Whether you are a solo entrepreneur, small business owner, or managing a large company in Canada, having group insurance is a crucial part of an employee benefits package. A group insurance plan offers comprehensive healthcare options and helps you attract and retain employees.
However, understanding group insurance can be confusing, as the coverage, costs, and plans can change depending on the size of the business.
In this guide, we’ll help you understand group insurance options based on employee count, from solo businesses to large enterprises with over 50 employees.
Group insurance for solo and micro-businesses (less than 2 employees)
Finding suitable group insurance for 1 employee in Canada can be quite challenging. Most employee benefits plans require a minimum of at least 3 employees, making it difficult for micro-businesses and solo entrepreneurs to access standard group benefits.
Some challenges that small businesses can face include higher risk and high premiums, limited bargaining power, limited plan options, challenges of plan customization, and the burden of compliance.
Alternative health insurance solutions for micro-businesses
Despite the above-mentioned challenges, micro-businesses or solo-entrepreneurs still have several options, like Health spending accounts (HSAs), Individual health and dental plans, Wellness spending accounts (WSA), to get health benefits for themselves or their employees.
Health Spending Accounts (HSA)
Health Spending Accounts are a great alternative to getting health benefits for self-employed or micro-businesses. These accounts allow you to set aside an amount to spend on eligible health and dental expenses.
Health Spending Accounts also offer tax benefits to Canadian employees, as these expenses are tax-free. These accounts can be set up for solo-entrepreneurs as part of a group insurance plan or as a standalone plan
Individual health and dental plans
Micro-businesses or self-employed individuals can also get individual health and dental insurance plans. These plans offer you financial protection to manage unforeseen health expenses without minimum employee eligibility requirements.
You can also bundle these plans with benefits like vision care, prescription drugs, or emergency medical travel coverage
Wellness Spending Accounts (WSA)
WSAs are employer-funded accounts designed to support your personal well-being and health-related expenses. You can allocate funds in this account and use them when needed. Micro-businesses with fewer than 3 employees can use this option to offer health coverage to their employees.
Tax implications and advantages for solo-entrepreneurs
As a solo-entrepreneur, you must also understand the tax implications and advantages of group insurance options. Benefits from Health Spending Accounts and Wellness Spending Accounts are mostly tax-free, thus reducing your tax liability.
You can deduct other health plans as business expenses to lower your overall taxable income.
When to consider transitioning to a group insurance plan?
Till the time you are solo, having the above-mentioned healthcare coverage is a great option. However, as soon as you grow and hire your second or third employee, you become eligible for a group health insurance plan for your business. A group benefit plan offers broader coverage at a lower premium as compared to individual health plans.
Group insurance for small businesses (2–10 employees)
Businesses with 2-10 employees can offer valuable health and wellness benefits to their teams. Most insurers require at least 2 or 3 employees to offer group insurance for small businesses in Canada. One out of these can be the business owner, but at least 1 must be an unrelated, full-time employee.
Coverage options under group benefits for 2-10 employees
Group insurance for small businesses in Canada typically offers health and dental coverage, life and accidental death coverage, disability insurance, and HSAs.
- Health and dental coverage: Health and dental plans offer coverage for prescription medicines, dental procedures, paramedical services, and vision care
- Life and accidental death cover: Group medical insurance plans also provide life insurance and accidental death insurance for employees and their families. These plans provide additional coverage if the employee dies or sustains injury from an accident
- Disability insurance: Most insurers also offer both short-term and long-term disability insurance under an employee benefits package. This type of group health insurance plan replaces income for employees who are unable to work due to any illness or injury
- Health Care Spending Accounts: HSAs are another great addition to employee benefits packages. These accounts allow employees to set a fixed amount per employee, which they can spend on health-related expenses
Cost considerations for small business group insurance
Cost considerations play a huge role in group benefits for 2-10 employees. A detailed budget consideration is crucial before choosing group health insurance for small businesses. The cost will depend on factors like employee demographics, insurer claims history, and plan type.
Typical costs for group benefits for small businesses vary between:
- $80-$200/month/employee for a very basic plan
- $100-$250/month/employee for a more enhanced plan
- $150-$350/month/employee for comprehensive coverage
These are indicative costs only, and they will change based on the coverage and plan details.
Ensure that you do a thorough assessment beforehand. To help you with this, our licensed advisors at PolicyAdvisor will help compare group health plans from 30+ insurers and help you choose a plan that suits your cost requirements.
How can small businesses customize group insurance plans?
Small businesses can control costs while providing broader health coverage by customizing their group health plans. This not only satisfies the employees but also offers tax savings for the business.
Small businesses can customize their group medical insurance benefits by choosing only the benefits their employees need, such as dental, vision, or mental health support, and avoiding any unnecessary expenses.
Group insurance for growing businesses (10-30 employees)
As your business grows to 10-30 employees, you can start giving a more comprehensive employee benefit package to your team.
With mid-size group health plans, you can offer vision care, paramedical services, critical illness coverage, and employee assistance programs to your employees.
