December 4, 2012
by Bruce

Should Employers Pay Provincial Medical Premiums?

provincial medicalUnlike Ontario, premiums for provincial medical services in British Columbia are billed on a monthly basis rather than covered through income tax. Because of this, employees are occasionally surprised and disappointed to find out their employer does not cover this charge.

Interestingly enough, having the employer pay doesn’t really make much sense in the end when you break it down.

Related: Tax Tips To Improve The ROI of Your Employee Benefit Plan


Think About The Tax

provincial medical

For both the employer and employee, you need to consider where the best use of money is going to be. If you pay for your employee’s provincial medical premium, that becomes taxable income for the employee. They get taxed at their personal tax rate and you pay the applicable payroll taxes.

The employer gets a tax break for covering it but that $60 premium (for a single person) becomes a taxable benefit to the employee. If they end up paying tax on that $720 at the end of the year anyways then what is the value of this benefit to the employee?

Depending on the employee’s gross annual salary, it’s possible that $720 could put the employee into a higher tax bracket, further reducing the value of the employer’s generosity in paying the Provincial Medical Premium.


provincial medicalCreating A Win-Win Situation

The thing that many employees (and even unions) don’t realize is that it’s actually better for the employee to pay for their own medical premium and have the employer allocate those funds to an enhanced employee benefit plan instead.

Take that Provincial Medical Premium amount and apply it to the premium paid by the employee for his benefit plan. This will increase the employees take home pay.   It is still a tax-deductible expense to the employer that does not incur any payroll taxes or income taxes for the employee.

That’s what I call a win-win!

Related: 3 Expensive Mistakes Employers Make When Buying A Benefit Plan

November 30, 2012
by Bruce

Stress Taking Its Toll On Canadian Employees

employee benefit planStress is a demon we all deal with on a near-daily basis. With the cost for employers escalating from $12 billion a year in 2003 compared to over $22 billion today, the numbers prove that the problem is only getting worse.

A recent article from the Vancouver Sun discussed a new Canadian study showing that key employees tend to be under the most stress. Frankly, this should be beyond alarming for employers because we’re talking about the top employees that are the driving force of an organization.


employee benefit planYoung Canadians Hit Hard

The younger generation has seen devastating levels of mental anxiety with a recent study showing a staggering 90% of people between 18 and 24 years of age feeling excessive stress, compared to 72% in adult Canadians. [Source]

Underemployment seems to be highest among young Canadians with almost 40% saying they felt they are underutilized. The study was able to closely link feelings of well-being to full time employment – an important observation given the economic climate.


Stress’ Impact On Employees

employee benefit planThere are several mental and physical consequences of stress that can manifest with employees. A 1999 report from the Centre for Addictions and Mental Health suggests that stress can cause employees to:

  • Feel depressed
  • Be careless and reckless
  • Become easily distracted/lack of concentration
  • Eat poorly
  • At risk of substance abuse
  • Sleep poorly, etc.

These issues are not only a terrible way to live life, they become very costly issues for both the employee suffering from them and their employer. Ignoring these problems can lead to:

  • Higher employee benefit plan payouts
  • Increased absenteeism
  • Increased presenteeism
  • Decreased productivity

What You Can Do About It

employee benefit plan

Equipping your management team to deal with issues surrounding employee stress is necessary for optimal mental health and efficiency in the workplace. With 1 in 5 Canadian employees dealing with depression or some form of mental health issue, it is more important than ever to have processes to help employees recover.

The first step is implementing an Employee Assistance Program (EAP) – a confidential service that offers employees short-term counseling solutions for crisis, anxiety, depression, work-related and home-related issues. Trained professionals can offer referrals to a specialist if the issue is severe enough and requires additional medical attention.

It’s not always practical to have management discuss these personal matters since employees might not feel comfortable talking about it with their superiors. EAPs offer a confidential way for employees to seek help for private issues that are affecting them on a psychological level.


Keeping A Positive Environment

Most importantly, the workplace should always be a positive and non-judgmental environment where employees can feel safe. Dealing with mental issues like depression and stress in the workplace can amplify the problem and potentially become exponentially worse if handled poorly.

For more information on Employee Assistance Programs and employee benefit plan coverage, click here.

