What is group disability insurance?

Group disability insurance is a financial safety net for your employees if they are unable to work due to a non-job related disability. An employee with group disability benefits will receive a portion of their income during this difficult time so they can focus on getting better. 

Most insurers replace a certain percentage of an employee’s regular income. Depending on the group disability plan, the benefit amount is paid on a weekly or monthly basis. Typically, an employee will receive group disability benefits until they have recovered and resumed working. 

Why is group disability insurance important?

Types of group disability insurance coverage

There are two types of group disability plans:

• Short-term disability (STD)
• Long-term disability (LTD)

Group short-term disability benefits

When we talk about disability, we usually think of things like paralysis, cancer, or a serious injury. However, there are certain conditions for which recovery might take anywhere between 15-26 weeks. These are the conditions that are covered under a short-term disability insurance plan. 

While the definition of disability and the coverage options can vary from one insurer to another, most group disability insurance plans cover the following common issues:

Group long-term disability benefits

Long-term group disability benefits replace an employee’s income if they are unable to work due to a major illness, accident, or injury. Depending on the plan that is being offered, long-term group health insurance benefits can replace employee incomes up to the age of 65. 

Similar to how short-term plans work, group long-term disability insurance coverage varies depending on the plan and the insurer. Most long-term group disability plans will typically cover:

Are both long- and short-term group disability benefits necessary?

Most group disability plans cover LTDs but not STDs. This is mostly due to budgets and priorities. In our opinion, this also often makes sense. Many short-term disabilities can be covered under a group health plan or employment insurance which is a mandatory employee benefit. So if employers choose not to offer STDs that is okay. 

LTDs on the other hand are very important. Any employee who is unable to work for a longer period of time due to a disability will need all the help that they can get. An STD will help them and their loved ones deal with any financial issues while the disabled employee can focus on rehabilitation. 

Know more about how group health benefits work

How group disability insurance works

Employees covered under a group disability insurance plan are entitled to receive a weekly or monthly benefit amount in the event of a disability. Depending on the terms of the plan, the disability benefit can be availed after the waiting or elimination period. 

Here is how group disability insurance typically works in Canada:

• An employee who wants to claim a disability payout will fill in the required paperwork
• Following the approval of the documentation, the employee receives an insurance card
• This may be followed by a waiting period during which the insured cannot make a disability claim. The waiting period may vary depending on the type of disability insurance. For short-term disability, there is no waiting period long term disabilities may have a waiting period
• After successful completion of the waiting period (if any), the insured individual can successfully make a claim and receive coverage anytime within the term period if their disability is recognized by their policy

It is important to note that the insured individual or their family will receive a percentage of the coverage periodically until they have recovered. The payout may be weekly in the case of short-term disability insurance and monthly in the case of long-term disability insurance.

Learn more about group health benefits and its workings

How does disability insurance work in Canada?

Most insurers in Canada replace a certain percentage of an employee’s wages during the length of the disability. Depending on the group disability insurance plan, the benefit amount is paid on a weekly or monthly basis. Typically, an employee will receive group disability benefits until they have recovered and resumed working. 

Is group disability insurance a taxable benefit?

If an employer pays all or part of a group disability insurance premium, then it will be a taxable benefit for the employee. However, if the premiums were paid by the employee through paycheque deductions, it would not be a taxable benefit. 

What is group long-term disability insurance?

Long-term group disability benefits replace an employee’s income if they are unable to work due to a major illness, accident, or injury. Depending on the plan that is being offered, long-term group health insurance benefits can replace employee incomes up to the age of 65.

Who is eligible for group disability insurance in Canada?

Employees who are part of an employer-sponsored benefits plan are generally eligible for group disability insurance. Eligibility often depends on factors like full-time or part-time status, minimum working hours, and completion of a probationary period. Some plans may also require employees to actively be at work on the policy’s effective date.

Can an employer modify or terminate group disability insurance benefits?

Yes, an employer can modify or terminate group disability insurance benefits, but changes must follow the terms outlined in the benefits plan. Employers typically review coverage during renewal periods and may adjust benefits due to cost considerations, business needs, or insurer policy changes. 

What happens to my group disability insurance if I leave my job?

Group disability insurance coverage usually ends when employment ends. Some policies offer conversion options, allowing employees to switch to an individual disability plan without medical underwriting. It’s important to review options before leaving a job to avoid gaps in coverage.

How do benefit amounts get calculated for group disability insurance?

Benefit amounts are typically based on a percentage of the employee’s pre-disability income, commonly 60% to 85% of salary. Some plans have maximum benefit caps, and benefits may be reduced by other sources of income, such as government disability programs.

What are the typical waiting periods for claiming group disability insurance benefits?

The waiting period, also called the elimination period, commonly ranges from 30 to 180 days. Short-term disability plans often have shorter waiting periods (e.g., 7 to 14 days), while long-term disability plans require a longer period before benefits start. Employees should plan financially for this gap before benefits begin.

Example of group health insurance

Sun Life Financial Corporation is a reputable group health insurance provider in Canada with an enormous base of trusted customers across all provinces. Sun Life offers a comprehensive range of benefits and includes extended features, including:

• Extended Health Care (EHC) and dental
• Vision care
• Hospitalization coverage
• Chronic illness
• Prescription drugs

With over 2,700 employees across the country and thousands of support communities, Sun Life has helped employers provide comprehensive coverage to their employees. 

Here are a few things that we like about Sun Life Financial Corporation:

• Employers can easily track and monitor an employee’s health insurance details through the My Sun Life mobile application
• Sun Life provides Lumino Health Virtual Care, which provides individuals with access to reputed physical and mental healthcare professionals throughout Canada
• They provide access to a plethora of digital tools for hassle-free onboarding and management of new candidates

Find out more about how group health insurance can be converted to individual plans

How does coordination work in group health plans?

Coordination of benefits (COB) is a process used by health insurance companies to determine the order in which they pay medical claims when a person is covered by more than one health insurance plan. COB ensures smooth and consistent processing of medical claims when someone has more than one health insurance plan. The primary insurer pays first, and the secondary insurer covers any remaining costs, up to the total allowed amount. COB prevents overpayment and ensures fair coverage from all insurers and also reduces costs for the members.

The rules and processes for coordinated group health insurance benefits differ from one insurer to another. It is wise to read and understand a policy document or to speak to an expert to understand coordination of group health benefits. 

What are the coverage options and limitations of a group health plan?

Although group health insurance is by far one of the most affordable, comprehensive, and inclusive types of medical insurance in Canada, it does come with some limitations. These are: 

• Limited customization
• Employer dependency
• Limited portability
• Coverage gaps
• Limited portability
• Cost sharing (some costs are still paid by employees)
• Taxable to the employees

Temporary hires, independent contractors, and retirees are often not covered under group health insurance in Canada. Employees who are on unpaid leave might also lose their group health benefits until they resume work. 

Group health insurance for the self-employed

While self-employed individuals don’t have access to traditional employer-sponsored group health insurance, there are a few options for obtaining group coverage:

• Individuals can opt for professional association benefits if they’re a part of any trade organization
• Self-employed individuals can enroll themselves as a dependent if their spouse’s company provides an employer-sponsored benefit
• Some insurance providers offer group plans specifically designed for small businesses, including self-employed individuals

Considerations for self-employed individuals

When self-employed individuals consider enrolling themselves under a group health insurance plan, there are a few things that must be taken into consideration:

• Eligibility requirements: Associations or small business groups may have minimum membership or employee requirements
• Portability: Coverage is tied to the group plan, so it may not be portable if you leave the association or small business
• Customization: Group plans offer less flexibility to customize coverage compared to individual plans

Where to find group health insurance plans?

Group health insurance plans are usually provided by employers or by an association. If your employer does not provide a group health insurance plan, you must check out group benefits provided directly by insurance companies.

Companies such as Sun Life, Canada Life, Desjardins, Manulife, etc., have developed the most comprehensive group health insurance plans that can be customized to suit your specific needs. You can also speak to a licensed and experienced insurance expert, such as those at PolicyAdvisor, to help you find the right group medical insurance policies.

What to do if you lose your group health benefits?

If you’re on the verge of losing your group health insurance benefits due to a job switch or any other reason, you may need to consider other options.

You may choose to continue your coverage out of your own pocket. Continuation of coverage can be a little expensive, and the paperwork for the transfer can be overwhelming. Another option is to convert your group health insurance into an individual plan.

