Table of Contents
Taxation in the Area of Group Benefits in Ontario
The Chambers Group Insurance Plan Has Been A Successful Mission
Choices, Choices, Choices: How Do You Know Who To Go To For Your Firm's Group Benefit Plan Needs?
Using Cost Plus Instead of Co-ordinating Benefits Can Save A Firm Hundreds of Dollars Per Year
Changes to Benefit Rules Reflect Market: More Owners Now Work Past Age 65
Find Out If You Can Offer What You're Promising
Has Your Group Travel Insurance Taken A Holiday?
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Home Based Business?
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Join the crowd!
If you run a home-based business, chances are you're part of the fastest growing segment of the economy. And, chances are your resume includes a previous job with a larger employer; where you enjoyed a wide range of group benefits.
If you've been in operation for at least six months, you can apply for the same kind of benefits again, under your Chamber of Commerce Group Benefit Insurance Plan. They recognize that "small business", including home-based firms, is a vital part of today's business environment. Traditionally, smaller firms haven't been well served by group insurers and that's why the Chamber Plan was developed more than 30 years ago.
Today, the plan serves more than 27,000 firms nationally, from one person operations to firms with up to 50 employees, and it offers a full range of benefits. It can provide Life, Disability, Extended Health with drugs, Dental, and Vision Care coverages. There is also a Cost Plus Program, Business Overhead Expense, and a Group RRSP Program.
For more information visit to the Chamber of Commerce Group Insurance Plan website.
Presently there are 50 leading life insurance companies in Canada that provide individual Life and Disability Insurance. I have a continuously updated computer software program which provides every company's premium costs for all of their life products. After inputting a clients personal information, one of the functions it can do is rank every company's rates from lowest to highest cost. Comparisons show that premiums can range as much as 150% from the least to most expensive of any one policy product. It pays to have a Broker who can shop for you!
Taxation in the Area of Group Benefits in Ontario
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At the present time premiums paid by an employer for a group insurance plan, for any and all coverages, is a business expense and tax deductible by the business. Prior to 1998 a business required to be incorporated in order to be eligible to do this but this is no longer the case.
Generally, employees pay for their share of coverage with after-tax dollars. Their share of premium is not tax deductible by the employees for any benefit, with one exception. When an employee who pays premiums into a "taxable" group disability policy receives claim payments, they can deduct the amount of premiums paid from the claim amount when determining income tax for the year claim payments are received. Also, should an employee's total health care expenses, including group health and dental premiums, in a particular tax year either equal $1,614, or exceed 3 percent of net income, then those premiums may be considered as a tax deduction.
A "taxable" group disability policy (either weekly indemnity/short term disability or long term disability) is one in which the employer pays any portion of the disability premium even if it's just one cent per year. Canada Revenue Agency allows a disability benefit to be "non-taxable" when received, if employees pay 100% of the premium for that benefit. It is possible to set up a non-taxable short term disability benefit and a taxable long term disability benefit or vice versa.
Employer contributions to group life insurance premiums for an employee are considered a taxable benefit to the employee. Prior to the Conservative Government's Federal 1994 Budget, Canadians were allowed up to $25,000 group life coverage as a non-taxable benefit.
When a life insurance claim payment is made to an employee's beneficiary the life benefit amount is tax free money. There is however tax payable on the interest earned by the life insurance proceeds after the date of death.
Interestingly, an employer is allowed to pay up to $10,000 as a death benefit to an employee's family outside the group insurance plan as it is allowed as a deduction by Canada Revenue Agency. The amount paid to the family is treated as a life insurance benefit, and as such, is not taxable upon receipt. Employers may also deduct expenses incurred and claims paid out under self-insured group plans.
Extended Health Care and Dental benefits are not included in employee income as taxable benefits unless there isn't a contracted plan, an insured plan or a union agreement in place.
GST is payable on Broker consulting fees only and PST was applied to group benefit plan premiums in 1993 by the NDP Government. The Ontario Government assess a "hidden" tax on all group insurance premiums. It's called hidden because most people are not aware it exists. The charge in Ontario is 2%, is built into the premium and paid to the Government by the insurance companies. (This hidden tax is not applicable to the health and dental premiums provided by non-profit benefit plan providers, such as the Chambers of Commerce Group Insurance Plan.)