November 23, 2012
by Bruce

Tax Tips To Improve The ROI of Your Employee Benefit Plan

employee benefit planProviding an employee benefit plan for your Canadian workers is not only a valuable form of compensation for them but also an excellent way to give a raise without incurring any payroll taxes. An employer can pay for 100% of the benefit plan but it actually makes more sense to have the employee share in some of the cost. When setup correct, your employee benefit plan can have zero tax consequence to both the employee and the employer.

Related: Reducing Absenteeism In The Workplace


employee benefit planWhere The Tax Gets You

Revenue Canada says dependent life insurance is taxable as T4 income, if the employer pays any portion of the premium.

If the employer pays any portion of a disability premium that covers weekly income, short-term or long-term disability (as a result of a accident or sickness) it is also classified as taxable income.

Let’s say the employer is paying $30 a month for a disability insurance premium and that buys the employee $3000 a month in income in the event of accident or illness. If the employee makes a claim, that $3000 a month is now taxable income. It’s beneficial to have that portion of the premium be paid by the employee for this reason.


Taking Tax Out of The Equationemployee benefit plan

When we setup a plan, the employee pays all the taxable portions. For sake of example, let’s say the premium is $120 a month and the employee pays $60 with the employer paying the other half. That constitutes all the taxable benefits and anything leftover goes to extended health and dental.

Therefore, anything paid by the employer is a tax-deductible expense but not taxable to the employee. It’s a zero tax consequence to anybody.

Related: 3 Costly Mistakes Employers Make When Buying An Employee Benefit Plan


employee benefit planA Win-Win Situation

If the employer pays the entire premium on behalf of the employee, it’s tax deductible for them but the employee has to pay tax on the insurance premium, the dependent life premium and has a taxable disability benefit if he/she makes a claim.

This misunderstanding can lead to employees getting a worse deal than they actually are. Unsuspecting unions might also favour 100% coverage of the employee benefit plan by the employer without realizing that the employer ends up getting taxed more in the end.

November 20, 2012
by Bruce

Are You Afraid To Tell Your Employees To Use Their Benefit Plan?

employee benefit planOne thing is certain when it comes to workplace health: employers should not be afraid to tell employees to use their employee benefit plan.

Because of the pricing model offered by traditional major insurance companies, many employers are fearful of the notoriously high renewal rates that are synonymous with making claims. Why would you attract quality people, retain them with a good employee benefit plan and then avoid telling them to use the plan so they can maintain their health?

You shouldn’t have to do that because it does not make any sense!


Why Does This Happen?

This happens because over 95% of employers buy their employee benefit plan using the “standalone” or “experience-pricing model”. They have never heard of the pricing protection offered by pool priced employee benefit plans, a model that groups together a large number of employers to protect each other from large and unreasonable premium increases.

With the majority of Canadian insurance companies wanting to make a profit for shareholders, they make sure they recover any losses in the next policy year. When an insurance company does this, it is not uncommon for you to see a premium increase of 30-40%.

Related: 3 Expensive Mistakes That Employers Make When Buying An Employee Benefit Plan [Free eBook]


Small Changes. BIG Differences!employee benefit plan

To give you an example, we have renewed most of our pools this year with increases of 3%, 5% and 2%. My clients are complaining. A client who moved from our benefit pool to an experienced priced plan last year has just received a 60% premium increase.

Beware of insurance companies that only speak of attraction and retention of employees because they do not tell you how to maintain your employees. If they do, you will have a very large premium increase.


employee benefit planLet’s Talk About ROI

The ROI of a pooled employee benefit plan is high because employees are obtaining maximum usage from the plan, absenteeism goes down, work injuries go down and you can feel comfortable with your decision in the end. It fits within your budget.

There are very few insurance brokers in Canada offering pooled benefit pricing to their prospects and clients. A broker specializing in pool plans is one of your advisors that can help your business grow.

For more details on pooled plans and how they work, click here.

November 16, 2012
by Bruce

Steps To Achieving A Healthy Workplace

employee benefit planDuring a recent doctor visit we talked about my exercise and health routines. I was surprised by some of the information he shared with me. I personally go to the gym, lift weights, do TRX programs, run and do other cardio exercises. My doctor said my program was pretty extensive but does need not be that extensive to stay in shape.

He says maintaining a healthy exercise routine can be “as simple as walking for twenty minutes a day at a normal pace”. Extensive cardio isn’t necessary, simple exercise is enough to have an effect on your body’s physiology. Keep in mind I am no doctor, I’m simply repeating what a qualified medical professional shared with me (my little disclaimer).

