For most employers, offering a comprehensive benefits package is table stakes to attract and retain top talent. One of the main offerings employers can offer their employees is group health insurance.

It cover health-related expenses that are not typically included in provincial healthcare plans, like dental vision, and massage benefits.

Aside from group health insurance, professionals may also have access to benefits offered by professional associations and government. Like group health insurance, these benefits help reduce the burden of healthcare expenses. We’ve put together this guide to help you find out everything you need to know about group health insurance and other types of group benefits plans in Canada. 

Difference between group health insurance and individual health insurance

An individual health insurance plan covers an individual, who is also the policyholder in most cases.

By contrast, a group health insurance is a type of insurance where an employer foots the insurance cost for benefit of their employees. The employer is the policyholder, while the plan covers a group of people rather than an individual. 

The table below highlights the main differences between group and personal health insurance. 

Common Types of Group Benefits Plans

Group health benefits in Canada fall in three categories: 

1. Employer-sponsored benefits
2. Government-sponsored benefits
3. Benefits offered by professional associations

Employer-sponsored benefits

Employer-sponsored benefits are incentives or perks that employers provide to employees in addition to their salary. One of the most common (and popular) type of employer-sponsored is group health insurance, for both large and small companies.

Group health insurance can be defined as a health insurance policy purchased by an employer and offered to all eligible employees. Since group health insurance is typically offered as part of the employee benefits package, the employer usually pays all or part of the premiums. 

Group health insurance plans are typically structured in any of the following four ways: 

1. The employers pays all of the premium costs.
2. The employer pays part of the premium costs and the employee pays the remainder through payroll deductions.
3. The employers offers basic coverage free of cost, with the option to buy additional coverage. Employees pay all of the premium costs for the top-up coverage.
4. The employer sets up the plan, while the employees pay the entire premium. 

Government-sponsored benefits

Offered by federal or provincial authorities, government-sponsored benefit programs are specifically aimed at vulnerable demographic groups. These may include seniors, children, and individuals who don’t have access to employer-sponsored insurance plan. 

The coverage details and the criteria for eligibility differ based on the particular program and the province in which it is available. Examples of government-sponsored benefits plan include Canada Dental Care Plan, Extended Health Benefits, and Family Health Benefits Program.

Professional Association Benefits

Professional associations may offer health benefits, along with several other benefits, to their members. Premiums are paid by members directly or the professional association may pay the premium on their behalf and deduct the amount from the annual membership fees. Coverage details vary by plan, but most health benefits programs offered by professional associations like the Ontario Teachers Insurance Plan (OTIP) offer coverage for hospitalization, prescription medicines, paramedical services, and dental and vision care.  

Compared to employer-sponsored group health insurance, these plans are more flexible. Members can add their dependents and choose riders to tailor the policy to their needs. 

How much does traditional group health insurance cost?

Group health insurance is more affordable than personal health insurance, as the risk is spread over a larger group. However, since each group health plan is different, the exact cost varies depending on the package type and coverage details. Common factors that impact group health insurance cost include: 

• Coverage details: A comprehensive group health insurance plan has higher premiums compared to basic plans, which cover fewer things and have lower coverage limits. 
• Group size: Generally, a larger number of employees reduces the premium cost. 
• Average age: The greater the median age of the group, the more expensive the premiums will be. This is because health insurance premiums go up with age. 
• Claim history: A poor claim history may mean higher premium costs.

How does group health insurance help cover out-of-pocket expenses?

Provincial drug plans in Canada cover many necessary health expenses, but they generally won’t pay for all your medical bills. Group health insurance can cover the gap. It can supplement your provincial healthcare plan by paying for expenses it doesn’t cover. For example, these could include dental expenses, prescription drugs, or emergency travel medical care.

What are the different types of traditional health insurance plans?

The most common types of group benefits plans are: 

1. Extended Health Care (EHC) Plans

Most extended health care plans cover a wide range of health-related expenses, including but not limited to prescription drugs, physiotherapy, vision care, chiropractor visits and more.

