How much do benefits cost employers?
Dec. 2021 – 15 min read
While the average annual premium is about 15% of payroll for a smaller business or up to 30% of payroll for large companies, there are small business options for as low as 1% to 5% of payroll.
The reasons to offer a benefits plan include employee retention, employee wellness and morale, and some potential tax advantages for employers
The average cost of employee benefits 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 - Opens 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.
What percentage of benefits do employees pay?
Employers (plan sponsors) must pay at least 25% of the cost of the plan, which means employees usually pay up to 75% of the cost of benefits.
What types of benefits should you offer?
- Health insurance (covers things like physiotherapy, chiropractic, etc.)
- Out-of-country insurance
- Life insurance
- Accidental death and dismemberment (AD&D) insurance
- Critical illness insurance
- Disability insurance
The benefits of benefits
Attract and retain employees – Today, most employees expect, and value, benefits. In fact, according to the 2020 Sanofi Canada Healthcare survey, 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 2020 Sanofi Canada Healthcare survey, 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.
Now that you understand more about how much benefits cost, you may want to meet with an advisor to:
Learn more about how adding an employee benefits plan could help keep your business successful
Get a quote on a benefit plan for your employees
This information is general in nature and is intended for informational purposes only. For specific situations you should consult the appropriate legal, accounting or tax advisor.