Health insurance for small business owners
Employee benefits plans attract and retain workers, promoting work-life balance. These plans usually include health and dental insurance, life insurance, disability insurance, retirement savings, and more. The cost of a small business employee benefits package depends on factors like employee demographics, location, claims history, and plan details, typically ranging from $50 to $300 per employee per month. Employers can deduct the cost of providing group benefits from their taxable income.
When you run a small business, your tiny (but mighty) team means everything. They deserve to be compensated for their hard work—and we mean more than just their salary. Employee benefits plans are a great way to attract and retain workers for the long term. They promote work and health balance all while working on your team.
But what will it cost you to provide employee benefits? When you run a small business, we know every penny counts. Read on to find out what employee group benefits cover if you have to offer them, and how to get the best deal for group health and dental insurance.
What are employee benefits?
Employee benefits, also known as a group benefits package, refer to a set of perks and advantages provided by an employer to their employees as part of their overall compensation package. These benefits go beyond the basic salary or wages and are designed to attract, retain, and motivate key employees while enhancing their overall well-being. Benefits usually include health & dental insurance, life insurance, disability insurance, stock options, and retirement savings plan matching.
Provincial health plans vs group health plans vs private health plans
Canada is known for having “free” health care, so some might be wondering why private or group health insurance is even needed. Government health care in Canada is administered by each province. Provincial health care plans are designed to cover emergency and basic medical care. For example, surgeries and doctor visits. Extended benefit plans provide coverage for recovery efforts after an emergency or general health maintenance.
|Provincial Health Insurance||Tax-payer-funded insurance plan for residents||Covers:
|Private Health Insurance||Paid for by the individual to provide extended health care recovery and maintenance needs||Covers:
|Group Health Insurance||Similar to private health insurance, individuals come together as a group to buy a plan. As a group, the premiums are cheaper for the individual. Usually, other insurance products are combined for the group. A small business might offer a group health insurance plan for their employees as a part of their employee benefits package||Covers:
What do group benefits cover?
Group employee benefits can cover a variety of insurance products, depending on the group plan the business owner chooses.
|Coverage Category||Covered Services & Items|
|Healthcare||– Private hospital coverage
– Medical expenses
– Medical equipment
– Some elective surgeries
– Care homes and nurses
|Vision care coverage||– Eye exams
|Dental coverage||– Teeth cleanings
– Cavity fillings
– Orthodontics (braces)
|Prescription drugs||– Medication|
|Health spending account||A set amount per year that employees can spend on any item or service that improves their health|
|Health access||Some providers have online access to doctors and health service providers when you sign up for their group insurance plans|
|Emergency travel medical||– Coverage if you have a medical emergency while traveling
– Trip cancellation/interruption
|Critical illness||A lump sum payment when you are diagnosed with a critical illness|
|Life insurance||A lump sum payment if you pass away from natural or accidental death|
|Short & long-term disability insurance||Salary replacement if you become disabled and cannot work for a short or long period of time|
|Accidental death and dismemberment (AD&D) insurance||Financial assistance if you have an accidental death, are dismembered or lose your sight. This would be in addition to a life insurance payment|
Who are the best health insurance companies for small business owners?
There are a lot of group insurance providers out there with a wide range of plans to fit your business’s needs. At PolicyAdvisor.com, we work with 30 of Canada’s top insurance companies to get you the best rates on the benefits plans you need for your business.
|GMS||Comprehensive coverage (80-90%)|
|Blue Cross||Customized coverage options|
|SunLife||More than 50 employees|
|Equitable Life||Health spending accounts|
|Canada Life||Small business owners|
While some companies offer different benefits and different prices, ultimately the best insurance company is the one that works best for your business needs. Like all insurance products, pricing and coverage will be specific to your unique business needs.
What will they ask about my business on a group health insurance application?
Applications for group health insurance are a little different from individual plans. With private health insurance, the insurance provider is concerned about the individual’s health history and age. With group insurance, they don’t do as much individual underwriting. Instead, they’ll want to know more about the general employee demographics.
|What will be asked on a group insurance application?
Employees will notice that when they sign up for their group employee benefits, they won’t be asked as many health questions that normally come with individual insurance applications. Instead, the underwriting factors are more heavily weighted on your business’s claims history and industry claims history. If your employees claim a lot, the insurance company will price their premiums accordingly.
What is a pooled insurance plan?
The two biggest factors in determining the price of your group health insurance is your claims history and industry. But what if it’s your first time? Or what if your business is in a high-risk industry? If you don’t have any history, an insurance company might put you in a pooled insurance plan. They pool your business with others so that they can collect the premiums from everyone and use that to cover any claims. Pooling the risk like this allows the higher costs of the less healthy to be offset by the relatively lower costs of the healthy.
