What is a group benefit plan?
A group benefit plan is a contract between an employer and insurance provider. The insurance provider processes and administrates claims using the plan funding (premiums) set by the employer.
Purpose of benefits
To reduce the burden from Health & Wellness costs for owners and employees. Funding a group plan with tax deductible business dollars to pay claims normally paid from your income allows business owners and employees to retain more of their take home income.
This approach allows business owners and employees to retain more of their take home income.
How benefit plans are designed
The employer decides what to provide employees:
- What benefits are to be included and how much is covered
- What type of employee qualifies
- How employees are added to the plan
- How the plan will be renewed, for sustainability
Based on the employer’s design, the insurance provider in return provides claim administration (paying claims) in exchange for plan funding (premiums).
What can be included
- Life Insurance
- Accidental Death & Dismemberment
- Disability Benefits (short and long term)
- Critical Illness (coverage for up to 28 illnesses)
- Prescription Drugs
- Routine Dental
- Paramedical Services
- Counselling Services
- Emergency Transportation (ambulance)
- Travel Insurance
Why have a benefit plan?
Benefit plans cover over 80% of working Canadians and their families. In 2019, 28.7 billion was paid in supplementary health care costs not covered by provincial health plans.
Why have a benefit plan
Employees are increasingly concerned about their own and their families’ health and well-being, making group benefits an increasing part of why employees stay with or choose a new employer. Group benefit programs are a vital aspect of competing for and retaining quality employees.
The advantages of a group plan
A group benefit plan provides supplementary health coverage for medical expenses not covered by provincial health plans, reducing the financial burden of medical costs.
Group plan strategy
Even with the best intentions, a group plan requires a tax strategy for benefits to be effective for employees. This will keep more money in the employee’s pocket for their qualified expenses as well as shelter claims for disability benefits from unexpected taxation.
How premiums are calculated.
Initially premiums are based on demographics of the business and history of similar businesses. At renewal the actual claims paid are included in setting rates.
How are benefits initially priced
Premiums are based on demographics including age, location and occupation for each type of benefit. When available the claim experience of the employees of a company are used. When this information is not available, experience from similar employees of other companies is used.
Recalculating rates (renewal)
Renewal is an annual review where the funding (premiums) and claims are compared to ensure the benefit plan can continue to be sustainably funded by the employer.
Claims rated and pooled renewal methods
The Claim-Rated Method:
The individual business’s funding is used to support the expected cost of paying claims.
The Pooled-Rated Method:
A collective funding using many businesses to increase the amount to support the expected cost of paying claims.
In today’s competitive marketplace, businesses need to raise the level of knowledge of what they offer within their own organizations. When employees understand what is being provided, what they can receive and why the benefits structure exists, they will realize that you value each individual within your business.
Providing understandable insurance products to businesses throughout Canada.
ABC Insurance is a family business originally started in 1960, as a sole proprietorship selling life insurance products. In the 1980s, the company expanded into providing group benefit plans.
In 2001, the business was restructured as ABC Insurance Solutions Inc. to offer some of the only true pooled benefit plans.
In 2005, the third generation of our family joined the business to carry on our legacy to be the top national provider for insurance products for businesses across Canada.