, $50 for employees with family coverage, or $5 per prescription drug), a coinsurance factor (e.g. 80% reimbursement for prescription drugs), and maximums (e.g. $500 per calendar year for physiotherapy). It is common to have a different coinsurance factor for difference benefits. For instance, hospital and out-of-province coverage are frequently reimbursed at 100% as claims for these benefits can be substantial and present a significant financial burden to employees. However, other Extended Health Care Benefits are often reimbursed at a lower level.

​

Drug coverage

Prescription drugs account for the largest item of an employer's total costs for a health care plan, typically accounting for 60-80% of the claims. There are three common methods of designing a drug plan:

1. Prescription only drug plans which only provide coverage for drugs and medicines which require a written prescription from a physician or dentist. Over-the-counter drugs are not reimbursed even if prescribed by a physician as these medications do not require a prescription.

2. Prescribed drug plans cover all prescribed medications including over-the-counter drugs. A prescribed drug plan is more expensive than a prescription only plan due to the increased scope of coverage.

3. Hybrid drug plans cover all drugs requiring a prescription and certain prescribed drugs that do not legally require a prescription. Different drug formularies are available which list specific drugs and medicines covered under a drug plan. The formulary can be very comprehensive and include almost all prescription drugs (and some prescribed medications) or more restrictive and exclude drugs of a particular therapeutic class.

​

There are two basic methods of reimbursing drug claims:

1. Reimbursement plans, where the person insured pays the pharmacist for the drugs and submits the bill to the insurer for reimbursement.

2. Pay direct drug plans, where the person insured presents a drug insurance card to the pharmacist who, in turn, bills the insurer directly. With a pay direct drug plan, several cost containment features are available which can not be incorporated into a reimbursement plan. These include a dispensing fee cap which limits the reimbursement of the pharmacy dispensing fee to a certain level and many of the drug formularies which generally require claims adjudication at the point of purchase (e.g. the pharmacy)

​

Medical Services and Supplies

Reimbursement for supplies and the rental of or purchase of durable medical equipment including:

• Hospital beds, wheel chairs, canes, crutches, walkers and trusses

• Prostheses, braces for back, neck, arm or leg

• Oxygen and oxygen supplies

• Colostomy apparatus and supplies

• Ileostomy apparatus and supplies

• Insulin syringes

• Orthopaedic shoes and orthotics

• Support hose and compression stockings

• Kidney dialysis equipment

• Hearing aids

​

Paramedical Practitioners

This benefit covers charges, including x-rays, of the following paramedical practitioners:

• Chiropractor, osteopath, naturopath, podiatrist, acupuncturist, masseur, speech therapist, psychologist, psychoanalyst (Quebec only), and physiotherapist.

Reimbursement is subject to an annual maximum (commonly $500 per practitioner per calendar year). Reimbursement is based on the "reasonable and customary" charges for the insured's province of residence. Most services require a physician's referral.

 

Dental Care (GB.CA)

Dental care benefits provide comprehensive dental services and supplies for plan members and their eligible dependants. The type and scope of dental services covered under a dental plan varies; however, dental care services are generally grouped into three major categories:

• Basic

• Major restorative

• Orthodontics

​

Basic

Basic services include coverage for diagnostic and preventative treatments, such as dental examinations, x-rays, cleanings, topical application of fluoride, oral hygiene, fillings, scaling of teeth, tooth extractions, periodontic services to treat the bone and gum around the tooth and endodontic services including root canal therapy.

​

Major Restorative Services

Major restorative services include coverage for dentures, crowns, inlays, onlays and bridgework.

​

Orthodontic Services

Orthodontic services include coverage for procedures and appliances, such as braces, wires, space maintainers and other mechanical aids required to straighten teeth and correct other defects.

The dental services are generally divided into several levels of coverage. At each level, a variety of plan design features, such as co-insurance, deductibles and maximums are available. Generally, the percentage reimbursement for Basic services is higher than the percentage reimbursement for Major Restorative and

 

Orthodontic Services.

Beginning with basic coverage, plan sponsors have the option of adding more comprehensive services including:

• endodontics,

• periodontics,

• dentures,

• crowns,

• bridges, and

• orthodontics

​

Employee Assistance Plan (GB.CA)

An Employee Assistance Plan is a professional counseling and referral service sponsored by the employer, providing service to employees and their family members to assist them in resolving or coping with personal problems in a confidential and voluntary manner. By improving employees' health and well-being, job performance will generally improve. Therefore, implementing an Employee Assistance Plan can result in a cost savings for employers.

​

Personal and/or family problems affect people in all areas of their lives, including the work place. Work can be impacted in many ways such as:

• Absenteeism

• Lateness

• Sick Time

• WSIB Claims

• Accidents

• Use of Health Benefits

• Communication Problems

• Personality Conflicts

• Poor Performance

 

An Employee Assistance Plan generally provides services in the areas of crisis prevention (e.g. counseling services, drop-in groups), outpatient services (e.g., assessment, diagnosis, information, education and ongoing treatment), inpatient services (e.g. hospital care, home care) and self-help groups. These services can assist employees with a variety of problems including:

​

• Post Traumatic Stress (lingering effects from old trauma)

• Addictions, Eating Disorders

• Sexual Problems

• Personality Conflicts

• Financial Planning

• Self-Esteem Problems

• Grief or Loss

• Anxiety and Stress

• Depression

• Attitude Problems

• Family Problems / Marriage Breakdown

 

Larger employers often have their own, on-site, services. However, most Employee Assistance Plan providers are specialty organizations, external to the insurer and plan sponsor.

