Plan Design Strategy for Mid-Sized Employers

Executive Summary

Mid-sized employers in Canada—those with 50 to 1000 employees—are stuck in a tricky middle ground.

You’re too big for cookie-cutter benefits plans but too small to access the deep customization, self-funding tools, and actuarial support enjoyed by large national employers.

As a result, many mid-sized companies end up overpaying for underperforming plans—or they overdesign and end up with rising costs, declining engagement, and painful renewals.

This article outlines a proven plan design strategy tailored for mid-sized Canadian employers. You’ll learn how to:

• Structure your plan to balance cost and coverage

• Segment your workforce into meaningful tiers

• Use HSAs and WSAs for flexibility without overspending

• Avoid hidden design flaws that drive up claims

• Design a plan employees understand and value

1. Understanding the Unique Challenges of Mid-Sized Employers

Mid-sized organizations often face:

• Limited internal HR/benefits resources

• Minimal actuarial support from insurers

• Inflexible insurer templates for plan design

• Renewals based on opaque pooling formulas

• Inconsistent communication of plan value to employees

But you also have unique advantages:

• 1. You can move quickly

  2. You’re big enough to access multiple funding models

  3. You have leverage with regional insurers and brokers

  4. You can tailor benefits to your specific talent strategy

2. The Core Components of a Modern Group Benefits Plan

3. The Three Layers of Plan Design Strategy

Every smart mid-sized benefits strategy includes:

1. Core Plan Design: What’s covered and at what levels

2. Funding and Cost Sharing: Who pays and how

3. Communication and Perception: What employees understand and value

You need all three working together to build a competitive, sustainable plan.

4. Designing by Tier: One Size Does Not Fit All

Your plan shouldn’t treat every employee the same.

Consider tiered plans based on:

• Role (executive, manager, front-line)

• Tenure (e.g., enhanced benefits after 3 years)

• Division (e.g., salaried vs hourly)

Tiers don’t have to mean inequality—they allow for targeted value where it matters most.

5. Flexibility Without Full Flex: Modular Plan Design

Full flex plans (cafeteria-style) are complex, expensive to administer, and often ill-suited to mid-market employers.

Instead, use modular plans:

• Offer 2–3 plan bundles (e.g., “Core,” “Enhanced”)

• Let employees choose based on needs/life stage

• Include HSAs for additional customization

This balances simplicity, equity, and choice without overwhelming your HR team or insurer.

6. The Role of Health Spending and Wellness Accounts

Health Spending Accounts (HSAs):

• Tax-free to employees

• 100% deductible to the employer

• Covered under CRA guidelines (must be for eligible medical expenses)

Wellness Spending Accounts (WSAs):

• Taxable to employees

• Flexible: gym memberships, meditation apps, financial coaching, etc.

• Boost perceived value at low cost

Tip: Offer a modest HSA/WSA combo ($250–$500 each) to boost satisfaction and reduce plan utilization.

7. Drug Coverage: The Largest Driver of Costs

Work with your advisor to analyze drug claims and develop cost containment strategies that don’t hurt employees.

8. Dental Design: Where Rich Plans Go Wrong

Dental inflation is 5–8% annually. Poor design decisions include:

• No co-insurance (e.g., 100% basic and major)

• Ortho coverage with no lifetime max

• Unlimited scaling units

• No frequency limits

Smart strategies:

• Use 80% co-insurance for basic and major

• Set reasonable annual maximums ($1,000–$2,500)

• Consider split-tier plans (e.g., managers get ortho, others don’t)

9. Disability Benefits: Risk, Cost, and Compliance

LTD and STD are complex and high risk. Key tips:

• Always use non-taxable LTD if employees pay the premium

• Consider third-party adjudication for STD

• Review LTD waiting periods and benefit maxes

• Align your LTD design with EI sickness benefits

Disability claims are costly and difficult to manage—your plan design must strike the right balance.

10. Paramedicals and Vision: Contain Costs Without Cutting Value

Paramedicals:

• Limit number of visits (e.g., 15–20/year total)

• Set combined maxes (e.g., $500–$1,000/year)

• Focus on high-value services (e.g., physiotherapy)

Vision:

• Standard reimbursement: $150–$250 every 24 months

• Add optional laser eye surgery top-up

• Include eye exams every 24 months (not covered by all provinces)

11. Cost Sharing: Getting the Employer–Employee Split Right

Balance cost sharing to reduce overutilization while maintaining perceived value.

12. Benchmarking and Plan Design Optimization

You should benchmark your plan design:

• Against industry norms

• Against regional and national averages

• Against talent competitors

And optimize it every 2–3 years to reflect:

• Workforce demographics

• Inflationary pressures

• Changing employee preferences

• Benefit utilization data

Final Thoughts

Plan design is one of the most powerful levers you have to:

• Control costs

• Differentiate your employee experience

• Minimize risk and overuse

• Align your benefits with strategic goals

For mid-sized employers, it’s not about doing everything. It’s about doing the right things—with clarity, simplicity, and intentionality.

If you need a second opinion on your current design—or want help modeling alternatives—we’d be happy to help.