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Types of group benefits plans in Canada

SUMMARY

Group insurance plans are offered by organizations to their members or employees. There are three types of group benefits plans: employer-sponsored benefits, professional association benefits, and government-sponsored benefits. They cater to employees of an organization, members of an association or group, and vulnerable demographics such as children, elderly, and low-income individuals, respectively.

IN THIS ARTICLE

An average employee in Canada works for 40 hours a week. That is 40 hours of their time dedicated to working for an organization and helping it grow and achieve its goals. In return they expect their employer to care of their wellbeing. One of the easiest and most effective ways for an organization to do this is by offering them an employee benefits plan. 

Employee benefits plans, also known as group benefits, employee insurance plans, or employer-sponsored plans, are offered by an organization to its full-time or part-time workers. In Canada, these plans are available in various forms, customized to meet the unique and diverse needs of an organization and its employees. 

In this blog, we’ve explained the different types of group insurance plans that are available. If you’re an employer, looking to attract and retain talent, or an employee who wants to understand group health coverage, this blog is for you!

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How is a group health plan different from an individual health insurance plan? 

The main difference between a group health plan and an individual health plan is reflected in their respective names—the former covers a “group” of employees in an organization while the latter is purchased by an individual for personal health coverage.

Difference between group health insurance and individual health insurance

Types of group health benefits plans 

In Canada, group health benefit plans typically fall into three main categories: employer-sponsored plans, benefits provided through professional associations, and government-sponsored benefits.

Employer-sponsored benefits

Employer-sponsored benefits are offered by an employer to the employees of an organization, forming a key part of an organization’s compensation package. Employers work with licensed experts, such as the ones at PolicyAdvisor, to obtain a group health plan that is tailored to meet the needs of the employee pool at the organization. 

Employer-sponsored benefits are typically part of an employee’s compensation package and are offered as a perk. This means that the employer pays most or all of the premium for the group health benefits being offered to their employees. Since these benefits are offered to a group of people, the premiums are lower as compared to individual plans since the insurer’s risk is distributed amongst the pool of employees. 

In some cases, the cost might be split between the employer and employees, especially if the latter chooses to add family members to their group health benefits plan. 

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Businesses that have a small number of employees can choose to pool together with other similar sized organizations if they want to offer group benefits to their workers. Pooling an employee benefits plan helps the insurer spread out their risk and offer lower premiums to the pooled group. This is known as benefits pooling or employee benefits pooling. 

Key features of employer-sponsored plans

Some of the key features of employer-sponsored group benefits plans are:

✅ They can be paid for largely or in entirety by an employer

✅ Smaller organizations usually need 100% participation while larger ones will need 70%

✅ Employees can add family members to their group benefits for an additional cost 

❌ Employer-sponsored plans are typically not portable and only last for the term of employment

❌ Employer-sponsored plans have limited customization

❌ Some organizations might exclude part-time workers or employees on unpaid leave from these plans

Know more about how group health insurance works

Professional association benefits

Professional associations are organizations that offer networking opportunities to a group of people from a certain industry or profession. These associations include financial institutions, retiree organizations, college and university alumni groups, and clubs. 

Professional associations offer standardized group benefits to their members and their families. Similar to employee benefits, every member can choose to get coverage for health & dental, vision, prescription medication, and paramedical services. The premiums can either be paid directly by the members or deducted from their membership fees. 

Depending on the preference of the association, they might also offer life insurance, disability insurance, and accidental death and dismemberment (AD&D) insurance. For example, an armed forces or army veterans association might choose to offer life, disability, and AD&D insurance to its members while an advocacy group for a trade  association might not. 

Since a group of people are being insured under professional association benefits, the premiums are going to be lower and the plans will be customizable. It is beneficial to work with licensed experts when figuring out the best group benefits for a professional association. 

Key features of professional association benefits

Professional association benefits are a great way to increase and retain members of an organization. Some of the key features of these benefits include:

✅ Highly customizable plans, tailored based on the association’s member composition

✅ Lower premiums since the insurer’s risk is spread

✅ Group benefits extended to family members and loved ones 

❌ There is no portability with coverage which ends when a membership expires or is stopped

Government-sponsored benefits

Government-sponsored group benefits are provided by the provincial or federal government. These are specially given to vulnerable demographic groups such as children, seniors (over 65 years of age), and individuals who might not be covered under an employee insurance plan. 

The coverage and eligibility for government-sponsored benefits vary depending on the specific program and the province where it is offered. Different provincial plans provide different kinds of coverage. 

Provincial benefits plans such as the Ontario Health Insurance Plan (OHIP), Alberta Adult Health Benefit (AAHB), and Medical Services Plan (MSP) for British Columbia are some examples of government-sponsored benefits. 

Key features of government-sponsored benefits

Some of the key features of government-sponsored benefits are:

✅ The coverage varies based on the province/jurisdiction where it is offered 

✅ Only the citizens of the particular province can be covered under this kind of plan

✅ Low-income individuals, senior citizens, and children are covered under government-sponsored group health plans

❌ Plans are usually not customizable and the province will decide what coverage they offer 

❌ These plans are typically not as comprehensive as other group health benefits plans

Provincial health care plans vs employee benefits plans 

The Canadian government provides healthcare to all its citizens. So the question that arises is: why are group benefits plans even necessary? It’s because provincial health care plans typically cover essential medical needs such as emergency healthcare and other basic medical care that includes surgeries and doctor visits. Employee insurance plans, on the other hand, provide wider, more extensive supplementary medical coverage. 

Provincial vs group health insurance in Canada

Importance of group benefits plans

Group health benefits or employee insurance plans are crucial to attract and retain talent. For professional associations, they work as an added benefit for the members. The different types of group benefits are important because:

  • They attract and retain employees/members of an organization 
  • They promote employee/member wellbeing and reduce financial burdens when it comes to healthcare 
  • Government-sponsored benefits are crucial for vulnerable groups such as the elderly and those with lower incomes 

Which are the best group health insurance companies in Canada?

There are several insurance companies in Canada that can help build a group benefits plan for your organization. At PolicyAdvisor, we work with 30 of Canada’s top life insurance companies to get you the best rates on the benefits plans you need for your business. While all insurers offer different kinds of coverage, the best health insurance company is the one that understands your unique requirements and builds a customized plan with you.

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Frequently Asked Questions

Is group health insurance taxable for employees?

Apart from Quebec, employer-sponsored benefits like prescription drugs, vision and dental are not taxable. 

What is the most common type of group health insurance?

Employer-sponsored group plans are the most common type of group health insurance. They are offered directly from the employer to their employees.

Which are the top three health insurance companies in Canada?

Some of the best health insurance companies in Canada are Desjardins, GMS, and Blue Cross. Our guide to group health benefits will give you more information on what each company offers. 

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KEY TAKEAWAYS

  • There are three types of group benefits plans: employer-sponsored benefits, professional association benefits, and government-sponsored benefits
  • Employer-sponsored benefits are offered by an employer to employees and their family members
  • Professional association benefits are for members of an association or group
  • Government-sponsored benefits are provincially administered and usually cover children, elderly, and low-income individuals

By Jiten Puri
CEO & Founder, Insurance Advisor, LLQP
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