Employee Assistance Plans can be funded by employer contributions only or both employer and employee contributions. Premiums are experience-rated, in other words, adjusted annually based on the level of claims for the group.

​

Traditional Benefits Plan (GB.CA)

Traditional benefit plans are very common and can cover drugs, extended health benefits, life insurance, accidental death and dismemberment, short and long term disability, out of country and dental. Typically, these plans outline specific benefit coverage with set benefit amounts that may include deductibles and coinsurance. Benefits are usually mandatory, except extended health and dental, which can be waived if benefits are available through a spouse or significant other.

Traditional plans are analyzed annually and the premium can increase or decrease depending on the demographics of your organization, health care inflation for the year, and whether the previous year’s claims exceeded what was expected.

​

Health Spending Account (GB.CA)

A Health Spending Account is similar to a bank account, and is often used as a supplement or alternative to a traditional benefit plan. The accounts are tax-free, and designed to provide a way to provide for the health care of the account holder and his/her dependent family members. The account is flexible, and there is no set plan design.

• Employer is able to cap their costs, as opposed to a traditional plan which can see premium rate increases

• Employees have more flexibility as to what expenses they want reimbursed, and reimbursements are received tax-free

• Most health spending account plans allow for the unused balance to be rolled over to the subsequent year, and any unused balance in the second year is returned to employer

​

PROSPECTIVELY EXPERIENCE RATED (NON-REFUND) (GB.CA)

The underwriter accepts all the risk and uses past claims along with demographics, trend factors and inflation factors to estimate future claims and arrive at a premium. The medical, dental, and short term disability benefits are generally underwritten on an experience rated approach. As the claims under these benefits are small in dollar amount and are incurred with relatively high frequency, their expected claim patterns are generally more predictable than Life, AD&D and LTD claims. Accordingly, premium rate levels at renewal can be assessed based primarily on a group's past experience. For small groups, only partial credibility is generally given to the claims experience. In these cases, the rates are in effect partially pooled as they are also based on the insurer's manual rates (average rates for a group of similar demographics within a similar industry).

​

RETENTION ACCOUNTING (REFUND ACCOUNTING) (GB.CA)

The underwriter uses past claims along with demographics, trend factors and inflation factors to estimate future claims and arrive at a premium. If at the end of the financial year, premiums exceed costs, then the surplus can be used to boost reserves or refunded to the plan sponsor. If at the end of the policy year, costs exceed premiums, the deficit is collected through a premium increase. The underwriter risks being left with deficit if the policy is terminated. In terms of the renewal rating process, there is essentially no difference between a prospectively experience rated group and a retention group. The main difference between the two methods is the financial accounting process. Although a prospectively experience rated group is rated on its own experience, it is still pooled in that it does not share in the plan results. In contrast, a retention accounting group is rated on its own experience and also shares in its experience.

​

ADMINISTRATIVE SERVICES ONLY (ASO) (GB.CA)

With an ASO plan, a third party provides claims paying services and charges for services provided. The cost can be budgeted and remitted monthly based on a level amount or according to volume of coverage. Alternately the cost of claims and charges can be billed to the plan sponsor monthly. Some benefits, such as hospital out-of-country and long term disability coverage are generally insured as claims for these benefits can be substantial. A "stop-loss" policy is also usually purchased to protect against other large health claims. The dental benefit is usually fully self-insured.

Expenses for an ASO plan vary considerably, but typically are as follows:

• Administrative Fees: 8-10% of paid claims

• Premium Tax*: 2% of total of paid claims and administrative fees

• Insured Benefit Premium (hospital, out-of-country): Cost will vary, 20% to 35% of EHC rates

• Stop Loss Insurance: Cost will vary depending on policy but is typically in the range of 3-6% of claims

• *The 2% premium tax is already taken into account in the target loss ratio of a non-retention plan

As the health benefit is mainly self-insured and the dental benefit is fully self-insured, the plan sponsor may save with an ASO plan when claims are low. However, the plan sponsor may incur higher expenses if claims are high as the plan sponsor is responsible for funding the payment of all claims (with the exception of those benefits which are insured and those claims that fall within the parameters of the stop-loss insurance). In other words, the plan sponsor is sharing in the risk.

 

SELF-ADMINISTERED (GB.CA)

The plan sponsor performs all administration functions including the payment of claims and accepts all risks associated with the benefit program. There is a potential issue relating to confidentiality under this type of arrangement as a result of the plan sponsor having access to the medical information of plan members. The fluctuation of claims decreases as the size of the group increases. Only very large organizations will even consider self-insuring their long term disability benefit. The risk of out-of-country and large non-recurring medical claims is often managed through pooling limits.

​

​