Related: 3 Costly Mistakes Employers Make When Buying An Employee Benefit Plan


employee benefit planThe Sitting Disease

New studies have shown sitting for three hours a day can cut two years off your life. When you sit your muscles shut down completely and stop doing the things that have positive effects on our body. Movement aids in filtering blood, removing toxins, building better and stronger muscles and burning calories. Our hunter-gather roots as a species show that humans were not designed to sit around all day and now we are paying for high priced studies to tell us what we already knew.

Many individuals who sit constantly at their desk for an 8-hour period without movement will eventually end up with medical problems such as diabetes, back problems and other chronic health issues.


Encourage Healthy Practices

employee benefit planEmployers should encourage employees to get up and take walks after lunch or during breaks. People who take a short exercise break are more alert and more productive when they return to their workstation.

Moving twenty minutes a day seems to be the magic number. Any employer that can get their employees moving more are far more likely to see tangible results in preventative health measures, productivity and profits.

Many companies are saving big money by encouraging physical activity among workers by implementing a unique employee benefit plan and creating health programs that encourage physical activity. A few examples:

  • Municipal employees in Toronto missed 3.35 fewer days in the first six months of their MetroFitness program compared to those who did not enroll
  • With only 60% of employees participating, Coca-Cola was able to save $500 a year per employee through their company fitness program
  • BC Hydro employees that enrolled in a work-sponsored fitness program had a turnover rate of only 3.5% (the company average is 10.3%)

Related: Making Your Employee Benefit Plan Work For Everyone In The Company

Making it out to the gym or health club is sometimes not possible (or not preferred) so suggesting simple exercises and walking can help improve your ROI. Simple educational efforts like putting up informative posters on healthy lifestyle choices and the benefits of exercise can go a long way with those who are uninformed. Avoid bringing in donuts and try doing a “healthy snack day” instead.

Tell employees to use their employee benefit plan to take care of themselves. They will be healthier and both of you will be a lot happier!


November 12, 2012
by Bruce

Presenteeism: The Costly Epidemic Most Employers Haven’t Heard Of

presenteeismAfter I published my recent article on “Improving Absenteeism In The Workplace”, a colleague showed me an article about something I had never heard of before called presenteeism. Employers are naturally concerned about the issue of punctuality and absenteeism but what about the times when they go to work sick or not fully present?

That is presenteeism.


The Problem Is NOT Cheap

When you have a sick employee showing up for work, not only are they going to be less effective, they are dramatically increasing the chances of other employees getting ill simply through contagion.

Big, expensive and potentially dangerous problems can arise when you have a worker operating machinery without a clear head. Physical sickness is the first thing that comes to mind for most people but it isn’t the only thing that’s creating harmful distractions in the workplace.


1 in 5 of Your Employees Are Depressed


Recent stats are showing that 1 in 5 Canadian employees suffer from depression and other mental health related issues. This data correlates with our information showing medications for mental illness account for 30% of claims on the average group plan. Everyone loses when it comes to unaddressed mental health issues.

It’s tough to focus when you are going through an emotional crisis and many managers lack the proper training to effectively deal with it when it arises in the workplace. Good employees can be greatly impaired by mental stress; nobody is truly immune from the problem.


presenteeismAbsenteeism Vs. Presenteeism

Many employers feel a sense of relief when an employee decides to come in, despite whatever illness they are dealing with. Studies have shown that this desire is most likely misplaced, as presenteeism is believed to cost Canadian businesses more money than absenteeism itself.

A survey completed by AccountTemps revealed the uprising trend of working while “under the weather” with 51% of employees saying they go to work even when they are feeling sick. This is estimated to cost businesses billions of dollars but what can be done to combat it?


Finding Cost Effective Solutions

Although no employer can purchase a magic wand that will fix all of these issues overnight, there are several options that are worth considering and implementing. Many effective preventative solutions can be found with the right employee benefit plan such as:

  • Employee Assistance Programs (EAP) are a great first step to assisting with employee mental health issues

  • Encouraging physical health maintenance of employees
  • Extended medical coverage
  • Paramedical services (such as chiropractor & physio)
  • Purchasing a pool priced benefit plan can significantly help avoid high premium renewals due to excess usage
  • Employers can attend training sessions on how to recognize presenteeism

Of course cost must be a major factor in gaining value and ROI from your group plan so it’s important to be discerning when choosing your employee benefit plan. A great resource to read is “The 3 Mistakes Employers Make When Purchasing An Employee Benefit Plan”.