Converting to an individual plan can be less expensive, and you can customize your policy to suit your needs, Additionally, there won’t be a need for new underwriting when you’re converting your policy.

What are Administrative Services Only (ASO) plans?

An Administrative Services Only plan is a self-funded health insurance plan where an employer takes on the financial risk to cover the costs of the healthcare benefits offered to its employees. Instead of paying fixed premiums to an insurer, the employer directly covers the costs of employees’ medical bills, prescriptions, and other health expenses.

An employer offering an ASO plan hires an insurance company or a third-party administrator who processes claims, handles paperwork, and provides other administrative services on behalf of the employer.

ASO plans offer flexibility and customization options for employers, allowing them to tailor benefits to their employees’ needs and potentially save costs compared to traditional fully insured plans. However, they also carry the risk of higher financial liability if healthcare claims exceed expectations.

Featured small business health insurance partners

1. Sun Life: Offers a range of group health insurance products that include digital tools to manage employee onboarding, benefits, reports, billing statements, and more
2. Canada Life: Offers health, dental, life, disability insurance, and more
3. Manulife: Offers AD&D, health, dental, disability, and more
4. Desjardins: Delivers innovative group health insurance offerings like the Manager Assistance Program, Health is Cool 360° Platform, and more
5. Green Shield Canada:  Offer employee benefits solutions like the iBenefits platform, specialty care program, claims management assistance, etc

Read about how small businesses can offer health insurance perks to their employees

Choose the right group health insurance for your employees

If you’re looking for the right kind of group health insurance plan, our licensed insurance advisors will be happy to help! We’ll ask for some basic information about your business (industry type, number of employees, claims history, etc.) and will help you find the perfect plan for your organization and employees. 

Frequently asked questions

Who is eligible for group health insurance? 

An employer or organization can choose to offer group health insurance to their employees, including full-time, part-time, and contractual workers, depending on the company’s policy. In some cases, eligibility may extend to family members, such as spouses and dependent children, if the plan includes coverage for them. The eligibility criteria for providing group health insurance can vary based on factors like the size of the organization, employment status, and specific insurance provider requirements.

Do employees pay for health insurance in Canada?

Employee benefit plans are typically offered as a workplace perk, with organizations covering most of the premium costs. However, many employers offer these benefits on a cost-sharing basis. This means employees may be responsible for paying a portion of the premium through payroll deductions. In some cases, employees may also have the option to purchase additional coverage, such as extended health benefits, dental care, or vision care, at their own expense.

Are group health plans mandatory in Canada? 

No, group health plans are not mandatory in Canada. Employers are not legally required to provide them, but many choose to do so as a way to support employee well-being and enhance job satisfaction. These plans are commonly offered as a workplace benefit to attract and retain talent. Group health plans can also help reduce absenteeism and improve the overall productivity of the workforce.

What happens to my group health insurance coverage if I change jobs or leave my current employer?

Group benefits offered by an employer will end if you change jobs or leave an organization. However, if you are laid off your benefits may continue for a few weeks. In some cases, replacement coverage is also available if you apply within a certain time frame, usually between 60-90 days. 

How can I get the cheapest group coverage?

To get the cheapest group coverage for your employees, you can:

• Compare different insurers and plans and choose the right coverage
• Pool your benefits plans with other organizations 
• Speak to an insurance expert to build a cost-effective plan for your organization

What is the minimum size for group health insurance?

Most insurers require a minimum of two participants in a group health benefits plan, including an employer and at least one employee. The exact requirements may vary depending on the insurance provider and the type of business. Some insurers may have higher minimums, especially for specific plans requiring higher coverage and benefits.

Importance of group critical illness insurance for employees

Canada has a well-defined and regulated healthcare system. But provincial healthcare plans are not comprehensive and might not cover some of the costs associated with an illness. That is where a group critical illness insurance plan plays an important role. 

Apart from being relatively inexpensive when compared with individual critical illness insurance plans, employee critical illness insurance also doesn’t require a medical examination. Employee critical illness insurance benefits can help with: 

• Exploring new medical treatments for a critical illness 
• Replacing lost income while an employee recovers from an illness 
• Transportation to and from hospitals and rehabilitation centers
• Extra help that may be required at home for the employee’s care or childcare
• Modifications or renovations at home to accommodate a critically ill member of the family

How group critical illness insurance can support employees in early diagnosis and recovery?

Most group critical illness insurance policies offer partial benefits or payouts—typically ranging from 10% to 15% of the total insured amount—upon diagnosis of early-stage conditions, such as thyroid cancer, prostate cancer, and early forms of breast cancer. These partial payouts provide employees with much-needed financial assistance, enabling them to seek timely medical care and recover faster from the illness.

Is group critical illness insurance worth it?

Employees are arguably the most important factor to an organization’s success. Employers who value their workers should absolutely offer group critical illness insurance as part of employee benefits. Employee critical illness insurance will add to an organization’s hiring and retention strategy and will help them stand out as an employer of choice for top talent. 

Most people who are diagnosed with cancer might have to stay home or in a hospital leading to wage losses. Keeping this in mind, offering employee critical illness insurance is the right step for any empathetic employer. 

Who is covered?

Group critical illness health insurance plans in Canada typically cover the following people from any unprecedented critical health condition:

• Employees or members of an association: The primary individuals covered under the plan are the employees of an organization or members of an association. This coverage is part of an employee benefits package, and part-time freelancers or contractual employees cannot avail the benefits of a critical care plan, unless otherwise specified in the policy documents

• Dependents: Many group plans also extend coverage to the dependents of employees, which can include spouses and children. The specifics can vary based on the employer’s policy and the insurance provider’s terms

Find out the difference between critical illness rider and insurance here

Eligibility requirements for group critical health insurance

Although the eligibility requirements for group critical care plans can vary, here are some common eligibility criteria:

• Active work requirement: You usually need to be actively at work when the coverage begins. If you are not working due to illness or disability, you may need to return to work and enroll in your organization’s group benefits plan
• Minimum service period: Some insurance companies or organizations may require an employee to complete a certain period of service before availing critical care benefits. The period may range from a few weeks to several months

• Relationship with dependents: If the policy covers dependents, they must be the legal spouse or children (biological, adopted, or stepchildren) of the employee. Age limits for children might apply in the case of certain companies
• Age restrictions: Some plans have minimum and maximum age limits for coverage, and eligibility might be restricted to individuals with a certain age range
• Health requirements: While group plans are generally more lenient than individual plans, some insurers may require health questionnaires or medical exams, especially for higher coverage amounts

Policy details

Policy details contain comprehensive information on the insurer’s policy, some of which are:

1. Benefit amount

Policy details may contain the benefit or coverage amount that the insured can expect to receive for a critical illness diagnosis and treatment. Having knowledge about the coverage can help an individual plan their finances accordingly.

2. Survival period requirements

Policy details may also contain information on specific survival period requirements. Most critical illness policies require the insured to survive a certain period after the diagnosis of a covered illness to be eligible for the benefit. This period is typically 30 days but can vary from one policy to another.

3. Exclusions

Policy details can also help the insured understand the limitations of their policy. Some policies do not cover specific pre-existing diseases, lifestyle-related critical disease care, the payout for individuals above 65 years of age, etc. Being aware of a policy’s limitations may help the individual come up with suitable treatment alternatives.       

How do I file a claim?

To file a claim for group critical illness insurance, follow these steps:

• Download the claim form: First, obtain all the necessary forms from your insurer’s website
• Complete the form: Next, provide the required information, including
  • Medical reports
  • Doctor’s diagnosis
  • Contact details (your own and your doctor’s)
  • Any other requested documentation
• Submit the form: Finally, send your completed form via fax, mail, or courier (refer to your insurer’s website for submission details)

Note that you typically have 90 days from the date of diagnosis to submit your claim. Once your claim is approved, there may be a waiting period of 30-90 days before the benefit is issued.              

How does group critical illness insurance fit into broader employee wellness programs?

Group critical illness coverage is an important component of a comprehensive employee benefits package. By providing this benefit, employers ensure their workers have access to financial assistance if they’re diagnosed with life-threatening conditions such as cancer, heart attack, or stroke.

