As your business continues to grow, you might be looking for ways to bring in new workers and keep good ones. A great way to do this is to implement a group benefits plan. Next to a salary, employee benefits is the most important tool in attracting and retaining quality talent.
A healthcare survey in 2011 polled 1600 people who had health benefits and when asked if they would keep their benefits or receive a $10,000 raise, 59 percent said they would rather keep their benefits coverage.
What makes up a group benefits plan? The foundation of every group benefits plan is group life insurance. Group life insurance offers a simple and affordable way to give employees life insurance so that their families are financially protected in the event they pass away. This feature is especially valuable for employees who may have pre-existing health conditions and have a hard time getting insurance by themselves elsewhere. Accidental Death and Dismemberment offers additional financial benefits if an employee passes away accidentally.
Living benefits such as critical illness insurance can be built into group plans to provide a lump sum tax free benefit to employees if they live through a critical illness such as a heart attack, stroke or cancer.
Disability protection can be built into plans as well to provide a tax-free income supplement to employees who can not come into work as a result of an illness or injury.
Extended Healthcare Coverage Extended healthcare coverage is one of the most important pieces of any group plan. This includes prescription drugs which gives employees coverage to supplement costs for prescription medication. This is crucial because a significant percentage of the Adult Canadian population are living with a chronic condition that’s treated regularly with drugs. The Public Health Agency of Canada published data in 2019 illustrating the prevalence of chronic diseases among Canadian Adults 20 years or older and the study showed that 44 percent suffer from at least 1 of 10 conditions including hypertension, diabetes and mood disorders.
Dental Benefits are another component to group plans and a great add on to plans that can cover but are not limited to preventative and diagnostic treatments.
Retirement solutions can be built into group plans as well to helps employees save for the future and contributions made by you as the business owner can be a valuable tax deductible expense.
Group RRSP’s and Group TFSA’s The most common retirement solutions we deal with at VFS are Group RRSP’s and TFSA’s Defined Contribution Pension Plans and Deferred Profit Sharing Plans.
Group TFSA’s operate exactly the same way regular individual TFSA’s do. They’re offered by the group plan and offer a tax-free investment option to help employees save and grow their wealth with no tax on withdrawals. Alternative Options You can further customize your group plans by incorporating the following: Health spending accounts or HSA’s are a non-taxable account that cover health expenses approved by the CRA Guidelines. They can be used to supplement an existing plan and essentially top up coverages or be used as a cost-effective solution for a stand-alone plan that business owners who’ve never had benefits can take advantage of.
Wellness spending accounts or WSA’s are a taxable account which means employees will pay the tax on the benefits they use. They cover any expense to promote a healthy balanced lifestyle. Expenses including gym memberships, golf clubs and running shoes can be claimed under a WSA which makes it a great tool to attract and reward employees. Flexible benefits or flex benefits are almost a blend of the HSA and WSA in this plan employees are given credits they can use to purchase a mix of coverages, both taxable and non-taxable. With this option, employees can enhance the benefits they want and reduce or opt out of benefits they don’t need. The value proposition: One of the most common pain points we come across when working with business owners is that they have a hard time finding and keeping good workers. Being able to offer benefits helps to create a better value proposition when looking for new hires. Not everyone that owns a business offers benefits packages and the businesses that don’t offer plans have a harder time attracting and retaining quality talent.
There are so many variables and things to worry about when running a business. Having a benefits plan is making the responsible decision as a business owner to invest in your employees overall health and satisfaction and maximize their productivity when they come into work everyday.
Group insurance premiums paid by you as the business owner can be a tax-deductible expense which further reduces the bottom line costs for implementing a plan and makes it that much more cost effective to provide. We see a lot of business owners that will split the cost of the plan with their employees and that way, both the owners and employees take advantage of the tax benefits.
The take away There’s a lot of ways you can structure a plan and it’s worth it to do so because of the value it adds to your business. Working with a VFS broker to build a plan is ideal because we do all the legwork In finding the provider and tailoring a plan that’s specific to your group so that you don’t waste any time putting it together and you won’t end up overpaying for features that you won’t use.
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