The eBook is available for free instant download here.

November 2, 2012
by Bruce

Attracting Top Talent by Using Employee Benefits

employee benefit planAlthough recessions maybe tougher times to make sales, they are the perfect time to get the top talent. Jobs are harder to come by and a lot of qualified talent is standing in unemployment lines with their resumes in hand, ready to work. Despite this fact, there are still vital forms of compensation top level talent looks for in an ideal workplace. For example:

  • Culture/Work Environment
  • Hours & Flexibility
  • Extended health and dental benefits
  • Flexible Employee Benefit Plan
  • Pension
  • Profit sharing
  • Cost plus

Giving Tax-Free Raises

employee benefit plan

If you have a top executive making 150k a year, most of any raise received goes to taxes. By placing key executives in a different benefit classification than the rest of your employees you are able to offer them enhanced benefit options instead of pay raises. Most employers aren’t even aware they can create separate classifications with their employee benefit plan, referred to as a FLEX Plan.

By offering key executives value instead of money, it will give them more spendable dollars and you will pay less in payroll taxes. This strategy will help you attract highly qualified executives and sales people from your competitors.


A Vital Part of Compensation

employee benefit plan

Benefits are not just important to executives and senior management, they are also a vital part of compensation for lower income employees. The reality of taking care of our families and ourselves is expensive but vital to our health and well being.

A properly designed benefit plan will lift the paralyzing stress of financial burdens associated with medical care costs.

We all know that shopping down the organic foods isles can get pricey and so is much of the food that is generally perceived as “more healthy”. Because of this, we see other things taking a priority over health in people’s wallets. As employers, we can’t put the food in their basket when they are shopping at the grocery store but we can offer tools for maintenance and care through an employee benefit plan.


Maintenance Is Key To Good Health

Going to the chiropractor isn’t covered by government health care but can play a critical role in the ongoing maintenance of employees, especially those in industries like construction. An employee benefit plan can also help workers that are burdened by the costs of expensive maintenance drugs for issues like diabetes and blood pressure problems.

Employee benefit planHelping with these costs is like lifting a weight off the shoulders for many of your employees and research suggests that it pays off. 76% of small businesses believe that taking better care of their employees has made them work harder for the company.

This shouldn’t be surprising for many of us. If you feel like someone is taking care of you, there is an instinctive drive to reciprocate. By providing your workers with an employee benefit plan they will use, you can reduce turnover while increasing productivity and overall health.

Making the right decision isn’t always easy so I encourage every business owner to download the free eBook: 3 Mistakes Employers Make When Buying An Employee Benefit Plan. It is a valuable insight into how major insurance companies price their plans, how to measure the ROI of your benefit plan and other insider info that could potentially save you thousands.

Click here for instant delivery!

October 30, 2012
by Bruce

How Your Employees Can Help Reduce The Cost of The Company Benefit Plan

employee benefit plansWe have become a society of expectation. Many of us expect the government and our employer to take care of us from the cradle to the grave. Canadians expect the government to provide income at retirement, 100% reimbursement of all services and medications from the provincial medical system and services not covered by the government should be reimbursed by their employee benefit plans.

When adequate reimbursement is not received they complain.


The Current Situation

employee benefit plansWith the average monthly cost for medications in Canada currently at $765 per person and specialized medical supplies (such as C-Pap machines) doubling in the last few years, keeping Canadians healthy has gotten extremely expensive. Even paramedical and dental services continue to increase yearly and it is very difficult for governments and/or employer sponsored employee benefit plans to provide 100% reimbursement at a reasonable price.

In order to help keep costs down a procedure for claiming medications has now been put into place requiring employees to research out all resources providing reimbursement of medications and any services required.

The first place a person is asked to request reimbursement from is the Provincial Government, secondly to request help from societies such as the cancer, or MS society and then finally through employee benefit plans. A combination of all these resources will help individuals receive support for the cost of medications.

Not every province offers drug reimbursement so it is important individuals research help from any and all services available.