When offered alongside group health insurance that covers dental and vision care, prescription drugs, hospitalization, and other healthcare services, group critical illness insurance helps employees maintain comprehensive healthcare coverage. The additional layer of protection allows them to support their dependents, meet financial obligations, and access home-based care when facing a serious health condition.

Integrating group critical illness insurance in an employee benefits plan

A critical illness can be a mentally and emotionally difficult time for an employee and their family. Navigating the process to recovery—from hospital visits, to medication, and recovery—can take a toll on the employee and their loved ones. At such a time, offering a group critical illness insurance cover can make all the difference. 

Our licensed and expert advisors will help you understand how to integrate a group critical illness insurance plan to your employee benefits package. Speak to us today to get started. 

Choosing the right policy for your organization

Employers need to take a lot of things into consideration while choosing the best group critical illness plan for their workforce. Here are a few common factors to look at:

• Accessing the needs of employees through a detailed questionnaire
• Comparing different insurance plans of various companies and understanding their offerings thoroughly
• Deciding upon the coverage amount and coming up with the right premium payment plan
• Understanding if the chosen insurance plan offers flexibility and customization options
• Checking out the compliance and regulatory requirements before making the purchase
• Choosing specific add-ons such as dependent coverage, disability rider and more

Check out the different types of group health insurance plans in Canada through our detailed blog

Getting a quote and setting up the policy

If you’re looking for the most affordable group health insurance quotes but don’t know where to begin, it’s best to seek help from industry experts. Speak to a licensed insurance expert such as our advisors at PolicyAdvisor to understand the features of each plan and get the best quotes.

Once you’ve finalized a policy, go ahead and set it up with the help of insurance agents. This includes the underwriting of the policy, any additional rider inclusion, setting up the requirements for the policy and more. 

Communicating the benefit to employees

Once the plan has been set up, employers can communicate about the insurance policy with their employees. A thorough orientation meeting wherein the employers provide a walkthrough about the insurance policy, its features and benefits to the employees can be beneficial. 

Employers can also answer common doubts and queries and help the employees understand their policies better and figure out how to make the claims. This can streamline the process for both parties in the future.

Additional support services

Apart from providing group critical care insurance, employers can extend their employee benefit package to include a plethora of additional perks, such as:

• Mental health and wellness packages
• Access to dental care subscriptions and applications
• Out-patient consultation claim support
• Second-opinion reimbursement support
• Disability benefits and rider add-ons

Frequently asked questions

How is group critical illness insurance different from individual critical illness cover?

The main difference between group critical illness insurance and individual critical illness cover is that the former offers coverage to all the employees of an organization while the latter is only for the individual who purchases the policy. Other differences include the premium amount which is inexpensive when it comes to group cover.

How does group critical illness insurance provide financial security to employees during critical health crises?

Group critical insurance cover can help replace the lost income for the duration of the illness. It can help families take care of immediate costs such as for rent, mortgage, and even everyday things like groceries. The payout from a group critical illness insurance plan can also help with the treatment and recovery process of the employee.

Are there disadvantages to an employee critical illness insurance plan?

A group critical illness insurance plan can have lower coverage when compared to the amounts available under an individual plan. In group critical illness plans the premiums can increase with age. 

Does group critical illness insurance cover pre-existing conditions?

Yes. Unlike individual policies, group critical illness insurance plans don’t require medical underwriting or evaluation, and therefore are more inclusive of pre-existing conditions. That said, there may be waiting periods for certain conditions, depending on your policy’s terms.

Does group critical illness insurance offer coverage for family members of employees?

Yes. Many group critical illness insurance plans extend coverage to employees’ spouses and children through optional plans. For example, insurers like Canada Life and Manulife offer optional critical illness insurance while Empire Life has “Dependant CI” for family coverage.

Are there any limitations on the number of critical illnesses covered?

Yes, but they depend on the type of plan and insurer. For example, if you’re on a basic plan, you’ll be covered for 3 to 4 serious health conditions, including heart attack and cancer. However, if you’re covered by an enhanced or comprehensive plan, you may be covered for over 26 health conditions, while also receiving partial coverage for some less severe health conditions. Additionally, depending on the insurer, certain diagnoses within a specific condition may qualify for benefits while others may not.

Can I convert my HSA to cash?

No, the funds from an HSA can only be used for eligible medical expenses and cannot be converted to cash. Employees will get a reimbursement from the insurance company for the medical expenses that they claim. The unused HSA balance at the end of a year cannot be paid out to employees as cash under any circumstances. 

Can I transfer HSA to my bank account?

The funds from an HSA cannot be transferred to your bank account. They can only be reimbursed by an insurance company if an employee files an online claim for medical expenses. The Canada Revenue Agency (CRA) has strict guidelines about the use of HSA funds. They cannot be transferred to a bank account even if they remain unused at the end of a year. 

Can I withdraw money from HSA at ATM?

While they are technically called “funds”, the money that an employer invests in an HSA is not a form of cash and it cannot be withdrawn from an ATM. Employees can only use an HSA fund for medical, dental, vision, prescription drugs, and other healthcare expenses. 

Health Spending Accounts vs. traditional insurance plans

There are three key differences between a Health Spending Account (HSA) and traditional insurance plans—costs, coverage, and flexibility. HSAs give employers complete cost control and tax benefits while traditional plans may or may not offer these choices. 

In terms of coverage, HSAs have the broadest scope since they cover every CRA-approved healthcare service. Traditional plans typically have tiered coverage based on the type of plan a policy holder chooses. 

With an HSA, employees have the freedom to spend on the kind of health service that they want to, including preventative care. These are usually not included in traditional plans. 

What happens to unused HSA funds?

Employers may permit the rollover of unused HCSA into the following plan year. The maximum amount that can be carried over is usually $500, though some plans may have lower or no limits at all. If the employer does not permit carryover, any unused funds at the end of the plan year will be forfeited. 

How can I submit an HSA claim?

You can submit an HSA claim either online or offline, depending on your plan provider’s guidelines. Your plan documents will have the details of how you can submit an HSA claim.

Can I use HSA funds for medical expenses abroad?

HSA funds can generally be used for eligible medical expenses incurred abroad, as long as the expenses are medically necessary and meet the criteria outlined by the HSA provider. 

What happens to my HSA if I leave my employment mid-year? 

If you leave your employment mid-year, you may lose access to their Health Spending Account (HSA) benefits, depending on the employer’s policy. Any unused funds in the HSA may be forfeited, so it’s essential to check with the employer or the policy administrator for specific details. Additionally, the deadline for submitting claims may vary and be 30, 60 or 90 days after the end of the HSA plan year.

Can I purchase an HSA even if my employer doesn’t offer one?

Yes, you can open an HSA independently if your employer doesn’t offer one.

Premium 

Group term life insurance policies are generally less expensive for younger employees. The premium rates increase with an individual’s age. The policy document that an insurer provides will typically include details of the bands at which the cost of the premium will increase. 

Employers can choose to offer group life insurance benefits at no cost. If employees wish to buy additional coverage or add their dependents, they may have to pay more. 

Waiver of premium

With group life benefits there may be an option to waiver the premium for employees who become permanently or totally disabled while they are insured. Employees need to be under the care of a doctor and should be disabled for a period of at least six months to get group life benefits without a premium. 

Waiver of group life insurance premium is usually available to employees under the age of 65.

Coverage amount

The coverage amount in a group life insurance policy can be different for people at various levels of the organizational hierarchy. So a senior executive or manager will typically have a higher coverage amount as compared to a junior member of the organization.

Eligibility

All employees are typically enrolled in a group life insurance plan provided they meet certain eligibility criteria that can include: 

• The number of hours they work per week 
• The duration of their employment

A group plan does not require the employees to go through any underwriting—the risk-assessment process that insurers use for individual policies. All eligible employees, regardless of their age, gender, health, etc. are covered. 

Portability

As we previously mentioned, group life benefits are owned by the employer. This means that the coverage an employee gets will end with their employment. If an employee resigns or their employment is terminated by the employer, they will lose their group life insurance coverage. 

There are some insurers who give employees the option to convert their group life benefits into a whole or permanent life insurance policy. However, the premium for these can be high and they will also require underwriting and medical evaluation and evidence. 

Tax implications

The premiums for group life benefits that are paid by the employer are taxable to the employee. An employee will have to pay taxes on the value of the premium because it is seen as additional income. 