Are My Prescriptions Covered?
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As government programs change their benefits, often reducing the coverage, it's more important than ever to understand how your group insurance plan can provide a financial safety net - especially when it comes to prescription drugs.
All group health plans base their benefits on a list of eligible drugs called a formulary. Most insurance companies have several formularies available. This allows employers to choose from comprehensive plans that cover most prescription drugs to more restrictive plans where only certain types of drugs are covered.
Some group plans even let the employer add or remove specific drugs to control coverage and cost. For example, smoking cessation or erectile dysfunction drugs may be covered under some plans but not under others. These particular coverages are costly items to include in a firm's benefit plan by the way.
If a firm opts for the most comprehensive plan, one that includes all medications with a DIN (Drug Identification Number), your plan will allow reimbursement for over 10,000 items. Such plan are not common today because of the very high cost. Today's more typically chosen formularies would cover drugs which, by law, require a prescription; approximately 8,300 items.
"Managed Formularies" are popular today as they have cost containment features. For example, these programs may pay for generic drugs, but not the additional cost of brand name versions. Some group plans use a provincial drug listing which cover between 3,500 and 7,500 items. Privately developed formularies, such as Emergis "National Formulary", cover between 6,200 and 6,700 DIN designated items.
Whichever formulary you choose, keep in mind that medications may have multiple DINs. That's the case with a 200 mg tablet, a 400 mg tablet and a 400 mg time-released capsule, all with the same active ingredient. With some formularies the 400 mg tablet may be covered while the time-released capsule might not.
Too many choices? Your Chambers Plan Agent can help you select the right formulary for your firm's needs.
The Chambers Group Insurance Plan Has Been A Successful Mission
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The Chambers Group Insurance Plan is overseen by the Chamber Insurance Corporation of Canada (CICC). Their board consists of two representatives from each participating region of the country; One member being a permanent Chamber staff person, and the other being a volunteer member. As a board they ensure the Plan is being operated to the best interests of the Chamber members across Canada. Their mission is to provide a competitively priced comprehensive group insurance benefit plan available to all participating Chamber members and their employees.
Since the inception of the Plan in 1970 the day to day operations have been managed by Johnston Group Inc., located in Winnipeg. They specialize in the administration of group plans for large corporations and organizations and all that this service entails. They have been named as one of Canada's 50 Best Managed Private Companies for seven consecutive years.
Over the last year more than 4,000 new businesses chose to acquire their group benefits with the Chambers of Commerce Group Insurance Plan. Equally important, 92.5% of existing insured firm members chose to renew their current Chambers Plan coverage; A very strong sign of overall satisfaction with the product offering.
As of April 1, 2008, there was $213,416,643.00 of in force annual premium and 27,257 insured firms providing coverage to 109,846 employees and their family members. For the 12 month period preceding the above date, 268 Life claims were paid, in addition to 1,149 Disability claims, 1,097,930 Extended Health claims and 288,313 Dental claims were paid.
Health and dental claims are settled within 24 - 48 hours of their receipt by the Chambers Plan Claim Departments, and employees can have their claim payments deposited directly into their personal bank accounts if they so wish.
The Management at Johnston Group Inc., meet with their Agents twice per year to review all aspects of the Plan and to request advice and suggestions on how to improve the Chamber Plan's service and coverage offerings. To my knowledge no other group benefit market in Canada is similarly supportive and committed to their clients and Agents.
The Board of Directors also meet twice per year to ensure the Plan remains financially sound and competitive, and to review the many new options, benefits and enhancements that are introduced every year.
A coast to coast network of very fortunate Advisors/Agents, of which I am one, work closely with local Chambers to market the Plan and service participating firms. Chambers and Boards of Trade receive an administration fee for endorsing the Plan to it's members.
A benefit plan is an excellent recruitment and retention tool for all sized businesses. If you're thinking about acquiring coverage for yourself or firm be sure to get quotations and solutions with the Chambers Plan, the most progressive provider of group benefits to small firms in Canada.
Choices, Choices, Choices: How Do You Know Who To Go To For Your Firm's Group Benefit Plan Needs?
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Almost 24 million Canadians are protected today by one or more life and health industry products. These coverages have been acquired from the 100 plus life and health insurance companies who are licensed to operate in Canada.
