When sitting down with a SmallBiz Owner for the first time, thankfully I get asked a lot of questions because I have a lot of answers! The Top 5 questions I get asked are:
- What is it and how does it work?
- Do I have to fill out a Medical Questionnaire?
- What does it cover?
- How much does it cost?
- Will the cost ever increase?
1. What is it and how does it work?
Group Benefit Plans are a tax-effective way to compensate employees so they can have peace of mind that you are helping them offset Medical and/or Dental expenses and, in some cases, provide financial relief for loss of life or disability. There are 4 common ways to set up a benefits plan:
- Traditional Group Insurance (TGI)
- Health Care Spending Account (HCSA)
- Administrative Services Only (ASO)
- Flex Benefits (FB)
2. Do I have to fill out a Medical Questionnaire?
Typically, you do not have to complete a Medical Questionnaire in order to qualify for coverage. Having said that, there could be pre-existing conditions that affect how much you get reimbursed.
3. What does it cover?
Benefit Plans are more often than not set up to reimburse the Health and Dental expenses of employees. In most cases, there is also the option to include “Peace of Mind” coverage such as Life, Disability, Critical Illness, and an Employee Assistance Program. You can also have different levels of coverage by category of employee (Management, Salaried, Hourly, etc…)
4. How much does it cost?
A Benefits Plan can cost as little as $51 per month per employee for an HCSA…or as much as you want to budget for. Typical TGI and FB plans are going to cost anywhere from around $1,000 per year per employee upwards of $5,000 per year per employee…all depends on the demographics (age, sex, marital status, occupation) of your employees and what type and level of coverage you would like put in place. ASO is rated somewhat similar to TGI.
5. Will the cost ever increase?
If you go the HCSA route, then you decide if you want to increase the contributions. If you go with a TGI plan, then your Carrier will typically want to increase your rates at the end of the year of each year…really depends on the demographics and on how much you and your employees claim vs how much you paid in premium. If you choose ASO, then your contributions will increase/decrease depending on exactly how much you contributed vs how much was claimed. The FB option is somewhat similar to TGI but it is on a 2-year rate change cycle.
Located in Cambridge, ON Sharkey Group Insurance provides independent Employee Benefits advice & counsel for Small Businesses across Ontario.