Every week we answer FAQs about employee benefits plans. There are few things less complicated in business than how employee benefits plans are run and what their options are. The truth is that each plan is unique and customized to the needs of each company’s employees. Nevertheless, we found that the following questions can be answered in a manner that applies to most companies. If you find yourself wondering about something check the following FAQs to see if it’s already been answered. If not then contact us and we’ll gladly chat with you.
- Do we have to wait for our renewal date to change or switch our existing plan? >>>
- How does inflation affect the cost of the plan? >>>
- How often do you recommend doing a market analysis? >>>
- How are renewal rates calculated? >>>
- What is a pooled program? >>>
- How are Abundance Employee Benefits advisors compensated? >>>
- What are our long-term obligations? >>>
- Will Abundance help with initial set-up and ongoing support? >>>
- Will there be a lot of ongoing administration? >>>
- Can the “couple” rate apply to a parent with one eligible dependent? >>>
- Is long-term disability mandatory on a health and dental plan? >>>
- Can I choose a plan that only offers dental coverage? >>>
- How long does it take to implement a new employee benefits plan? >>>
- Do you only represent a few select insurers? >>>
- What is the typical waiting period for employees on a benefit plan? >>>
- What is your opinion of 100% employer-paid premiums? >>>
- How much of the premium is paid by the employer? >>>
- Is MSP included in health-care premiums? >>>
- When should we change Insurers? >>>
- How does your approach save me money on my plan? >>>
- Does a benefits plan help attract and retain better employees? >>>
- How can we afford to start a benefits plan? >>>
- Is there a long-term value for my employees? >>>
- What is included in an employee benefit plan? >>>
- How much will a plan cost? >>>
- What if we already have a plan? >>>
- How can a properly designed plan save me money? >>>
- How do you save me money when you quote? >>>
Do we have to wait for our renewal date to change or switch our existing plan?
One common misconception is that changes can only be made at the annual renewal date of the plan. Both changes and switches can occur at any time because all contracts are unilateral without any cancellation penalty.
How does inflation affect the cost of the plan?
Inflation trends for benefits plans are primarily based on drug prices and dental fees. Unfortunately, not only do these vary from province to province, but different insurance providers may also use different numbers. If all other factors in your benefit plan stay constant, Abundance Employee Benefits recommends budgeting according to the inflation trend provided by your insurance provider each year.
How often do you recommend doing a market analysis?
Your employee benefits plan should be reviewed at least once every three years to ensure that you are getting the best rate for the services used by your employees. A review also keeps you informed about market trends, such as recent changes in technology and underwriting approaches (e.g. some companies now operate under an “honour” system for common claims like chiropractor visits).
A review is also worthwhile if you have added a significant number of employees (ie. from 3 to 9, 20 to 30, etc). Larger companies can secure lower rates and save substantial amounts of money.
How are renewal rates calculated?
Rate calculation depends on whether you have a pooled or traditional benefits program.
Rates for pooled plans are typically more stable because annual rate adjustments are based on the averages of a larger number of participants.
Traditional benefits plans for small or medium-sized businesses generally experience more rate volatility and are affected by industry averages and trends. Because there are often fewer participants, the actions of each individual on the plan may have a greater effect on the overall plan.
Premium rates for traditional and pooled plans are based on a variety of factors, including:
- Inflation rates
- Claims experience
- Average age of staff
- Number of staff covered
- Gender mix
- Levels of coverage
- Occupations covered
- Family status of employees
What is a pooled program?
Pooled programs are a simple, affordable, and efficient way to provide benefits for small to mid-sized groups. By pooling employers from a variety of industries, Abundance Employee Benefits is able to provide stable, reliable premiums to a wide range of groups. Rates are based on the average employee age, number of claims, and size of the entire pool. This structure provides stability, consistency and value for participating employers.
How are Abundance Employee Benefits advisors compensated?
Abundance Employee Benefits charges no membership or consulting fees. Our advisors are compensated through yearly commissions from the insurance carriers. The satisfaction you have with your plan and our service to your company is what ensures that our advisors are committed to providing the best solution to you.
What are our long-term obligations?
As a client of Abundance Employee Benefits, you are not committed to your plan. You can stop, change, or cancel at any time. Our plans are designed to be dynamic so that they can change along with the needs of your company as you grow and evolve.
Will Abundance help with initial set-up and ongoing support?
Of course! Abundance Employee Benefits are here to help, from initial contact to ongoing support. Our goal is to ensure that your plan runs smoothly, stays current, minimizes costs and that the administrative process is as streamlined as possible.
Will there be a lot of ongoing administration?
No. Administrative functions include regular maintenance, adding/deleting employee and dependent information, payroll deductions of the employee portion and ensuring claim forms are available. Employees are responsible for reporting any changes to the plan administrator and submitting receipts directly to the insurer. Abundance Employee Benefits are extremely proud of our admin team, who make it their mission to make life as easy as possible for our clients. We would be happy to answer any additional administration or claims questions.
Can the “couple” rate apply to a parent with one eligible dependent?
Yes. It can apply to a married couple, common-law spouses, or a single parent with one eligible dependent (please note: definitions of “couple” may differ between insurers).
Is long-term disability mandatory on a health and dental plan?
No, but it is highly recommended. The total cost of an employee’s long-term disability can easily reach the hundreds of thousands of dollars. In contrast, a major dental claim often costs less than a thousand dollars. We believe that properly supporting employees over the long term means protecting them from the “big losses” they might experience.
Can I choose a plan that only offers dental coverage?
Not usually. Traditional plans include life insurance in addition to extended health and dental coverage.