Related: 3 Expensive Mistakes Employers Make When Purchasing Their Employee Benefit Plans


Why Are Insurance Companies Requesting Cost Saving Procedures?

employee benefit plans

Would you believe many insurance companies did not know about the drug coverage provided by Provincial Governments or many societies? Taxpayers could be funding a drug reimbursement system in their Province but are not advised on how to access the service.

Many insurance companies are now requiring “Special Authorization forms” to be submitted to the government for approval on medications. The form is completed by your doctor at the time the drug is prescribed and then sent for a government decision, which usually takes about 3 days to receive your answer.

To further help keep costs down employees should shop around for low cost dispensing fees for prescription. Don’t be afraid to ask! Dispensing fees can range from $4.00 to almost $13.00 per prescription so it can make quite the difference.


Expect Reasonable & Customary Reimbursement?

employee benefit plans

Most insurance companies pay for expenses that are “reasonable and customary” but what does that really mean? That doesn’t pertain simply to wheelchairs and breathing devices but services including chiropractic, massage and physiotherapy.

When an insurance company gets a massage bill for over $100, they’ll question it and may not pay for it because it isn’t reasonable and customary. A 45-minute massage in Nova Scotia may cost $45 but in BC the same service is around $75 – the variance between provinces is massive.

As each province has a different reimbursement and cost for medical and dental services, each province also has a different insurance premium cost for extended health and dental, whether it is pooled or experience priced. Everything is different because every government has a different price on the services they are required to offer under the Canada Health Act.

Ontario has the highest extended medical premiums in the country, not counting Quebec as they have their own system. Ontario has nearly 45-50% higher extended medical premiums than BC because BC offers prescription coverage to residents.

Related: Taking Your Employees Mental Health Seriously


employee benefit plansUsing The Plan Responsibly

If a worker has a benefit plan with 100% reimbursement and/or the premiums are paid 100% by the employer, they have no incentive to shop around for the best price for needed services. These practices contribute to rising costs of employee benefit plans for employers. Although some employees might protest, there are many reasons and benefits to employees and employers to have 80% reimbursement rates.

Higher claims eventually result in higher costs, especially if you are not on a pooled plan. Once employees are aware they are contributing toward benefit premiums, they become more conscious of their spending habits and how their style of purchasing can have a negative impact on premiums. That said, companies and their employees generally find costs much more reasonable and manageable when on pooled pricing. For an explanation on how pooled pricing can help control costs and see if your employee benefit plan is taking advantage of this type of pricing, click here.

Employees need to be educated on what cost saving measures can be taken to reduce claim expenses. There are many simple things all employees can do to help maintain cost and quality of employee benefit plans but it is up to the employer to make them aware of the options!

October 19, 2012
by Bruce

3 Mistakes Employers Make When Buying An Employee Benefit Plan

With over 30 years in this business, I have seen many common mistakes and misconceptions employers have when purchasing an employee benefit plan so I decided to do something about it and write an eBook. The world of insurance, group plans and employee benefits is extremely complex and I have done my best to ensure it has been simplified as much as possible so it’s easy to understand, no matter what your level of comprehension is currently at.

Employee benefit planThe eBook is called Three Mistakes Employers Should Avoid When Buying An Employee Benefit Plan and the following are a few of the important topics covered:

  • Understand exactly how traditional pricing models are designed to work against you
  • The secret pricing model major insurance companies don’t talk about (because they don’t want you to know)
  • How to measure the ROI of your benefit plan
  • Insider insight into how premiums and renewals are calculated
  • Potentially save THOUSANDS of dollars

Get instant delivery of the eBook for free now by going here.

Attract Top Level Talent

A great employee benefit plan is one of the key factors talent seeks when looking for their ideal workplace, especially with higher level executives and management. The more money an employee makes, the more they are taxed. An extended employee benefit plan is a tax-deductible raise that saves them from spending their after-tax dollars on services for themselves and their families.

Attracting talent isn’t the only thing employee benefits make a significant impact on since research data has shown that employees who feel more valued work harder at their jobs – effectively producing more results for their employers.

Understanding Your Options

Most employers aren’t even aware that they have a options when it comes to an employee benefit plan and pricing. This free eBook helps every employer bring a better sense of judgment to the table when negotiating with insurance companies for a better group plan.

If you have ever felt powerless against the insurance companies, this eBook is for you. Once you’ve seen the truth, you will be surprised how it didn’t get out sooner.


3 Mistakes Employers Make When Buying An Employee Benefit Plan