However, the premiums that an employee pays are not a taxable benefit. Since the employee is using their own money to pay for the premium, they don’t have to pay any tax on that amount.

Benefit reduction and termination

When an employee reaches the age of 65, their group life benefits will be reduced. So, if an employee had $100,000 coverage, it will be reduced to about 50% to $50,000 once they reach the age of 65. Some insurers also reduce the coverage to a predefined flat rate that varies from one plan to another. 

The reduced coverage typically continues till an employee reaches the age of 70 or retires, whichever comes first.

Common exclusions in group life insurance policies

Most group life insurance providers will not pay death benefits when death is caused by:

• Intentional self-harm, regardless of mental state or capacity to understand the consequences
• Viral or bacterial infections, except for pyogenic infections caused by injury
• Any form of illness or mental or physical infirmity
• Medical or surgical treatment, except for surgical reattachment procedures
• War, insurrection, or voluntary participation in riots
• Service in the armed forces of any country
• Aviation incidents: Death during air travel when:
  • Serving as a crew member
  • Flying in employer-owned or leased aircraft
  • Flying in aircraft with flight restrictions
  • Flying with an uncertified pilot

What can group life insurance be used for? 

The tax-free payout from group life benefits can be used by the beneficiaries to:

• Cover everyday expenses (groceries, bills, rent, etc.)
• Pay off existing debt (mortgage, loans, credit card bills, etc.)
• Fund their children’s education
• Pay for funeral arrangements
• Make a donation to a charity in the deceased’s name 

Pros and cons of group life insurance

While group life insurance policies are an important part of an employee benefits package, they do come with their own set of pros and cons.

Group life insurance pros for employers

• Affordable coverage for employees and their families: Offering group life insurance is a cost-effective way for employers to provide financial protection for their employees and their families
• Recruitment and retention tool: Group life insurance can be a valuable benefit that attracts and retains top talent, demonstrating a commitment to employee well-being
• Tax advantages: Employers receive tax benefits for offering group life insurance and can write these off as business expenses

Group life insurance cons for employers

• Limited customization: Group life insurance plans may not meet all employees’ needs, potentially leading to dissatisfaction among some staff
• Cost management: While generally affordable, the cost of providing group life insurance can increase with the size of the workforce or as the demographics of the employee population change

Group life insurance pros for employees

• Affordable coverage: Employees typically receive life insurance coverage at little or no cost, offering financial protection without a significant financial burden
• Peace of mind: Having life insurance through work provides employees with a sense of security, knowing their families will have financial support in case of an unexpected event
• Convenience: Enrollment in a group plan is often automatic or requires minimal effort, making it an easy way for employees to obtain life insurance coverage

Group life insurance cons for employees

• Limited coverage: Group life insurance may not provide enough coverage for individual needs, requiring employees to seek additional policies
• Coverage linked to employment: If an employee leaves the company, their coverage may be reduced or terminated, leaving them without life insurance at a critical time
• Lack of customization: Employees may find that the one-size-fits-all approach of group life insurance doesn’t align with their personal financial goals or family needs

Adding supplemental life insurance to your group policy

Adding supplemental life insurance to your group policy can provide the additional coverage needed to ensure comprehensive financial security. Basic group life insurance might not always meet all your personal or family protection needs.

By opting for supplemental coverage, you can tailor your policy to better align with your specific circumstances, offering enhanced peace of mind for you and your loved ones.

Supplemental life insurance is particularly beneficial for employees who need higher coverage limits due to significant financial responsibilities or dependents relying on their income.

It’s also ideal for those who wish to extend coverage to family members, such as a spouse or children, providing the flexibility to meet specific needs and ensuring that your loved ones are well-protected in unforeseen circumstances.

Group life insurance and switching jobs

Understanding how your group life insurance policy behaves when you switch jobs is crucial for maintaining continuous coverage. Here’s what you need to know:

• Portability of coverage: One of the advantages of group life insurance is that it may be portable, allowing you to continue your coverage even if you change jobs. This means you won’t have to undergo a new underwriting process or face potential gaps in coverage
• Premium payments after leaving: If you decide to continue your supplemental life insurance after leaving your employer, you may be responsible for paying the full premium. This transition ensures that you can maintain your coverage without interruption, though you’ll need to handle the payments directly
• Coverage termination: Typically, your group life insurance coverage will end when your employment with the company is terminated or if the policy is canceled. It’s important to review your policy’s specifics and plan for alternative coverage options if you’re considering a job change

Frequently asked questions

Are dependents covered under group life insurance policies?

Employees have the option to add their dependents to a group life plan. This typically requires employees to pay an additional premium out of their own pocket.

Is group life insurance enough?

While group life plans are an excellent employee benefit their premiums are inexpensive and the death benefit is also lower. Generally, the death benefit is paid as a fixed amount that can be between $20,000-$50,000 or it can be based on an employee’s salary (1x or 2x their annual compensation). This amount might not always be enough for the beneficiaries. 

Is group life insurance taxable in Canada?

Group life insurance premiums that are paid by an employer are a taxable benefit for the employee. Additional premiums for dependents that are paid by the employees are not a taxable benefit for them. 

Who is the beneficiary of group life insurance?

Employees can add their family members as beneficiaries to a group life policy. The tax-free lump sum benefit will go to these predefined beneficiaries as per the policy document. 

Does group life insurance pay for suicidal death?

Different insurers can have different clauses when it comes to suicidal death. Some insurers may cover these from the day the policy comes into effect. Others might have a waiting period of a few months or a year before suicidal death is covered. 

Note: If you, or someone you know, need help, please reach out to the Canadian Association of Suicide Prevention on 9-8-8.

Group Registered Retirement Savings Plans (RRSP)

Group Registered Retirement Savings Plans (GRRSPs) are offered in addition to the mandatory pension plan that most employees are entitled to. RRSPs help employees build additional wealth for when they retire and also give immediate tax benefits to the contributor. 

RRSPs are regulated by the Canada Revenue Agency and the contributions yield returns since they can invested in one of the following options:

• Mutual funds
• Exchange-traded funds
• Equities (Stocks)
• Bonds
• Savings accounts
• Mortgage loans
• Income trusts

Healthcare Spending Accounts (HSAs)

HSAs are a special kind of medical account that offers a mutually beneficial way for both employers and employees to provide and receive medical insurance benefits. 

Employers create an HSA account for their employees with a maximum spend limit. Employees can utilize the money from this account to pay for any medical requirements. HSAs allow both parties to receive tax benefits. Additionally, it also provides individuals a streamlined access to medical facilities without the burden of extra paperwork.

Some of the key features of HSA are as follows:

• Funds roll over year-to-year, and there is no “use it or lose it” rule
• Accounts are portable – you can keep the HSA if you change jobs or health plans
• Can invest HSA funds for potential growth, similar to an IRA

Disability Insurance (DI)

There are two types of disability insurance that an employer can choose to offer: short-term disability insurance and long-term disability insurance. Short-term disability insurance typically covers a shorter duration, from a few weeks up to six months. Long-term disability insurance is for employees who are unable to work for longer periods and usually begins after the expiration of short-term disability benefits or after a waiting period. 

Disability insurance covers any medical condition that prevents the employee from working such as mental health issues, fractures, back injuries, carpal tunnel, seizures, and hearing or vision loss. Short term disability benefits can be paid out as weekly benefits while long term disability benefits are typically paid out on a monthly basis to an eligible employee. 

Critical illness coverage 

An employee benefits package can also include critical illness coverage that is offered to workers who suffer a heart attack, cancer, stroke, kidney failure, Parkinson’s disease, aplastic anemia, and 26+ common conditions as listed by the Canadian Life and Health Insurance Association (CLHIA).

It is easy to confuse critical illness with a disability. For instance, blindness and paralysis are critical illnesses and disabilities. 

Learn more about the differences between critical illness and disability insurance 

Life Insurance

Life insurance provides financial support to family members in the event of the individual’s passing away. Life insurance as an employee benefit is important to help manage the financial impact from an earning member’s demise. It can be used to: 

• Pay for funeral expenses
• Pay off debts 
• Replace lost income 
• Make charitable donations 

Employers can pay the entire premium or split the cost with the employees for life insurance benefits. 

Additional paid days off

In Canada, some companies provide additional paid days off beyond statutory holidays and vacation entitlements. These extra days provide employees with more time for personal pursuits, family commitments, or rest. 