- Health and wellness group benefits: Growing businesses can offer enhanced benefits under their group health insurance plans. These include vision care, paramedical services, employee wellness benefits, prescription drugs, disability insurance, and comprehensive dental plans
- Critical illness coverage: Under group insurance for 10-30 employees, businesses can also add specialized coverage like critical illness insurance. These plans provide a one-time payment to employees upon diagnosis of covered critical illness
- Employee Assistance Programs: EAPs provide counselling and support services that help employees manage personal and work–related issues. Growing businesses can include this program under their employee benefit packages to support their team’s mental health and well-being
How to customize group employee benefits for a growing business?
With group insurance for 10-30 employees, you get more flexibility to customize your employee benefits plan. You can add optional benefits and implement cost-sharing options between the employer and employees.
Optional benefits like tiered coverage, accidental death and dismemberment insurance, short-term disability, long-term disability, ESAs, and HSAs can help customize employee benefits plans.
Cost management and employee retention strategies for growing businesses
For businesses with 10-30 employees, managing costs becomes necessary. Apart from strategic cost management, growing businesses should also adopt strategies like RRSP, TFSA, DPSP, and digital tools to retain employees.
- Balancing cost control with competitive benefits: Cost management for group insurance for growing businesses can be done by choosing flexible coverage options, implementing co-payment and deductible options, and including health and wellness accounts
- Integration of savings plans: Integrating a group retirement savings option can also be an attractive addition to an employee benefits plan. These include:
- Group Registered Retirement Savings Plans (RRSPs)
- Tax-Free Savings Accounts (TFSAs)
- Deferred Profit Sharing Plans (DPSPs)
How to choose the right health insurance plan for your restaurant?
Selecting the best health insurance for restaurant employees means balancing cost, coverage, and flexibility. With so many options on the market, it’s important to evaluate what fits your team’s needs and your budget.
Key factors include your team size and eligibility requirements, the types of coverage offered, flexibility for part-time staff, and strategies for cost control and tax advantages.
- Team size and eligibility requirements: Some plans have minimum employee thresholds, while others require full-time status. Consider how many staff will qualify and whether your team is mostly full-time, part-time, or seasonal
- Coverage types: Look for plans that include core benefits your employees need most, such as:
- Medical services (prescriptions, hospital care, paramedical)
- Dental care (preventive, major, orthodontics)
- Vision (eye exams, glasses, contact lenses)
- Mental health support (therapy, counselling)
- Flexibility for part-time and full-time staff: Employers can offer tiered or voluntary plans to allow more employees to participate, especially in an industry where part-time work is common. Employers can also offer Health Spending Accounts (HSAs) or wellness stipends as flexible add-ons
- Cost control and tax advantages: Understand your contribution options and how they impact your taxes. You can typically deduct employer-paid health benefits from your taxes, and options like HSAs can help you manage costs while still offering meaningful support
Group insurance for mid-sized businesses (30-50 employees)
Insurers offer mid-sized businesses with 30-50 employees a significantly larger number of employee benefit options. From negotiating premiums, greater plan flexibility, and customization, mid-sized companies can offer comprehensive group benefits to their employees.
Features of group insurance for 30-50 employees
Mid-size business group benefits offer various features such as broader coverage options, employee wellness and holistic programs, flexibility and customization, and digital administration tools.
- Enhanced plan flexibility: With group insurance for 30-50 employees, businesses can get more tailored plans by choosing additional benefits and coverage that fit their team’s needs
- Broader coverage options: Mid-sized businesses can get comprehensive employee health plans for their employees wth prescription drugs, paramedical services, extended dental, vision care, disability insurance (short and long term), critical illness cover, employee assistance programs, and life and accident death insurance
- Wellness and holistic programs: Businesses with more than 30 employees can also offer integrated employee wellness and holistic programs focused on mental health, preventive health care, and overall wellness of employees
- Digital administration tools: Mid-size businesses can take advantage of online platforms and mobile apps to simplify plan enrollment, claims processing, and the support process for their team
Cost considerations for mid-sized business group benefits
Average premium costs, employee demographics, claims history, group size, cost-sharing strategies, customization options, and tax benefits are some of the key factors that impact the cost of employee benefits plans for mid-sized businesses.
Understanding these can help you get a comprehensive employee health plan with budget control.
Factors affecting cost | Details |
Average premium costs | The average premium cost is $250–$350 per employee per month for group health insurance for 1-50 employees in Canada |
Group size | Large group of employees pays less premium per employee due to risk sharing |
Employee demographics | Gender, age, and health concerns of employees. Older/higher-risk groups may have higher costs |
Claims history | High past claims can increase premiums, while good claims experience can help keep costs stable |
Plan selection | Plans with more comprehensive coverage (dental, vision, disability) cost more than basic ones |
Customization options | More customization options such as tier plans, optional benefits e.g., critical illness) available |
Cost-sharing strategies | Employers may also share costs (for instance, 80:20 or 70:30) with employees to stay within the company’s budget |
Tax Advantages | Group insurance premiums in Canada are tax-deductible for employers |
Group insurance for large businesses & enterprises (50+ employees)
Businesses with 50+ employees must offer comprehensive group insurance to their employees. When it comes to enterprise group benefits in Canada, employers get stronger coverage, better premium, and greater flexibility options. With this size, businesses can negotiate with insurance providers, get advanced features, and offer employee benefits.
