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Everything You Need to Know to Design, Fund, and Manage a Modern Group Benefits Plan
Executive Summary
Executive Summary
Group benefits are no longer just a “nice-to-have.” They’re a foundational pillar of the modern employee experience—impacting attraction, retention, wellness, productivity, and risk management.
Yet for many Canadian employers—especially mid-market and growing companies—the group benefits landscape can feel opaque, jargon-filled, and increasingly expensive.
This guide is your practical, no-fluff roadmap to building and managing a sustainable, competitive, and employee-friendly group benefits plan in Canada. Whether you’re launching a new plan, auditing your existing one, or preparing for renewal, you’ll learn:
What group benefits include (and what’s optional)
The difference between funding models (Insured vs ASO vs Pooled)
What to do annually to keep your plan healthy
1. What Are Group Benefits?
1. What Are Group Benefits?
Group benefits refer to employer-sponsored insurance and health-related perks that are provided to employees (and often their dependents). These typically include:
Health and dental coverage
Disability insurance (STD & LTD)
Travel insurance
Optional or voluntary benefits
Group benefits are generally funded by employers (partially or fully) and administered through contracts with insurance companies or third-party payors.
2. Why Employers Offer Group Benefits
2. Why Employers Offer Group Benefits
The top five reasons employers invest in group benefits:
Talent attraction and retention: Top talent expects competitive coverage.
Employee health and productivity: Benefits reduce absenteeism and presenteeism.
Risk management: Insurance protects employees and their families.
Tax efficiency: Employer-paid premiums for health and dental are non-taxable benefits in Canada.
Culture and engagement: Benefits demonstrate investment in employee wellbeing.
Offering benefits is no longer a differentiator—it’s a requirement to stay competitive, especially in industries facing talent shortages.
3. Overview of the Canadian Group Insurance Ecosystem
3. Overview of the Canadian Group Insurance Ecosystem
Here’s how the group benefits ecosystem in Canada typically works:
Key Insurers in Canada:
Sun Life, Manulife, and Canada Life dominate the large employer market.
Desjardins, Empire Life, Beneva, and Equitable Life are strong regionally and in mid-market.
Green Shield Canada (GSC) leads in health/dental with TPP capabilities.
4. Core Plan Components: What’s Included
4. Core Plan Components: What’s Included
a) Extended Health Care
Prescription drugs (usually the most expensive component)
Paramedical services (chiropractor, physio, massage, etc.)
Vision care
Medical services and equipment
Out-of-country medical coverage
b) Dental
Preventive (cleanings, exams)
Basic (fillings, extractions)
Major (crowns, bridges)
Orthodontics (optional)
c) Disability Insurance
Short-Term Disability (STD)
Long-Term Disability (LTD)
Often the most misunderstood—and risky—coverage
d) Life and Critical Illness Insurance
Typically 1x or 2x salary for life insurance
Optional dependent and critical illness coverage
e) Spending Accounts
Health Spending Accounts (HSAs): Tax-effective reimbursement of medical expenses
Wellness Spending Accounts (WSAs): Flexible, taxable perk for wellness-related expenses
5. Funding Models: Insured vs ASO vs Pooled
5. Funding Models: Insured vs ASO vs Pooled
Understanding your funding model is critical to long-term plan sustainability:
Tip: Many employers use a hybrid model—ASO for health and dental, insured for life and LTD.
6. Pricing, Risk, and Renewals Explained
6. Pricing, Risk, and Renewals Explained
Every group benefits plan renews annually. Here’s how it typically works:
Health/Dental (experience-rated): Based on your group’s prior claims, inflation trends, and insurer assumptions.
Life/LTD (pooled-rated): Based on broader market or insurer pool.
ASO plans: Admin fee + stop-loss + claims = total cost.
Renewal Drivers:
Trend & inflation (7–12% is common)
Changes in demographics
Claims experience vs premiums paid
Pooling charges
Advisor commissions
Best Practice: Review your renewal thoroughly with your advisor and consider marketing to other insurers every 3–5 years.
7. Choosing the Right Broker or Consultant
7. Choosing the Right Broker or Consultant
The advisor you work with may have a bigger impact than the insurer.
Evaluate based on:
Market expertise and independence
Benchmarks and data tools
Renewal negotiation skill
RFP management and placement capability
Value-added services (e.g. compliance support, wellness, analytics)
Avoid: Advisors who only show you spreadsheets at renewal or are slow to respond. You deserve proactive, strategic guidance year-round.
8. Designing a Competitive Yet Sustainable Plan
8. Designing a Competitive Yet Sustainable Plan
When structuring your plan:
Start with philosophy: What do you want to offer—and why?
Design by tier: Consider different levels for execs, managers, and front-line staff.
Balance: Between cost control and employee value.
Review dependents: Eligibility verification is critical to cost control.
Consider flexibility: HSAs, WSAs, or flex plans.
Rule of Thumb: Benefits cost 2–5% of payroll. Invest wisely.
9. Compliance, Taxation, and Governance
9. Compliance, Taxation, and Governance
Key Compliance Elements:
CRA rules (non-taxable vs taxable benefits)
PHIPA and data privacy (especially for ASO)
Proper remittance of premiums
Eligibility tracking and dependent audits
Fiduciary oversight of plan decisions
Ensure plan governance is documented—especially as your organization grows.
10. The Annual Group Benefits Calendar
10. The Annual Group Benefits Calendar
11. Future Trends: What’s Coming in Group Benefits
11. Future Trends: What’s Coming in Group Benefits
Virtual care and mental health integration
Personalized benefits via digital wallets
AI-driven renewals and analytics
Sustainable plans tied to ESG goals
Paramedical and drug utilization management
Forward-thinking employers are already piloting AI underwriting, value-based drug coverage, and flex-first plans.
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