Employers offering this benefit often see increased productivity, reduced burnout, and higher job satisfaction. 

Wellness programs

Wellness programs, including health coaching and virtual care, promote overall employee well-being. 

Health coaching offers personalized guidance on nutrition, fitness, and mental health, helping employees achieve their health goals. Virtual care provides convenient access to healthcare professionals via digital platforms, reducing the need for in-person visits. 

These programs enhance employee health, leading to reduced absenteeism, increased productivity, and lower healthcare costs for employers. 

Transportation allowance

Transportation allowances are a valuable employee benefit that can significantly ease commuting stress and expenses. These allowances, provided as a monthly stipend or reimbursement, help cover costs related to public transit, fuel, parking, or even car maintenance. 

Cash bonuses

Cash bonuses are awarded for meeting specific targets or exceptional performance. They provide immediate financial rewards and recognition, fostering a culture of excellence and achievement and driving employees to exceed their goals.

Other supplemental group benefits

Supplemental benefits are a range of comprehensive add-ons that employers may choose to offer their employees. Some companies provide bonuses and stock options as an added perk to their employees. 

Others may provide travel benefits, including all-expense-paid trips for the employee and their families. Supplemental benefits promote loyalty and a sense of belonging among employees. Other examples of supplemental group benefits include:

• Retirement savings programs
• Employee training, education, and development programs
• Flexible work schedules and remote work
• Compassionate care leave
• Aboriginal employee leave
• Childcare benefits

What does an employee benefits plan look like?

In Canada, employee benefits are provided by most companies and small businesses. Here is a detailed sample of what an employee benefits plan looks like in Canada:

Find out more about how group health insurance plans can be used by small businesses

Understanding Employee Assistance Programs (EAPs)

Employee Assistance Programs (EAPs) are critical benefits that offer confidential support for employees dealing with personal or work-related challenges. These programs help employees manage stress, anxiety, and other issues that might affect their performance and well-being. 

Some of the most prominent EAPs offered by Canadian companies are:

• Counseling services: Access to professional counselors for issues like stress, anxiety, depression, and relationship problems
• Legal assistance: Guidance and advice on legal matters, including family law, wills, and housing issues
• Financial planning: Support with budgeting, debt management, and financial planning
• Work-life balance support: Resources to help manage personal and professional responsibilities
• Substance abuse programs: Help for employees dealing with addiction or substance abuse issues

By offering EAPs, employers demonstrate a commitment to their workforce’s holistic health, fostering a supportive and productive work environment.

Provincial variances in employee benefits

Canada’s labour and employment laws fall under provincial jurisdiction. This means that based on the province an employee is working in, the benefits that an employer offers can vary. 

Some of the employee benefits that are different in each province are: 

• Employee pension plans (Quebec Pension Plan and Canada Pension Plan—more on this later)
• Vacation benefits 
• Parental insurance (offered in Quebec) 
• Statutory holidays 
• Sick leave 

Quebec Pension Plan (QPP) vs. Canada Pension Plan (CPP)

As previously mentioned, pension plans are a mandatory employee benefit in Canada and the cost is split equally between an employer and employee. However, there is a difference between the pension plans in Quebec and the rest of Canada. Let’s take a look at some of the key differences and similarities between the two:

The maximum annual contribution for both the CPP and QPP is $3,867. 

Structuring an employee benefits package

Employee benefits packages can include one or all of the optional benefits we’ve mentioned above. And while the choices are many and can seem overwhelming, employers should ask themselves the following questions to build a benefits package that will suit their organization and employees: 

• What benefits match the roles we are hiring for?
• What benefits will work most for our existing employees?
• Can I add a benefit that beats my competitor’s package?
• How can I make the benefits package more cost-effective?

What is the average cost of employee benefits in Canada?

The cost of employee benefits varies based on the special features and benefits that are added to each plan and the customizations provided to employees by the employer. 

Generally, the cost of group health insurance varies. Here is what it can typically look like:

• A very basic plan can cost between $130 and $250 per employee per month
• $180–$225 is usually charged per employee per month for a more expensive plan
• The monthly cost per employee for an advanced plan with comprehensive coverage is $250–$300

These costs are only estimates. The actual costs will vary depending on the specific plan details and the coverage that an employer decides on. 

Usually, offering employee benefits to a large pool of employees may be budget-friendly for companies. However, you can still offer the best benefits at a reasonable price to a small working team.

Legal requirements and compliance

Canada has very high standards when it comes to employees’ well-being and safety at their workplace. While mandatory employee benefits packages will include employment insurance, workers compensation insurance, and pension plans, providing health, disability, life, and critical illness insurance is also highly recommended. 

For instance, in Canada, disability-based discrimination is prohibited and is a human rights violation under the Canadian Charter of Rights and Freedoms. In fact, even drug addiction and alcoholism is legally recognized as a disability in Canada. 

Employers have to accommodate their employees’ disability to a reasonable extent. Including disability insurance in an employee benefits package ensures that an employer is able to aid an employee with disability and adhere to legal requirements in the country. 

Address diverse employee needs with a comprehensive benefits package

Any company will have a mixed workforce in terms of age, gender, race, and socio-economic status. This means that a one-size-fits-all employee benefits package does not exist. A benefits package needs to address the diverse needs of all employees. After all, a 40-year-old married woman with a child and a sick parent she looks after will have completely different requirements from a 23-year-old man with student debt who is looking to build his credit score. 

Speak to our licensed, expert advisors to build a benefits package that will suit your organization’s unique requirements.

Frequently asked questions

Who pays for employee benefits?

Employers primarily pay for employee benefits. Mandatory benefits like CPP/QPP are shared between employer and employee, while optional benefits may be fully covered by the employer, shared between employer and employee, or fully paid by the employee depending on the benefit and the employer policies.

How do employee benefits impact job satisfaction?

Employee benefits go beyond provincial offerings and give employees and their families access to healthcare, better retirement savings, and even life insurance. A good benefits package can make all the difference for an employee since it reduces out-of-pocket costs.

Are employee benefits taxable in Canada?

Whether or not a group benefit is taxable in Canada depends on its type and funding source. Generally speaking, employer-paid premiums for group life insurance, critical illness insurance, and accident insurance are taxable benefits. Short-term and long-term disability insurance may not be a taxable benefit if you pay the premium.

What employee benefits are required by law?

Mandatory employee benefits include the Canada and Quebec Pension Plan contributions, employment insurance, workers’ compensation insurance, vacation benefits, and sick leave. 

Which are the best companies for small business health insurance in Canada?

There are several group insurance providers out there with a wide range of plans to fit your business’s needs. At PolicyAdvisor, we work with 30 of Canada’s top insurance companies to get you the best rates on the benefits plans you need for your business.

While some companies offer different benefits and different prices, ultimately the best insurance company is the one that works best for your business needs. Like all insurance products, pricing and coverage will be specific to your unique business needs.

Pooled insurance plans for small businesses in Canada

Pooled insurance plans are a collaborative strategy that allow multiple small businesses to come together and provide coverage to their employees. Offering pooled group benefits in Canada helps reduce costs and administrative efforts for small businesses in Canada. 

Advantages of pooled group benefits for small businesses

1. Lower premiums: Combining multiple small businesses, the premiums for group benefits are reduced when compared to individual health plans
2. Access to comprehensive coverage: Individual small businesses may not always be able to offer comprehensive coverage such as dental, vision, disability, etc. Joining a larger pool increases the range of group benefits that a small business can offer to its employees
3. Reduced administrative efforts: Pooled group benefits plans are managed by the insurer. This reduces the administrative burden of a group plan on the small business, allowing it to focus on their core operations
4. Customization options: Many pooled insurance plans offer some kind of customizations. This allows businesses to offer tailored coverage to their employees

How to choose the best company benefit package for your small business?

When choosing a company benefit package for your business in Canada, ask yourself the following questions:

• What kind of plan is the most suitable for my business?

Depending on your budget, decide if you want to pay for all the coverage or split the cost with your employees. You should also think about whether you want to offer group health benefits to your part-time employees or only to full-time staff.

• What kind of coverage do my employees need?

Analyze your employees’ needs and find a plan that truly works for them. For instance, if you operate in a high-risk industry such as construction, you might want to consider a plan with comprehensive disability or accident coverage.

• How much do I want to spend on group health benefits?

