We’re back with another edition of Ask the Expert! This new blog series aims to answer the most common questions that we receive from new or prospective entrepreneurs. On today’s edition, we feature Craig Baker, President of Baker & Baker Benefits.
Craig specializes in employee benefit programs – a common area that many small business owners struggle to navigate as their business and number of employees grows. So we asked Craig: what are the five most common questions you hear about employee benefits?
In this blog post:
- 1: “My Business is Shut Down and Employees are Temporarily Laid Off During the COVID 19 Pandemic. What Should I do about our Group Benefits Plan?”
- 2: Are employee benefits mandatory?
- 3: How many employees do I need to qualify for group benefits?
- 4: How much do benefits cost?
- 5: I have a business partner, how can we protect our business should one of us become unable to work?
- 6: Now that I’m a small business owner I don’t have benefits from my employer anymore. How can I get health and dental insurance for me and my family?
1. “MY BUSINESS IS SHUT DOWN AND EMPLOYEES ARE TEMPORARILY LAID OFF DURING THE COVID 19 PANDEMIC. WHAT SHOULD I DO ABOUT OUR GROUP BENEFITS PLAN?”
If you plan to re-hire some or all of your team once you re-open then you should keep your benefits in force, if at all possible. Your laid-off employees are already in a precarious situation, providing the comfort of benefits for them and their families during this difficult time provides optimism, loyalty and peace of mind.
Most Canadian insurance carriers offer discounts while so many of the services typically covered by your group benefits plan are restricted during the shutdown (optometrist, physiotherapist, orthodontist etc.) The amount of the discount varies among Canadian insurers and you should have already received notice of these changes from your insurer. If you’re not already receiving a significant reduction on your employee health and dental premiums, your Group Benefits Broker can help.
During this unprecedented time, insurers are introducing unprecedented measures. It is important that you know the options available for your business.
In some cases, this allows for a temporary suspension of benefits, meaning while you and your employees no longer have coverage you are not required to pay monthly premiums. Once your business is ready to re-open, you can apply to reinstate the same coverage at the same rates. You may need to provide an up-to-date list of your employees at least two weeks in advance of benefits resumption. This innovative option to stop your benefit plan on a temporary basis, has never been offered before Canadian insurance history. The solution is temporary and will be reassessed on a monthly basis.
Every business has unique needs, and every Employee Benefits Plan needs individual attention. We are happy to consult with you and work with your insurance carrier to find the best possible solution to keep your benefits alive and your team happy and healthy during the shutdown.
2. ARE EMPLOYEE BENEFITS MANDATORY?
While benefits are not mandatory, every employer’s goal is to have a team of happy and healthy employees. For that reason, employers should take note of the link between physical and financial health. For example, the stress an employee may experience as the result of financial insecurity can directly result in lost productivity and excessive claims on a health plan. With comprehensive programs in place this stress can be relieved and you will see gains in productivity and reduced claims on health care. The result is an increase in morale and productivity while health costs an absenteeism are reduced.
In Canada, employee benefits most often include health and dental benefits, group life insurance, disability insurance, travel insurance and group savings plans. When you work with a group benefits advisor, they will customize a plan for your business and your budget. A good advisor will also assist your team with questions and concerns about benefits and integrate with their personal financial plans.
3. HOW MANY EMPLOYEES DO I NEED TO QUALIFY FOR GROUP BENEFITS?
Group benefits can be setup for as few as two employees – even if they are in the same family. As the business owner you will also be a member of the group benefits plan.
Many people think that you have to be a large corporation to offer group benefits and this is definitely not the case. As long as you are a “company” you can qualify. It’s easy to set up and start small, and you may also want to consider having enhanced benefits for a few key employees. There are a lot of ways to customize the optimal plan and that is where working with an independent benefits advisor is helpful.
4. HOW MUCH DO BENEFITS COST?
Surprisingly less than you might think. Custom plans can have great features and reasonable costs. You can always start small and grow your benefits program along with your business.
Once your benefits plan is established having an independent advisor is very important. Group benefit plans are renewed every year. Your advisor will negotiate the best possible renewal rates and remarket your plan if necessary. This is perhaps the most important reason to work with a benefits advisor.
There are also several tax benefits associated with having a group benefits plan. First and foremost, all premiums paid by the employer are 100% tax deductible to the business. Also, any amounts claimed or payments received by plan members are not taxable to their income in any way.
5. I HAVE A BUSINESS PARTNER, HOW CAN WE PROTECT OUR BUSINESS SHOULD ONE OF US BECOME UNABLE TO WORK?
There are several options to cover the unexpected illness or injury that can halt your business, critical illness and disability income protection plans for the partners can be added to the group benefits plan.
Many business partners forget to plan for the premature death of a partner. Losing a partner can be devastating to the business, inheriting a partner you don’t want can be worse. Setting up a buy/sell agreement funded by insurance policies for business partners is not complicated and provides peace of mind.
6. “NOW THAT I’M A SMALL BUSINESS OWNER I DON’T HAVE BENEFITS FROM MY EMPLOYER ANYMORE. HOW CAN I GET HEALTH AND DENTAL INSURANCE FOR ME AND MY FAMILY?”
Sole proprietors and the self-employed can access benefit plans for individuals and families at reasonable costs and premiums may be tax deductible. Life insurance, disability insurance and critical illness insurance should also be considered to protect your loved ones. A benefits advisor has the tools to help you with these options as well.
Thank you to Craig Baker for generously donating his time and providing valued insight. Stay tuned for the next edition of Ask the Expert, and subscribe to our newsletter here so you can stay up to date on the latest posts!
Did this inspire you to launch your own business, or jump-start your existing one? Book a free one-on-one consultation with a YSBEC consultant today!