Out of approximately 116,000 people who work to deliver these insurance products and services more than 50,000 are full-time employees and Agents, with close to another 64,000 Independent Agents and Brokers, working coast to coast.
So the question is, how do you know who to go to for your firm's group benefit plan needs? As you look for a Group Benefit Plan Carrier, Agent or Broker keep these four things in mind.
First, decide what's more important to you, the insuring company or the person you will be dealing with? Insurance Agents who work exclusively for one company have extensive knowledge of one insurer's products. If you have comfort in dealing with a particular Agent or his/her market, it may be the way to go. On the other hand, an Independent Agent or Broker who has access to numerous markets may satisfy your need to compare a number of different companies and what benefit packages they have to offer.
Second, don't let an Agent or Broker start "selling" you a plan. Make sure your firm's needs and objectives are thoroughly understood, and that the Agent/Broker works with you to find the best coverage and plan design that will provide a sustainable premium.
Third, as in any business, on-going "service" is very important. Will the Agent or Broker be able to assist you quickly and efficiently upon request. Will your claims be paid promptly? Ask as many people as possible who you know who have group benefit plans in place for their recommendations.
Fourth and last, inquire about the Agent or Broker's experience, the number of markets they have access to and do business with and how many firm clients do they presently have. If you were considering taking a flight to a far away destination tomorrow wouldn't you want to have a Pilot who has flown the route five hundred times rather than one who is just making his fifteenth trip?
Your group benefit plan provides protection to your business's most important asset - you and your employees. Take the time to find the best possible solution for your firm.
Using Cost Plus Instead of Co-ordinating Benefits Can Save A Firm Hundreds of Dollars Per Year
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Employees who have group benefit coverages through their spouse's employer's plan have the option to opt out of the Extended Health and Dental coverages with their firm's plan if they wish to do so. These employees would then be insured for all other coverages such as Life, Long Term Disability (LTD) and Dependent Life, if they were provided.
When an employee is required to pay 50% of the premium, which is much the norm today, and their spouse's plan provides more comprehensive coverage this would be a logical thing to do. It would also make good financial sense to have the spouse who has the higher earnings to be the one to carry these coverages, or the spouse who receives their coverage at no cost because it's part of their employment package.
Employees can co-ordinate benefits with their spouse's benefit plan in order to top up any shortfalls with their own employer's plan. So if each person has 80% Basic Dental coverage for example, it is one way for them and their family to receive 100% coverage.
At times when employees wish to co-ordinate benefits I recommend my firm clients to inquire as to what these employee's main concerns are and what the amount of money is that they plan to save by being able to co-ordinate benefits. The reason for this is because it could very well make more sense to reimburse these employees the difference through the Cost Plus Program rather then having them co-ordinate benefits.
To give an example, a few months ago I was contacted by a client of mine who explained that one of his employees wanted to add the Health and Dental back on to her coverage because her spouse had changed jobs and his new coverage is not as comprehensive as his previous benefit plan. He asked me to speak with this employee in order to explain what forms and information was required to initiate this process.
After talking with this employee for a short period of time I found out that she was mainly concerned about a $200 annual shortfall that her and her spouse would now realize due to the recent reduction in her spouse's dental benefits. I in turn explained that it was going to cost both her and her employer $1,200 a year each to add the Health and Dental coverage back on to her plan. We all agreed that paying out $2,400 in premium order to save $200 a year didn't make any sense at all.
I recommended to my client that he utilize the Cost Plus Program, that is available with the Chambers Plan, to reimburse this employee her out-of-pocket dental expenses as it arises each year. They readily agreed and who wouldn't. After all the firm saves approximately $1,000 per year, the employee saves $1,200, it's considered a business expense similar to a premium payment, it's not considered a taxable benefit to the employee.
In this particular case the co-ordination of benefits was going to be complicated as well, because the employee would have been considered a Late Entrant for not applying for the health and dental when her coverage first began. This however is another topic for another time.
Changes to Benefit Rules Reflect Market: More Owners Now Work Past Age 65
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Across North America, there are more and more people working past age 65. It used to be you couldn't get group benefits past age 65 - and you certainly couldn't start a group plan after age 65, but those rules just don't make sense in today's work force.