Key features of group insurance for large businesses
Group insurance for 50+ employees in Canada offers a broad range of features. These include plan customization, self-insurance models, advanced wellness programs, retirement and savings plans, data-driven plan management, and compliance considerations.
- Fully customizable plans: Large companies can completely tailor group health insurance plans to meet the needs of employees. You can opt for customization options like multi-tiered plans, the addition of life insurance, disability insurance, visual and dental care, and virtual services as well
- Self-insurance and ASO models: Some other alternative models that large businesses can explore include:
- Administrative services only plans allow employers to self-fund group insurance plan while outsourcing the administrative tasks to a third party, preferably the insurance provider
- Businesses with 50+ employees can also choose to self-insure certain benefits of their employee benefits package. These can be health and dental insurance
- Advanced wellness programs: Enterprise group benefits can also include advanced wellness and mental health programs to support their employees’ overall health
- Data-driven plan management: Businesses with more than 50 employees can use data tools to manage their group insurance plan more efficiently. Data metrics like claims history, predictions, and plan comparison can help you improve plan benefits over time
- Legal and compliance considerations: For large enterprises, compliance becomes a bit more complex. From meeting group insurance rules, protecting employees’ privacy, understanding tax rules, or any other legal formality, considering all these aspects becomes crucial. Getting help from our licensed insurance advisors at PolicyAdvisor can help you comply with all the rules and get an affordable group benefits plan.
Cost considerations for large businesses & enterprises
Large Canadian businesses (50+ employees) can reduce group insurance costs through better plan selection, cost-sharing and size-based negotiations.
- Negotiate better deals: Large companies can use their size to get better rates and customize their plans to fit their employees’ needs.
- Plan level affects price: Costs go up as you add more coverage. Typical costs for large businesses’ group insurance plans are:
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- Basic plans: $80–$200 per employee per month
- Standard plans: $100–$150 per employee per month
- Enhanced plans: $150–$350 per employee per month
- Cost-sharing with employees: To stay competitive, cover more than the legal minimum 25% of group insurance premiums and share costs with employees to maintain affordability and attract top talent
- Administration gets cheaper with size: Larger companies pay less to manage their plans per employee, but more complex plans may need extra management
How can you choose the right group insurance plan based on employee size?
When finding the best group insurance plans for your business size, consider some key factors. These include cost vs coverage balance, employee needs assessment, flexibility options, digital tools, ease of administration, and working with advisors.
- Balance cost and coverage: Finding a balance between the cost and coverage is necessary while looking for the right group insurance for business. Carefully consider your budget constraints, financial objectives, coverage needs, and cost-sharing options before investing in a group plan
- Assess your employees’ needs: Assess the needs of your employees via surveys, discussions, and feedback. Consider their age, family status, or any health concern they require coverage for
- Look for flexible plans: As your business grows, you may need to customize your employee benefits plan. Therefore, pick a group insurance plan that offers flexibility as your business grows
- Opt for digital tools: Offering easy-to-use digital tools like online portals and mobile apps to employees makes it easier to manage plans and costs. As per the Benefits Canada Healthcare Survey, 2023, 41% of large businesses have adopted virtual care benefits to control costs
- Consult a licensed advisor: To get the best group benefits plan for your business, be it of any size, consider working with experienced insurance advisors. Our licensed advisors at PolicyAdvisor can help you find the right group plan while controlling your business costs
Frequently asked questions
Can a business with only 1 employee get group insurance?
While insurers typically require a minimum of 3 employees to qualify for a group insurance plan, businesses with as few as one employee also have a few health insurance options. These include health spending accounts and individual health insurance plans.
What is the minimum number of employees for group insurance in Canada?
The minimum number of employees for group health insurance is at least 3 employees to qualify as a valid group. One employee can be the business owner, while the other needs to be a full-time working employee and not an owner/employer of the business.
How do premiums change as my business grows?
There are several factors that impact the premium of your business as it grows. These include:
- Larger groups spread risk across more members (also known as pooling), thus making premiums more stable per employee
- The growing business group insurance premium is based on their claims history
- Businesses with more than 30 employees have higher negotiating power
- With features like self-insurance and ASO models, large businesses can manage their costs more efficiently
What are pooled vs. experience-rated group insurance plans?
Pooled group insurance plans set premium rates by combining the claims of multiple employers. This pooling supports businesses of small size from a huge jump in premiums if they have lots of claims. On the other hand, experience-rated group health insurance plans set premium rates mostly on your business’s claims history. This approach is usually done for large businesses.
How do tax benefits work for group insurance?
Tax benefits for group insurance work in the following ways:
- Employer contributions to group insurance plans are considered tax-deductible business expenses, thus reducing their tax liability
- The benefits employees receive under a group health insurance are also non-taxable