Assess your employees’ needs and finalize a budget that works for your organization. Compare plans and choose the one that best suits you.

Common mistakes in selecting group health insurance plans

When buying group health insurance as a small business in Canada, avoid these four mistakes:

• Not reviewing your options (at renewal/ purchase): Don’t renew or buy a group health insurance plan without comparing enough providers. Consult a licensed insurance advisor to identify what works well for your company and your workforce. You may also want to explore customized options that align better with your business’s evolving needs
• Not understanding policy terms and conditions: Review your plan’s coverage limits, exclusions, waiting periods, and claims processes to avoid any dissatisfaction among employees or unforeseen expenses
• Ignoring employee needs: Consider factors like employee age, family status, and health profiles. Survey employees about their healthcare priorities and review past claims data to ensure the selected plan addresses actual needs rather than assumed ones
• Overlooking cost-sharing structures: Consider how premium costs will be shared between the employer and employees, and how this may affect both your budget and employee satisfaction

How is a small business benefits package set up?

A small business benefits package is set up in the following way:

• Sign up documents and group set up: Your sign up documents are shared by your advisor and need to be completed and signed. Once done, your group coverage is set up which can take up to two weeks 
• Employee enrolment: Employees will get an activation email with instructions on how to enroll 
• Billing: Once your employees are enrolled, you will receive the first billing statement 
• Plan activation: Your plan is activated and your employees can start using their benefits 
• Administrator access: Once your plan is all set up, you will receive the credentials to the administrator portal and the insurer will walk your designated administrator through the portal

What are the participation requirements for group health insurance plans for small businesses?

The participation requirements for a group benefits for a small business in Canada are: 

• Group size: Most insurers need a minimum 2-3 member participation requirement, some may have a 50 people requirement
• Eligibility: Canadian citizens under age 75 covered by their provincial healthcare plan and working full-time 
• Participation basis: Mandatory to join the plan 
• Family content: Must be a true-employer-employee relationship receiving wages and/or a T4 from the plan sponsor 
• Plan level changes: 1 level renewal with 24 months lock-in period 
• Termination age: Retirement or age 75

What will insurers ask on a company benefits package application?

Insurers will ask you about your company profile and employee demographics. Some of the questions that they might ask are:

• How many employees do you have?
• What industry is this business? 
• Has your company had group insurance before? If so, provide a claims history. 
• Is your company associated with a group or union? 
• Do you want your benefits to differ by class (i.e. managers get one plan, regular employees get another)
• Are there any employees currently absent or on maternity leave? 
• Are all your employees participating in this plan? 
• Are your employees covered by worker’s compensation?
• Are any of your employees regularly working outside of Canada?
• About your employees. Tell us about their…
  • Job title
  • Date of employment
  • Salary
  • Hours 
  • Province of residence
  • Date of birth 
  • Sex 
  • Family status (married, single, common-law)
  • Dependents

Are group benefits tax deductible in Canada?

Yes, group benefits provided by an employer are generally tax-deductible in Canada. Employers can deduct the cost of providing group benefits, such as health and dental insurance, from their business income when calculating their taxable income.

It’s important for employers to consult with a tax professional or review the CRA guidelines to ensure they are complying with the specific rules and requirements for deducting group benefits.

Group health insurance regulations in Canada

Health insurance in Canada is strictly regulated and under the constant supervision of certain federal and provincial enforcement bodies. Canadian federal regulations, such as the Canada Health Act and Income Tax Act, govern most health insurance policies. 

If you’re a small business owner buying group health insurance for your workforce, you must abide by regulatory guidelines for the greater good of your company and its assets. Using various educational resources and remaining up to date with the latest laws will help you keep up with regulatory changes.

Get quotes for small business benefits package

If you’re looking for an affordable group benefits package for your small business, or business of any size for that matter, our licensed insurance experts at PolicyAdvisor are here to help. We’ll ask some questions about your business (like the ones listed above) and shop around to find you the best rate for health benefit plans for your employees.

Book a call with one of our friendly expert insurance advisors to chat about protecting your personal and financial health today!

Frequently asked questions

Is group insurance for small business mandatory in Canada?

No. Employee benefits, such as health insurance, are not mandatory. However, providing insurance for your employees may provide that competitive edge your business needs to maintain employee retention.

The premium costs may seem like another additional expense to take on, but ultimately having a healthy and consistent employee base will save you money in high turnover costs. Plus, insurance premiums can be claimed as tax-deductible business expenses.

Are there tax benefits associated with group insurance for small businesses?

Yes. The premiums paid for group benefits are tax-deductible for businesses. This means that the cost of offering group benefits can be offset against the business’s taxable income.

What is an HSA?

A Health Spending Account (HSA) is a personal fund designated for employees and their eligible dependents. It covers health and dental expenses not included in provincial health insurance or employer-sponsored group benefit plans for a fixed amount.

The benefits provided through an HSA are fully tax-deductible, offering businesses an opportunity to save money while ensuring the well-being of their employees.

How can small businesses in Canada manage company health insurance plans?

Small businesses can manage group health insurance by working with licensed insurance advisors such as those at PolicyAdvisor. They can utilize online tools for employee enrollment and claims processing that insurers such as Sun Life, Benefits by Design, Equitable Life, etc. offer. 

How can small businesses qualify for lower insurance premiums in Canada?

Small businesses can qualify for lower insurance premiums by evaluating their providers for competitive rates, opting for a higher deductible (which reduces premium costs), and regularly reviewing their plan (typically annually) to avoid any redundancies, such as covering employees no longer on their payroll.

Small businesses can also manage their premiums better by offering subsidized gym memberships or preventive care programs, that can lower long-term costs.

What are the consequences of not providing group health insurance for employees in small businesses in Canada?

There are significant consequences for small businesses that don’t provide group health insurance to employees:

• Difficulty in attracting and retaining talent: Nearly half (49%) of small business employees would choose health benefits over a pay raise, while 76% of employees without health benefits would leave their current job for one offering better coverage. These numbers highlight that any business, irrespective of its size, will find it difficult to attract or retain talent without employee benefits
• Lower employee productivity: A lack of health benefits can lead to decreased morale and engagement, as employees may feel undervalued and unsupported
• Increased business risks:  Over 160,000 small businesses in Canada (1 in 8) have seen employee resignations due to better health benefits elsewhere. This turnover not only disrupts operations but also incurs significant costs (in recruiting and training new employees), and increases business risks

How often should small businesses review and adjust their group health insurance plans?

Small businesses in Canada should review and adjust their group health insurance plans annually to evaluate changing employee needs, compare market offerings, adapt to workforce demographics, and optimize costs while maintaining valuable benefits.

Professional association benefits

Professional associations are organizations that offer networking opportunities to a group of people from a certain industry or profession. These associations include financial institutions, retiree organizations, college and university alumni groups, and clubs. 

Professional associations offer standardized group benefits to their members and their families. Similar to employee benefits, every member can choose to get coverage for health & dental, vision, prescription medication, and paramedical services. The premiums can either be paid directly by the members or deducted from their membership fees. 

Depending on the preference of the association, they might also offer life insurance, disability insurance, and accidental death and dismemberment (AD&D) insurance. For example, an armed forces or army veterans association might choose to offer life, disability, and AD&D insurance to its members while an advocacy group for a trade  association might not. 

Since a group of people are being insured under professional association benefits, the premiums are going to be lower and the plans will be customizable. It is beneficial to work with licensed experts when figuring out the best group benefits for a professional association. 

Key features of professional association benefits

Professional association benefits are a great way to increase and retain members of an organization. Some of the key features of these benefits include:

✅ Highly customizable plans, tailored based on the association’s member composition

✅ Lower premiums since the insurer’s risk is spread

✅ Group benefits extended to family members and loved ones 

❌ There is no portability with coverage which ends when a membership expires or is stopped

Provincial health care plans vs employee benefits plans 

The Canadian government provides healthcare to all its citizens. So the question that arises is: why are group benefits plans even necessary? It’s because provincial health care plans typically cover essential medical needs such as emergency healthcare and other basic medical care that includes surgeries and doctor visits. Employee insurance plans, on the other hand, provide wider, more extensive supplementary medical coverage. 