Under the Chambers Plan, you can apply for a new benefit plan once your company has been in operation for 6 months. Every Chambers Plan program is a custom program, and coverage for participants up to age 75 can include:
- Health Care, including paramedical services, ambulance, semi-private hospital, medical appliances and equipment and prescription drugs ( if desired ).
- Visioncare and Preferred Vision eyewear discounts.
- Health Access telephone line offering information on health, nutrition and regional resources.
- Unlimited Out-Of-Country Emergency Medical for an unlimited period of time.
- Group Life benefits with accidental death and injury payments.
- Dependent Life Insurance.
- Dental Benefits.
- Best Doctors for serious illness diagnosis and treatment planning services.
- Employee Assistance Counseling services for confidential help for personal issues.
So if age 65 is just another birthday to you and not retirement, remember your Chambers of Commerce Plan wishes you all the best - then keeps offering you the best in group benefits for small business.
Find Out If You Can Offer What You're Promising
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Every year I receive a few phone calls from business owners who ask if I can help them to provide group benefit coverages for just one key employee. The background and industry of every business has been different but their stories are very similar.
The owner tells me that they don't have coverage for themselves or their present employees, but they need it for just one person. In most cases this person has recently been hired, is in a managerial or supervisory position and they are key to the operation of the business. Some of these key people have been lured from a competing firm who offered group benefits. They consider the coverage important and they have negotiated for it to be part of their employment package with their new position.
The business owner explains that he promised their key person the same benefit plan coverages that they had with their past employer. No, they didn't make any inquiries beforehand and they are very surprised and disturbed that they have had no luck what-so-ever trying to fulfill their promise of coverage.
How big of a disaster do you think this might be? One business owner complained to me that his new key employee and his spouse were quite perturbed with him because they couldn't make appointments for their family with their new local Dentist because they still didn't have coverage after three month's employment and time. That's nothing I told him. Just imagine what would happen if your key employee or family member experienced a serious illness or injury while being without insurance benefits? Now that's trouble I said, and guess who could be held responsible for the employee's loss of income, drugs bills and other medical costs? It would be bad news for him but a dream come true for the firm of Shapiro and Shapiro.
There are presently 15 markets in Ontario who underwrite group benefit plans for businesses and as well there are a vast number of associations who offer group plans to their firm members. The majority of the 15 markets, (Great-West Life, Manulife, Sun Life and etc.), who I have access to, require firms with 5 or more full-time employees in order to provide coverage. In addition, most of these insurers require 100% participation for firms with fewer than 10 employees.
It is also important to know that many of these insurers require 5 - 10 or more employees in order to provide a benefit plan with guaranteed coverages. Therefore, if an employee with a small firm has a pre-existing health condition they could be declined some or all coverages.
The list of criterium of the different group insurance markets are too many to mention in one article. The point I wish to make is that business owners should take the time to consult a Group Benefits Broker to ensure that their promises can be honored in full.
Has Your Group Travel Insurance Taken A Holiday?
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Many group benefit plans cover emergency medical expenses for employees and their family members, so long as the claim is for an " accident or unexpected illness " outside the home province.
In many jurisdictions, if you have such a claim, you will first require to send your bills to your provincial health plan. Once the government has paid it's share, you then need to send the bills to your group insurer for reimbursement of any outstanding amounts. (As a regular service and to simplify the process, travel medical bills can be sent directly to the Chambers of Commerce Group Insurance Plan, and they then submit the bills to OHIP on your behalf. Also, their Out-of-Country coverage provides unlimited medical costs for an unlimited period of travel time).
It's important to review and understand your Out of Country/Province Coverage before you leave on your trip so that you are not faced with any costly surprises. It's possible that medical treatments received before you leave home could affect you or a family member's eligibility for travel coverage. Therefore before you travel:
- Check with your group insurer if you have had an illness that has been previously diagnosed or treated, especially if the condition has been identified within the 12 months prior to your departure.
- Check with your insurer if your treatment has changed, even if only the level of medication has changed and even if you're taking less of it.
Typically, group insurance plans cover unforeseen events that require immediate medical attention. If you know you have a medical condition now, be sure you share your insurer's understanding of what would qualify as an " unforeseen " event.
If your benefit program doesn't give you the travel safety net that you need, consider shopping for another program that will or an individual plan to fill any gaps.
so that I can assist you to aquire your own affordable insurance policy. Free quotations can be provided by phone, fax or email.