Once you have a few years of claims history under your belt, you may qualify for your own individual pricing. This is because the insurance underwriter has a better idea of how often they’ll be paying out for your employee’s claims.
Having health insurance means more than financial protection—it provides peace of mind. Your quality of life is directly linked to your health care. Having health insurance allows you to focus on your well-being without worrying about potential expenses. And that is priceless!
How much does a small business employee benefits package cost in Canada
The cost of a group insurance plan for a small business owner will really depend on their employee demographics, claims history, and plan details. In general, the larger the employee base, the cheaper the cost per employee. This is because the insurance company can spread the risk out—the employees that don’t claim a lot make up for the ones that do. For a small business, the price will be more contingent on industry type and claims history.
|Employee count: 9|
|Industry type: Retail|
|Claims history: None|
|Unions or groups: None|
|Absences or leaves: 1 on maternity leave|
|All employees participating? Yes|
|Workers compensation? Yes|
|Working outside of Canada? No|
|Do benefits differ by class? No|
|Benefits plan type: Basic|
|Cost to employer per month for benefits plan:
Basic (no dental) $445 ($50/employee)
Basic (with dental) $1,175 ($130/employee)
Who pays the group insurance premiums?
It depends on the company. Some companies will provide their health and dental plans to their employees completely free. This means the business owner will cover all the health insurance premiums. Other businesses will charge a small fee to their employees to participate—usually deducting this premium directly from the employee’s paycheck. Some small businesses will offer free participation for standard plans and if the employees want more comprehensive coverage, they can opt for additional deductions from their pay.
Are group benefits tax deductible in Canada?
Yes, group benefits provided by an employer are generally tax-deductible in Canada. Employers can deduct the cost of providing group benefits, such as health and dental insurance, from their business income when calculating their taxable income.
|The Canada Revenue Agency (CRA) has specific guidelines regarding the deductibility of employee benefits.
Here are a few key points:
It’s important for employers to consult with a tax professional or review the CRA guidelines to ensure they are complying with the specific rules and requirements for deducting group benefits.
Get quotes for group health and dental insurance
If you’re looking for an affordable group benefits plan for your small business, or business of any size for that matter, our licensed insurance experts at PolicyAdvisor are here to help. We’ll ask some questions about your business (like the ones listed above) and shop around to find you the best rate for health benefit plans for your employees.
Book a call with one of our friendly expert insurance advisors to chat about protecting your personal and financial health today!
Group Health Insurance
Frequently Asked Questions
Are employee benefits mandatory?
No. Employee benefits, such as health insurance, are not mandatory. However, providing insurance for your employees may provide that competitive edge your business needs to maintain employee retention. The premium costs may seem like another additional expense to take on, but ultimately having a healthy and consistent employee base will save you money in high turnover costs. Plus, insurance premiums can be claimed as tax-deductible business expenses.
What is the cheapest group health insurance for small businesses?
Some plans offer group benefits for as low as $25-75 per employee, but it depends on the plan. Cheap plans usually mean minimal coverage—just basic medical expenses with no dental, vision, and/or minimal paramedical expense coverage. However, cheaping out on benefits can leave your employees high and dry when they need the coverage the most. Having a healthy employee base means they’re able to work and having adequate coverage to pay for health expenses is an important aspect of this.
What is an HSA?
An HSA is short for “Health Spending Account.” This is an additional benefit sometimes included in group health insurance plans that a lot a certain dollar amount each year for an employee to spend on health-promotional or recreational products. For example, you might use your health spending account to pay for part of your gym membership, an exercise bike, or an Apple watch. It’s designed to offer flexible coverage for services and items that still promote healthy living but don’t necessarily fit.
How much do benefits cost per employee?
The cost of group benefits really depends on your group plan. Generally, it can range from $50-$300 per month per employee. Some employers will have their employees contribute a fraction of this premium to help cover the cost. Business owners can also count these premiums as a deductible business expense on their tax return.
Do certain small businesses get discounts depending on their industry?
It’s not a discount, per se. But industry type is one of the more weighted factors in determining the price of group insurance. If historically, that industry has more claims than others, businesses in that industry would have higher premiums for their group insurance.
- Employee benefits are important for attracting and retaining employees in small businesses
- The cost of group benefit plans depends on factors like employee demographics, claims history, and plan details
- Employers can expect to pay anywhere from $25-$300 per month per employee for benefits depending on their plan type
- It's not mandatory to provide health and dental benefits to your employees, but it's an important part of maintaining a healthy workforce