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How do employee group health benefits plans work?

Apr 18, 2019 11:21:01 AM

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An employee group health benefits plan delivers protection for your employees above and beyond what government health insurance covers. Group health benefits can help cover healthcare costs such as prescription drugs, dental work and paramedical services, as well as provide life and disability benefits.

Who pays for the plan?

Employers sponsor their plan and provide these benefits to employees as part of their total compensation package. The right benefits plan is increasingly seen as a differentiator that can be more important than higher salaries for some employees. A benefits plan that meets employees’ diverse needs can help employers attract and retain talent.

Employees may have the option to pay for voluntary benefits or coverage over and above what the employer is offering. This optional coverage is usually available at lower rates thanks to the group benefits plan.

Who is involved?

The key people involved in a group benefits plan include:

Insurance provider – the insurance company that insures and administers the plan, including the adjudication and payment of claims

Plan sponsor – the business owner who pays the plan premiums

Plan administrator – an employee with the Plan Sponsor in charge of overseeing the plan, working with the Insurance Provider, and communicating with employees

Plan members – the employees and their dependents who are enrolled in the plan

What’s included in a benefits plan?

Employers can customize their group benefits plan to suit their employees and budget. A group benefits plan may include any or all of the following categories, at varying levels of coverage. It’s important to choose coverage based on your business’ needs, and communicate this coverage clearly to your employees.

Extended Health Care

Extended health care covers medical expenses outside the scope of the plan member’s provincial health coverage. Prescription drugs, medical supplies, vision care and paramedical services such as massage, physiotherapy and acupuncture are all considered part of extended health care.

Dental

A toothache doesn’t have to hurt your wallet. Dental coverage can include check-ups, cleanings, x-rays and filings. The plan sponsor may also choose to include major services such as bridges, crowns and surgery in their coverage.

Life and Accidental Death & Dismemberment (AD&D)

Life insurance supports an employee’s loved ones by making a payment in the tragic event the employee passes on. Life insurance can assist with the sudden loss of income, allow the family to continue living their familiar lifestyle and cover debts and final expenses. The payment can be either a flat amount, or a multiple of the employee’s earnings.

Some plans also offer Spousal or Dependent Life insurance, which supports the employee should they tragically lose their spouse or a child.

AD&D provides additional support by providing a lump sum payment if the employee dies or is disabled accidentally.

Short Term Disability

Short Term Disability insurance replaces a portion of an employee’s income while they are unable to work for a short period of time due to illness or injury.

Long Term Disability

Prolonged absences can impact an employee’s income. Long Term Disability insurance replaces a portion of an employee’s income while they are unable to work for an extended period of time due to illness or injury.

Health Care Spending Accounts

To provide the most flexibility for plan members, plan sponsors can choose to include a health care spending account (HCSA) as part of their plan. The plan sponsor makes a payment to the HCSA which plan members can use to manage eligible health and wellness expenses not covered, or beyond the limits of the plan.

What about flexible benefits

Flexible benefits are a fresh take on the traditional group benefits package. Instead of a “one-size-fits-all” approach, flexible benefits give employers the opportunity to offer more freedom and choice for their employees, while controlling their costs. The plan sponsor chooses a budget and coverage path, and then the employee allocates the dollars among the options to best suit their needs. Flexible benefits give plan members access to the coverage they need, while keeping businesses on budget.

Find out which style of benefits plan is right for you with our 2-step decision tool

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