How long does it take to implement a new employee benefits plan?
Implementation takes six weeks on average. We start by working with the decision maker to design the plan that best fits their company and business cycle. This leads to an initial design and quote. Forms are distributed to the employees, completed, and sent to the insurer for processing. When the plan is implemented, we help educate the employees and company administration about how to effectively use their new plan.
Do you only represent a few select insurers?
No. We are general brokers and can quote from any of the major insurers in Canada. We have our preferred relationships, but are happy to accommodate a client who has a specific request. Our experience has led to a clear understanding of the preferences of each of our major suppliers and we always choose the insurers that we feel will best serve the client.
What is the typical waiting period for employees on a benefit plan?
A standard waiting period is three months of employment, which typically matches a new employee’s probation period. Companies in high-turnover industries or environments might want to consider longer waiting periods. A strategically selected waiting period encourages long-term employees and reduces administration time and costs by reducing the number of employee addition/removal forms that must be completed.
What is your opinion of 100% employer-paid premiums?
We usually don’t recommend them. It has been our experience that people place a higher value on things that they have worked for. Employees who see their benefits as “free” often abuse them (ie. by purchasing drugs that they do not use), which increases plan expense and raises the premiums for everyone. To avoid abuses, Abundance Employee Benefits always emphasizes education for plan participants.
How much of the premium is paid by the employer?
The premium is usually split 50/50 between employer and employee, although some employers pay more. The structure of the split can be part of an employee motivation and retention strategy. When structured correctly, benefits like long-term disability can be provided to the employee tax-free. This is an area that needs expert attention, as we have seen some plans built incorrectly, resulting in an excess tax burden to the employee.
Is MSP included in health-care premiums?
No. The premiums calculated by Abundance Employee Benefits cover insurance only. Some companies pay MSP on behalf on the employee, which is a taxable benefit, much like a company paying for the tires on your personal vehicle.
When should we change Insurers?
If you have unresolved issues with your current insurer, Abundance Employee Benefits would be happy to work with them to address these issues. If the current insurer is unable or unwilling to work with you, then it may make sense to change insurers. Abundance takes great pride in our administration team, who regularly receive rave reviews from our clients. Our goal is to make your benefits plan completely trouble free, taking the load off of your HR team and allowing them to spend their time addressing company issues.
How does your approach save me money on my plan?
Employees who understand how plan usage affects their renewal premiums are most likely to use their plan prudently and save the company overall plan costs. We promote accountability by educating employers and employees about how the plan works. This promotes employee buy-in, accountability, and responsibility.
Does a benefits plan help attract and retain better employees?
Companies with strong benefits plans are better able to attract and retain high-performance teams because they have shown a commitment to staff health and wellness. Benefit plans also contribute to overall team stability by attracting family-oriented employees.
How can we afford to start a benefits plan?
Employers are often pleasantly surprised by the affordability of our plans. Additionally, a strong employee benefit plan may also enable an employer to offer slightly lower salaries to new employees (ie. an employee with a family may prefer a 36k position with a good plan over a 40k position offering no benefits). Benefits can be a tax deduction for the business and a tax-free benefit for employees.
For current employees, you could offer a benefits plan as part of their annual compensation review. Employees often value benefits over a cash raise. The benefit to you is that many plans come at a lower cost per employee than a cash raise and without additional EI, CPP, or WCB contributions. Premiums can be tax-deductible for the company and a tax-free benefit for employees, making it a win-win situation.
Is there a long-term value for my employees?
Employees who have been supported through a long-term illness in their family will remember the value of a good benefits package long after a raise would have been forgotten. Helping an employee care for their loved ones is an excellent way to cultivate staff loyalty.
What is included in an employee benefit plan?
Each plan is tailored to the needs of the company and its employees. This is a list of what plans may include:
- Life insurance
- Accidental death and dismemberment
- Dependent life insurance
- Prescription drugs
- Paramedical practitioners (chiropractors, registered massage therapists, physiotherapists, naturopaths, acupuncturists, etc.)
- Medical equipment
- Emergency travel medical insurance
- Glasses, contact lenses, laser eye surgery, eye exams
- Dental benefits
- Short-term disability
- Long-term disability
- Critical illness insurance
How much will a plan cost?
Employers are always pleased with the affordability of our plans. Because the cost depends on the options chosen, the size of your team and the marital/family status of your staff it is not possible to give you an answer before meeting with you to discuss your specific needs.
It is also important for Employers to remember the cost sharing component of a plan which is typically split 50/50 with their employees. So, after meeting with us when you are looking at your quote, it is important to remember that the price to the company is often half of the amount you are reading.
What if we already have a plan?
Having a plan isn’t the same as having the right plan. Your business evolves and so should your plan. We always reviews our clients benefits plan for fair pricing and do a comprehensive review at least every three years to ensure its suitability and competitiveness. If your broker has not done a competitive review of your business in the last three years, obtaining quotes from at least three different insurers, you may be paying too much.
How can a properly designed plan save me money?
Abundance creates plans tailored to the needs of each company and their employees. We save companies money on their plan by identifying and implementing high-value benefits, while minimizing low-value benefits. For example, if you don’t have employees with young children it might make sense to omit orthodontics from the plan (which could provide a 5% savings).
How do you save me money when you quote?
We have developed long-term relationships with specific insurance suppliers who have agreed to give our small-business clients rates similar to those of larger companies. Our close relationships with these preferred suppliers also ensures excellent client service. Some insurance companies that we represent have also cultivated relationships with big-box retailers like Costco, who have reduced their rates for our clients.