2. Dental Insurance Plans

 Many employers offer dental insurance along with EHC. Group dental insurance generally covers an employee and his or her dependents (Spouse and children). Different plans offer varying levels of coverage, but you can typically expect to be reimbursed for:

• Diagnostic and preventive services (x-rays, dental exams, cleaning etc.)
• Basic and restorative services (e.g. fillings)
• Orthodontic services (braces for adults and children)

Comprehensive group dental care plans will also cover major restorative services, oral surgery services, periodontal services, and prosthodontic services. Cosmetic dental procedures, however, are not covered. 

3. Disability Insurance

Group disability insurance replaces a portion of an employee’s salary if they can’t work due to illness or injury. Disability benefits are paid monthly or weekly and start after the insured survives the elimination period — which can be anywhere between a few days to several weeks — after being disabled. Disability benefits are usually paid for a predetermined period (like 2, 5, or 10 years or to retirement) or until the insured returns to work.

4. Health Spending Accounts (HSAs)

A health spending account is a group benefit that can be used to pay for or top up certain health, dental care, and vision care expenses that aren’t not covered by your provincial healthcare plan or group health insurance.

5. Extended Group Health Insurance

Extended group health insurance plans provide more comprehensive coverage than regular group plans. Along with cover for prescription drugs, hospitalization, basic dental care, paramedical services, and vision care, these plans may include:

• Critical illness insurance (pays a lump-sum amount if an employee develops a covered condition)
• Accident insurance (pays a benefit if an employee is seriously injured or dies due to an accident)
• Travel medical insurance (covers medical expenses if an employee is injured or become ill while traveling abroad)

Why group benefits plans are important?

Different types of group benefits plans are important for different reasons. For example, group health insurance helps employers to attract top talent and retain them. It also helps improve employee morale, job satisfaction, and productivity. 

Government-sponsored health benefits, on the other hand, help families with low income. Whereas, professional associations offer group health benefits to their members as an added benefit. 

Is group health insurance taxable for employees?

When you’re filing taxes, you may wonder: Is there a simple yes or no answer to whether group health insurance is taxable for employees?

Sorry, but there’s no 1-word answer. If your group health insurance policy is part of an employee benefit package, then “probably yes” is the most accurate 2-word answer. 

Here’s what you need to know about the tax implications if you have group health insurance: 

• If the employer pays all of the premiums cost, the entire benefit amount paid to you is taxable. This is due to the fact that the policy is considered a ‘benefit in kind’—a perk received from the employer that is not reflected in your salary. 
• If the employer pays part of the premiums cost, the part of the benefit amount paid for by the employer will be regarded as taxable income. 
• If you pay all of the premiums cost, there will be no tax. 

Conclusion

Group health insurance is bought by employers to provide health insurance to their employees. The employer may pay all or part of the premiums, depending on the plan.

For employers, group health insurance is one of the most cost-effective ways to invest in the wellbeing of their employees.

At Dundas Life, we can help you set up an affordable group health insurance plan that suits your business needs. Click here to speak with one of our licensed advisors today.

FAQs

How does group health insurance work? 

With group health insurance, your employer, not you, chooses the insurance carrier and determines the coverage details and payment schedule. Once the plan is set up, employees can enroll themselves. Generally, the employer pays all of the premiums, but sharing the premium costs with the employees is also pretty common. Employees’ contributions are deducted from their salary. Anyone covered by the group plan can make claims to the insurance provider to cover eligible expenses. Group insurance plans are typically renewed annually, and premium rate may change at policy renewal, depending on the insurer’s assessment. 

What is covered by group health insurance in Canada?

There’s no single answer, as every group health insurance plan is unique. That said, most plans (if not all of them) at the very least cover hospitalization, prescription drugs, dental and vision care, and paramedical services. Read the group health insurance policy document to find out what’s covered.   

Are mental health services included in group health insurance plans? 

Yes, several group health insurance plans in Canada include mental health services. Generally, this includes support from licensed practitioners such as psychotherapists, psychologists, and social workers. Coverage may extend to therapy sessions, counseling, and occasionally online mental health tools. Since coverage limits can differ significantly, it's advisable to review the specifics of your plan to know what's covered. 

Which are the top group health insurance companies in Canada? 

Canada Life, Sun Life, Manulife, Green Shield Canada, and Desjardins are some of the top health insurance providers in Canada. However, it’s possible some other company may meet your needs better. Working with an experienced, independent broker gives you the best chance to secure the right coverage for your employees at an affordable price.