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SmallBiz Employee Benefits – “My sister and my daughter are my Employees.”

By June 8, 2020 No Comments

One of the great pleasures of SmallBiz organizations is that they can be a family business! Isn’t it great to work with just your children, your spouse, parents, and/or siblings?

Even though a lot of Smallbiz are set up with just family members as employees, Traditional Group Insurance (TGI) Carriers tend to shy away from providing them with benefits. In their conservative minds, they believe that if a business has primarily family members, then the benefits plan is more likely to be set up specifically to financially support one or more of the family members.

So, most of the TGI Carriers will decline to provide benefits to companies whose family content is more than 50%.

What is a more than 50% family content business to do, if they want to set up a tax-effective benefits plan? Well, there are a couple of different ways to approach this…

  1. Health Care Spending Account (HCSA): A tax-effective HCSA does not go through a TGI underwriting process. Setting up an HCSA is like opening up a bank account but it is specifically for Health and Dental products & services.
  2. Individual Health & Dental: Individual Health & Dental Carriers will bundle Individual plans for a SmallBiz company so that the tax-advantages are still there. The basic difference between the Individual and TGI Carriers is that the Individual Carriers will medically underwrite the coverage. This means that each family member/employee will respond to a series of questions related to their health. This way, the Carrier can make a more informed decision on whether or not to underwrite the risk.

Having a Family Business and Benefits can be done.

Located in Cambridge, ON Sharkey Group Insurance  provides independent Employee Benefits advice & counsel for Small Businesses across Ontario.