This is a debate we see quite often amongst small businesses and their employees. With many employees at different stages of their lives,all with different priorities, the debate can often be a difficult one, leaving some employees feeling as though they’ve lost out. Either way, it’s important for employees to understand the value of a group benefits package and the costs associated with a salary increase, so that they are able to make an informed decision.
Group benefits allow an employer to offer another form of compensation for their employees. It’s also important to note that the employer contributions for benefits such as Extended Healthcare and Dental coverage are non-taxable in the hands of the employee. A provincial Retail Sales Tax (RST) is paid on the insurance premiums, but it is far less than the payroll taxes that are charged on a salary. Consider the added costs associated with a salary increase for both the employee and employer, such as CPP, EI, Workers Compensation and Employers Health Tax. Not to mention Provincial & Federal Income tax which can reduce an employee’s take home portion by up to 53%.
Also worthy of considering is the monetary value of the coverage included within your employee benefits plan. On one hand we have the expected medical and dental expenses, such as trips to the massage therapist or cleanings at the dentist. On the other hand, we have a long list of catastrophic coverages that are included in many employee benefits plans. These unforeseen situations are where the true value of a group insurance contract really start to add up. Many plans include catastrophic prescription drug coverage, emergency travel insurance, semi-private hospital coverage, ambulance transportation, accidental dental, life insurance, long-term disability insurance, plus many more. Having insurance for these types of expenses can prove priceless if faced with a difficult medical situation for yourself or an immediate family member.
When considering group insurance for your small business, please ensure that you and your employees are aware of the differences between offering group benefits and a salary increase. Feel free to contact us and one of our brokers would be happy to help you navigate your options.