Estimating costs of traditional group health insurance

Traditional group health plans may come in several different formats with limitless customization options. Hence, it’s safe to say that the cost of this insurance plan will also vary. Although prices may fluctuate across companies depending on employee demographics, here is an estimate:

• Small businesses (up to 50 employees): The cost per employee can range from $1,500 to $4,000 per year
• Medium-sized businesses (50-250 employees): The cost per employee can range from $1,200 to $3,500 per year
• Large businesses (250+ employees): The cost per employee can range from $1,000 to $3,000 per year

Cost-sharing options for employee health benefits

Group health insurance may also be categorized based on how the insurance premium is being paid and who pays for it. Taking a look at the plethora of cost-sharing options, employee health benefits may be as follows:

• Employer pays: In this category, the employer bears the entire cost of the premium on behalf of the employee. The employee usually provides this facility as an added perk to their dedicated workforce
• Employee pays: In this arrangement, the employee bears the entire cost of the premium. However, the employer may provide assistance with the insurance paperwork for a streamlined procedure
• Employer and employee split: This procedure allows the employer as well as the employee to split the cost of the premium. In this way, both parties may receive tax benefits and other mutual perks
• Coverage-based split: In this method, there can be different cost-sharing arrangements for different types of coverage. The cost-sharing procedure can be customized based on the agreement between the employer and the employee

Explore more about employee benefits through our detailed guide

Importance of group benefits plans

Group health benefits or employee insurance plans are crucial to attract and retain talent. For professional associations, they work as an added benefit for the members. The different types of group benefits are important because:

• They attract and retain employees/members of an organization 
• They promote employee/member wellbeing and reduce financial burdens when it comes to healthcare 
• Government-sponsored benefits are crucial for vulnerable groups such as the elderly and those with lower incomes 

Which are the best group health insurance companies in Canada?

There are several insurance companies in Canada that can help build a group benefits plan for your organization. At PolicyAdvisor, we work with 30 of Canada’s top life insurance companies to get you the best rates on the benefits plans you need for your business. While all insurers offer different kinds of coverage, the best health insurance company is the one that understands your unique requirements and builds a customized plan with you.

Frequently asked questions

Is group health insurance taxable for employees?

Apart from Quebec, employer-sponsored benefits like prescription drugs, vision and dental are not taxable. 

What is the most common type of group health insurance?

Employer-sponsored group plans are the most common type of group health insurance. They are offered directly from the employer to their employees.

Which are the top three health insurance companies in Canada?

Some of the best health insurance companies in Canada are Desjardins, GMS, and Blue Cross. Our guide to group health benefits will give you more information on what each company offers.

What are health and welfare trusts (HWTs)?

Health and Welfare Trusts (HWTs) were a way for employers to offer group benefits to employees with some tax advantages, but they are now discontinued in Canada. HWTs that were in use previously were converted to a different health insurance scheme.

Which are the best group health insurance companies in Canada?

There are several health insurance companies in Canada from which to choose. Some prominent companies working with group health insurance include Manulife, Sun Life, Desjardins, Canada Life, etc. You may connect with expert insurance brokers (such as licensed experts at PolicyAdvisor) to help you understand the process.

6. Medavie Blue Cross

Overview: Medavie Blue Cross is one of the top group benefits providers in Canada. As a not-for-profit organization, Medavie Blue Cross reinvests its profits to support community health initiatives and improve the lives of Canadians. They’re a reliable choice if you want to customize the group health benefits in your organization. 

PolicyAdvisor Rating: 5/5

What they offer:

• Drug solutions
• Health Connected offers a Health Risk Assessment and a comprehensive Wellness Portal
• Connected Care platform offers innovative digital health resources
• Health and wellness programs
• Employee & Family Assistance offering health coaching and chronic disease management
• Second medical opinion
• Online doctors’ assistance
• Gender affirmation benefit
• Protection Plus Benefits (digital insurance platform)
• Disability, life and AD&D

What we like:

• Extensive nationwide coverage with a huge health provider network and broad accessibility
• High rate guarantee and renewal caps
• Blue Cross offers Medavie Mobile, one of the highest-rated apps in the industry with a 4.6-star rating on Google and over 8,000 reviews where plan members can easily submit claims, search for healthcare providers, and set reminders for medication refills
• Blue Cross also has the Protection Plus Benefits digital platform which includes portable critical illness, life, and AD&D coverage for all group members and their dependents. It offers group pricing and unique advantages with no additional cost or administration for the employer
• It offers one of the most comprehensive plans in the industry, specifically for travel insurance coverage up to 180 days (under age 75), $2 million per incidence ($5 million for Benefits for Small Businesses), $5,000 for trip cancellation, and $500 for baggage loss
• Second-opinion services that provide members and eligible dependents access to specialists at world-class medical institutions for a second opinion when diagnosed with a serious illness
• 360 Total Care is a personalized coaching program for managing diabetes, high blood pressure, high cholesterol, and obesity. Supported by digital health devices linked to the 360Care app for remote health monitoring
• Blue Advantage that allows members to save up to 20% on health and wellness services/products, including dental, medical supplies, vision care, and fitness
• Virtual medical care and Employee Assistance Program are included at no additional cost for Benefits for Small Business plans

7. Equitable Life of Canada

Overview: Equitable Life of Canada is a trusted name in the insurance industry, known for its comprehensive coverage and commitment to customer service. Equitable Life of Canada has solutions across requirements for health, dental, or travel insurance. So, you can choose a policy based on what your employees need most.

PolicyAdvisor Rating: 4.5/5

What they offer:

• Life, accident and critical illness
• Health and dental
• Healthcare spending accounts (HCSA)
• Taxable spending account (TSA)
• Disability management solutions
• Health, wellness and online services
• myFlex flexible benefits
• EZBenefits for small business
• Personal health and dental coverage
• Fraud detection and prevention
• Drug plan management
• Disability management

What we like:

• Equitable offers a well-differentiated range of plan design options (Bronze, Silver, Gold, and Platinum)
• The Online Plan Member Enrolment (OPME) tool streamlines the onboarding process for new benefits plans, benefiting both administrators and members. Available at no extra cost for Equitable group benefits plans, it sends personal emails with reminders and instructions to members, easing the workload for administrators
• Equitable EZClaim® that enables plan members to submit claims through a secure web portal or mobile app, leading to quicker claim payments
• Long-term pricing stability for health and dental benefits
• Minimum participation requirement is only 2 employees, hence, ideal for small businesses

8. Empire Life

Empire Life is a reputed life insurance and group benefits provider, committed to supporting the financial security and well-being of Canadian employees and their families. Empire Life has flexible and comprehensive plans that cater to the diverse needs of businesses.

PolicyAdvisor Rating: 4.5/5

What they offer:

• Health and dental coverage
• Accidental death and dismemberment coverage (AD&D)
• Life insurance
• Critical illness insurance
• Mental health support 
• Healthcare spending accounts
• Paramedical coverage
• Travel insurance

What we like:

• Offers long rate guarantees and renewal caps for long term price stability
• User-friendly mental health portal called Mental Health Navigator for easy access to solutions
• Telemedicine by Teledoc Health that provides 24/7 remote access to primary medical care and professionals
• Quick e-claims and provider-submitted claims which means that the money is back in an employee’s account within 24 hours
• Employee Assistance Program (AssistNow) that assists plan members
• OnCallogic that provides specialized cancer support

9. Benefits by Design (BBD)

BBD Canada, also known as Benefits by Design, is one of the best third-party group health insurance administrators, dedicated to enhancing the well-being of Canadian employees and their families. BBD Canada focuses on creating flexible, innovative, and comprehensive benefits plans tailored to the unique needs of businesses.

PolicyAdvisor Rating: 4.5/5

What they offer:

• Health and dental coverage
• Catastrophic drug coverage
• Life insurance
• Critical illness insurance
• Mental health diagnostics
• Employee Assistance Program
• Healthcare spending accounts
• Paramedical coverage
• Travel insurance
• Orthotics
• Personal or wellness spending accounts (PSA/WSA)

What we like:

• Plan Administration Portal that allows employers to make updates to employee records, add dependents, change salaries, legal names, etc.
• Telehealth services that allow plan members to access medical professionals remotely
• Diagnostic Specialist Access Insurance (DSAI) that allows quicker access to services like MRIs, CT scans, etc.

Frequently asked questions

Are group health insurance premiums tax-deductible for employers in Canada?

