Group health insurance for startups in Canada: Employee benefits explained

Group health insurance is crucial for Canadian startups as it helps attract and retain their employees for the long term. Not only this, a group insurance plan also offers comprehensive coverage beyond provincial healthcare, thus providing financial security in times of need. 

Recent data from the Canadian Government shows that 10% to 16% of new startups in Canada hire their first employee within their first year, so startup founders should focus on offering employee benefits from the start.

In this guide, we will explore employee health benefits for startups, how to choose an affordable group health insurance for startups, and the key benefits of offering employee benefits in Canada.

Why do startups in Canada need group health insurance?

Due to increasing competition for skilled workers and their expectations, group health insurance for startups is crucial to attract and retain employees. Apart from this, having a comprehensive group health insurance in place is also beneficial to get tax advantages for startups. 

Here are some key reasons for startups to invest in a group benefits plan for their team:

Rising employee expectations for health benefits

One of the major reasons to have an employee benefits plan for your startups is the rising expectations of employees. According to the Sanofi Canada Healthcare Survey, 82% of Canadian employees consider health benefits very important when deciding whether to stay with their current company. This makes it evident that employees consider group health insurance essential before joining a company

Talent attraction and retention through group health insurance

Group health insurance for startups not only helps in attracting employees but also in retaining them in your team. Recruiting becomes easier and effective when startups offer comprehensive employee benefits plans. 

Moreover, startups in Canada offering group health benefits report 35% less turnover than those without any plan. Startups health insurance also helps in supporting your employees’ well-being, thus contributing to the overall growth of the company. So, to attract employees and retain them for the long term, especially when you have just started your business, you must get a group benefits plan.

Tax benefits of group health insurance

Group health insurance for startups offers tax advantages for employers. Premiums paid by Canadian businesses are considered tax-deductible business expenses. This means startups in Canada can lower their tax burden by opting for group health insurance for their employees.

Not only this, premiums paid for group health benefits are generally exempt from GST/HST in Canada, reducing the overall tax impact on both parties. GST refers to taxes that apply to most supplies of goods and services made in Canada.

What does a typical group health insurance plan cover?

A standard group health insurance plan in Canada typically includes coverage for prescription drugs, dental and vision care, mental health support, paramedical services like physiotherapy and chiropractic care, and virtual healthcare options. 

These benefits help employees manage everyday health costs and improve overall well-being, making group plans an essential part of a startup’s compensation package.

Group health plans in Canada typically cover the following conditions: 

• Prescription drugs: A group insurance plan in Canada offers coverage for prescription drugs, helping employees manage their out-of-pocket expenses

• Dental and vision care: Standard employee benefit plans also cover dental and vision care. These plans include regular check-ups, dental cleanings, basic dental procedures, eye exams, and corrective lens coverage

• Mental health support: Support for mental health under health insurance coverage in Canada has become important in recent times. Coverage for mental health generally includes counselors, therapists, and psychiatrist services. Employers also offer an Employee and Family Assistance Program (EFAP) for the well-being of employees

• Paramedical services: Paramedical services include multiple treatments such as physiotherapy, massage, chiropractor services, and acupuncture
• Virtual care options: Popular particularly after COVID-19, most group insurance plans in Canada offer virtual care services. This includes online appointments for busy employees who struggle to attend in-person appointments

Read more about types of group health insurance plans in Canada

Affordable group health insurance for small businesses and startups in Canada

Many startup founders assume that group health insurance is only for large companies, but that’s a common misconception. In reality, Canadian group health insurance is available for small teams with as few as two employees and can be surprisingly affordable.

Group insurance plans are scalable and flexible, making them ideal for startups looking to provide essential employee benefits. Some providers offer tiered employee insurance plans where the employer covers a basic plan, and employees have the option to pay for additional coverage, such as dental or vision.

You can also customize group health insurance to match your team’s needs and your startup’s budget. With access to over 30 insurance providers, PolicyAdvisor’s licensed advisors help you compare the most affordable health insurance for startups in Canada and choose a plan that works for your business.

How much does group health insurance cost for Canadian startups?

The cost of group health insurance for startup companies in Canada varies based on several key factors, but it doesn’t have to break your budget. With the right provider and plan design, even early-stage startups can offer affordable employee insurance tailored to their team.

Key factors that affect group health insurance costs for startups:

• Number of employees: Larger teams often receive lower per-person premiums due to risk sharing across a bigger group. However, plans are still accessible for startups with just 2 or 3 employees
• Level of coverage: Basic health plans are more affordable and cover essential benefits such as prescription drugs and virtual care. Comprehensive plans with dental, vision, mental health, and paramedical coverage will cost more
• Provider reputation: Leading Canadian insurers may charge slightly higher premiums, but offer added value through faster claims processing, stronger customer support, and better plan flexibility
• Custom add-ons: Adding optional coverage like life insurance, long-term disability insurance, or Health Spending Accounts (HSAs) can increase premiums, but they also enhance your overall employee value proposition

The cost of group health insurance for startups will vary based on the above-mentioned factors. Typical costs vary between:

• Basic Plan: $80–$200/month per employee (covers essentials like prescription drugs and virtual care)
• Standard Plan: $100–$250/month per employee (includes dental and vision)
• Enhanced Plan: $150–$350/month per employee (comprehensive coverage, e.g., mental health, paramedical services)