The average cost of employee benefits plans in Canada
Because Canadian health and dental plans vary, it’s difficult to know an average cost. According to MaRSOpens a new website in a new window, the average annual premium works out to about 15% of payroll for a smaller businesses or up to 30% of payroll for large companies.
However, there are benefits plans that cater to small businesses allowing them to offer a plan for as low as 1 to 5 % of payroll.
If you’re setting up an employee benefits plan, and a retirement savings plan at the same time, you may also be able to “bundle” both benefits to save money.
Note: the percentages quoted here don’t include the mandatory benefits that all Canadian business must provide:
- Vacation and statutory holidays (varies by province)
- Maternity and parental leave
- Sick leave
- Critical illness leave
- Compassionate care leave
- Canada Pension Plan/Quebec Pension Plan contributions
- Canada Employment Insurance
What types of benefits should you offer?
- Health insurance – Reimburses the employee and dependents for all or part of expenses for physiotherapy, chiropractic, massage therapy, etc.
- Drug – Reimburses employee and dependents for all or part of expenses for prescription drugs and drug supplies such as syringes.
- Vision – Reimburses employee and dependents for eye exams and a portion of prescription eyeware and contact lenses.
- Dental – Reimburses employee and dependents for all or part of expenses for regular check-ups and dental treatments.
- Out-of-country insurance – Covers medical expenses for employee or dependents if they have a medical emergency outside of Canada.
- Life insurance – Provides for the employee’s family if the employee dies while they are a plan member. Coverage is usually based on a multiple of employee’s salary.
- Accidental death and dismemberment (AD&D) insurance – Provides benefits to employee’s family should the employee die accidently, become paralyzed or lose a limb, sight, hearing or speech in an accident.
- Critical illness insurance – Provides benefits to the employee’s family should the employee be diagnosed with a critical illness from a defined list.
- Disability insurance – Provides the employee with regular income to replace lost income due to a lengthy disability due to disease or injury.
The benefits of benefits
- Attract and retain employees – Today, most employees expect, and value, benefits. In fact, according to Sanofi CanadaOpens a new website in a new window, 86% of plan members agree their health benefits plan is an important factor when deciding on a job offer. That’s why a benefits plan helps smaller employers compete with larger ones.
- Healthier employees – Benefits help keep your employees healthier by making health care costs easier to afford, which can lead to fewer sick days.
- Morale boost – Knowing you care about their well-being builds loyalty and appreciation.
- Tax advantages – The cost of many employee benefits can mean a tax deduction for the employer.
- A foundation for success – Offering employee benefits sets the stage for you to succeed and grow by attracting, hiring and keeping good employees. According to the Sanofi CanadaOpens a new website in a new window, 71% said their health benefits plan is a strong incentive for them to stay with their employer.
When should you consider getting health benefits for employees?
There are benefits plans available for companies as small as 2 employees.
These are the signs it’s time for you add a benefits plan:
- Your business can afford it
- You need to compete for employees with other companies that provide benefits
- You’re looking for ways to increase morale, productivity and loyalty
- You have key employees whose skills and knowledge are valuable to the success of your business
- You’re looking for additional ways to reward your employees