Yes, group insurance premiums are generally tax-deductible for employers in Canada. Premiums paid for employee health and dental benefits can typically be claimed as a business expense, reducing the employer’s taxable income. However, tax treatment may vary for other types of coverage, such as life or disability insurance. 

To ensure compliance and maximize deductions, employers must consult a tax professional or review Canada Revenue Agency (CRA) guidelines. This makes group insurance a financially beneficial offering for small businesses.

Why should employers in Canada offer group benefits?

An employee benefits package helps cover costs for medical services not covered by provincial health care plans. It can also be combined with a retirement and savings plan to help employees achieve their financial and retirement goals. While group benefits seem to favor employees, they mutually benefit both parties.

Benefits for Employees:

• Attract and retain talented employees
• Obtain comprehensive coverage at affordable rates
• Access a wider range of benefits
• Lower costs compared to most private plans
• Protect the health and well-being of employees and their families
• Reduce financial stress during unexpected events

Benefits for Employers:

• Gain tax advantages
• Reduce administrative burdens
• Increase employee satisfaction and productivity
• Improve morale and enhance productivity
• Write off group benefit premiums as a business expense
• Maintain a competitive edge in the job market
• Attract and retain key employees

What factors should I consider when selecting the best group benefits provider in Canada?

When you’re picking a group insurance provider in Canada, here are a few key things to consider:

1. Coverage that meets your employees’ needs: Think about what your team needs. Do they require extensive coverage or just the essentials? Make sure the provider offers plans that match your crew’s health needs.
2. Price tag vs. quality: Balance affordability with quality service. You want a provider that won’t break the bank but still delivers top-notch care when your team needs it most.
3. Network of providers: Check if the insurance provider has a wide network of doctors, specialists, and hospitals. Having plenty of options means your team can access care conveniently.
4. Reliable customer service: Consider how the provider treats its customers. You’ll want one that’s easy to reach, helpful, and quick to resolve any issues your team might face.
5. Flexibility for future needs: Think about the future. Does the provider offer flexibility to adapt as your team grows or if your needs change? You’ll want a partner who can keep up with your evolving demands.

Several employees in my organization take regular vitamins and supplements. Will any of these companies cover these?

Supplements are not eligible for benefits under most group health plans. However, some group policies may cover prescription supplements. 

What factors should I consider when selecting a group insurance provider in Canada?

Think about what matters most to your team. Do you need comprehensive coverage or just the basics? Are you looking for affordability or top-notch service? Keep these factors in mind when comparing providers to find the perfect match.

Can you recommend reputable group insurance companies in Canada with a specific focus on health?

Absolutely! Sun Life Financial Corporation, Canada Life Assurance Company, Manulife Financial Corporation, Desjardins Insurance, and Green Shield Canada are all great options known for their quality service and comprehensive coverage options.

As an employer in Canada, am I required to offer group benefits to my employees?

No, employers in Canada are not legally required to offer group benefits to their employees. However, providing group benefits can be a valuable tool for attracting and retaining talent, as well as enhancing overall employee satisfaction and well-being.

How many employees does a company need to qualify for group benefits insurance?

Typically, a company needs at least 3 employees to qualify for group benefits insurance. The exact number can vary depending on the insurance provider and the specific plan requirements.

Can I offer benefits to part-time employees?

Yes, many employers choose to offer benefits to part-time employees. While not all plans may cover part-time workers, some insurance providers offer flexible options that allow coverage for part-time staff, helping to attract and retain a diverse workforce.

Who pays for a group health plan?

Different organizations have different rules when it comes to paying group health insurance premiums. Generally, there are three ways in which the premiums for group health insurance are paid. These are: 

• Employer-sponsored plans: The employer pays the entire cost of the group health benefits plan and the employee is not expected to contribute
• Cost sharing with employees: An employer and their employees split the premium costs at a predefined rate. Commonly used splits are 50 percent each or 70 percent by the employer and 30 percent by the employee. These arrangements can differ depending on the specific plan and the agreements between the employer and their employees
• Employee add-on costs: If employees want to add dependents or get an advanced plan with additional benefits, they have the option to pay the extra premium

How does one choose between these cost-sharing options?

The choice truly lies with the employer! Depending on organizational budgets, goals, and employee requirements, employers can choose to pay for or split the cost of group health insurance premiums. 

Let’s understand this with an example: A startup may opt for a cost-sharing arrangement, with the employer covering 70% of the premiums to make it more affordable, while still providing valuable benefits to employees. Alternatively, a larger corporation may choose to pay for a comprehensive group health insurance plan without any contribution from the employees.

Types of group health insurance plans

The cost of a group health plan varies depending on the type of package an employer purchases with options such as basic, advanced, premium offering different levels of coverage. Each package offers different coverage and depending on who is covered, the premiums can vary. For small businesses, a benefits plan can cost about 5-15 percent of the total payroll on an annual basis. 

In the following table, we’ve included representative average premium costs for a group health insurance plan based on who is covered, the plan type, and coverage options: 

Key considerations for choosing group insurance plans

Employers should look at supporting their employees’ health and wellness by offering a comprehensive group health benefits plan that includes:

• Benefits covering pharmacy, healthcare, and dental care needs 
• Short and long-term disability coverage  
• Critical illness benefits  
• Employee and family assistance programs to aid stress management
• Resources on identifying and managing prevalent mental health concerns 

Alongside diverse benefits, employers must also compare:

• Premiums: The monthly/annual payment for employees’ initial expenses for health insurance coverage
• Deductibles: Annual amounts employees must pay before insurance coverage starts, in addition to premiums unless the employer wishes to pay
• Copayments: Fixed charges employees incur for doctor visits and prescriptions
• Coinsurance: Amounts employees are obligated to pay after meeting deductibles and other conditions

How can I enroll in group health benefits?

Once hired, you need to enroll in the group health insurance plan within a deadline. If this deadline is missed, you might have to wait until the annual enrollment window is open. Typically, a new employee who joins after the enrollment period is over has to wait for a period of 30-90 days before they can get group health benefits. This period is designed to ensure a degree of commitment from the employee to the employer before benefit enrollment.

Some group health insurance plans offer supplemental benefits like dental and vision care. During the enrollment process, you can choose any additional benefits you might want and add your family members and/or dependents.

How can an employer apply for group insurance? 

Applying for group health insurance in Canada is a straightforward process, typically initiated by the employer on behalf of their employees. Here’s a step-by-step guide:

• Research carriers: Start by researching insurance carriers in Canada that offer group health insurance plans. Some well-known carriers that offer group plans include Sun Life, Manulife, Canada Life, Equitable Life, Bluecross, GMS, Wawanesa, and several others. Each carrier may offer different plans and options, so it’s essential to compare their offerings to find the best fit for your organization.
• Connect with our advisors: Reach out to our advisors at PolicyAdvisor and inquire about our group health insurance plans. Our insurance experts will provide you with information about the plans we offer, including coverage options, premiums, and any additional benefits. They will also make it easy to review and compare plans across the market helping you find the best plans for your coverage needs.
• Provide information through a form: During the application process, the insurance carrier will likely ask for details about your company, such as the number of employees, industry type, and business structure. They may also request information about the desired coverage levels and any additional benefits you wish to include in the plan. 
• Review and select: Once you’ve provided all the necessary information, the insurance companies will review the information and provide quotes for the proposed plans. You can then review the proposed group health insurance plans from each carrier. Consider factors such as coverage, premiums, network of healthcare providers, and additional benefits before making a decision.
• Enrollment: After selecting a plan, the next step is to enroll your employees in the group health insurance program. The carrier will assist with the enrollment process, including providing enrollment forms and instructions for your employees to complete.

Know more about the best health insurance companies in Canada 

How to buy an affordable group health insurance plan? Trust our experts to help you find it!

At PolicyAdvisor, we have a team of licensed insurance experts who will help you buy the best group health insurance plans and provide you with information about the coverage options, premiums, and any additional benefits that you’d like to offer your employees. Schedule a call with our experts today!

Frequently asked questions

Who is eligible for a group health policy in Canada?

Typically, organizations mandate that the employees must be Canadian residents, or be temporarily assigned outside their country of residence. Additionally, their Government Pension Plan and Government Health Insurance must be in force. 

What is the average cost of premiums per employee in Canada?

On average, group insurance plans typically cost between $1,500 and $4,000 annually per employee.

How much does group health insurance cost for small businesses?

The average expense for a small business is approximately $1,822 per employee per year.