Group Insurance and Employee Benefits
We are also a leading supplier of group benefits and group retirement and savings plans in Canada. We provide employers and associations across the country with life insurance, health insurance and pension and retirement products for the protection of their employees. We can integrate group benefits and retirement savings plans, and ensure clients receive the highest quality level of service in Canada.
CWF will provide personalized service meeting the highest quality standards to companies of all sizes in all sectors.
Products and Services within a Group Plan:
- Health and dental care
- Drug plan solutions
- Health Spending Account
- Travel Assistance
- Life and Accidental Death & Dismemberment Insurance
- Conversion privilege
- Solutions for small businesses
- Multinational pooling
- Disability Management
Advantages of providing group benefits to your employees:
- Establish a competitive edge in the job market. You attract and retain employees, which helps minimize costs associated with high turnover.
- A cost effective method to protect employees. Increased productivity and higher morale by providing financial security and support to employees.
- Access to insurance at a reduced cost. Compared to most health and dental individual insurance plans. Group plans do not discriminate and are not anti-selective, offering all participants the same benefit plan.
- A tax effective form of compensation. Most premiums an employer pays are tax deductible as a business expense.
Establishing a company pension plan for your employees:
All company pension plans are different. Employers design pension plan programs with the unique needs of their employees in mind. If you understand the type of pension plan you want, you’re a step closer to understanding how your group plan can help your employees reach their retirement goals.
Defined Benefit vs. Defined Contribution
There are basically two types of registered pension plans: Defined Benefit, and Defined Contribution. The key to understanding the plan is all in the name.
Defined Benefit Pension Plan (DBPP) – The income you receive at retirement under a DBPP is predetermined and is usually based on a formula involving your years of service and earnings. You receive annual statements clearly indicating the benefit on your retirement date. In these types of programs, the company manages the assets – and the employees have no active involvement.
Defined Contribution Pension Plan (DCPP) – The income you receive at retirement under a DCPP is not pre-determined. It’s based on the assets within your individual retirement plan account at the time you retire. In DCPPs, your company makes a contribution based on a formula, which may or may not require you to make some type of matching contribution. These contributions are usually based on a fixed percentage of your salary or on a specific dollar amount and are deposited into an account in your name. DCPPs are popular because they offer you choice and flexibility.
Under a DCPP, you determine which investments your contributions are invested in from a selection of investment options available within your plan. This allows you to create an individual portfolio suited to your own investment goals and tolerance for risk.
The amount of money you have in your group plan account at retirement is based on the amount of contributions made over the years and the earnings these investments have made. Defined contribution plans may also include Group RRSPs and Employee Profit Sharing Plans. Or, they may also include a Non-Registered plan as an option to allow you to save outside of your RRSP. The operation of these plan types is similar to selecting the investment options for allocating contributions.
Whether the plan is a defined benefit plan or a defined contribution plan or a combination of both – which many plans are these days – your group plan is an important part of your retirement investment strategy. Knowing which type of plan you have and understanding how it works will help you determine how it can contribute to your retirement income.
Health Spending Account
A Health Spending Account is established exclusively to pay for healthcare services for you and your dependent family member and is available on a stand alone basis or as an optional additional benefit that works together with a Group Plan if chosen by the Employer.
Unlike traditional plans, which often include items that you or your employees don’t want or need, a Health Spending Account allows you and/or your employees choose which healthcare services you want to use and to fund through your benefits dollars.
How it Works
The Employer decides on an amount per person to contribute annually (ie. $600, $1000, $5,000) and deposits funds into the Health Spending Account for themselves (from their business account) or on behalf of their employees. The funds are deposited on a pre-tax basis, which means the account holder does not pay income tax on any amounts deposited in the account. Deposits are made on a monthly basis, allowing you to plan your spending and offering budget certainty and these monthly amounts are considered as your premium and can be used by the employee for any Health or Dental purpose.
This optional amount works like a bank account. The amount chosen is deposited for the business owner or employee and the employee accesses the money as needed. When an HSA holder incurs an expense for eligible healthcare services, they then submit the bill to the insurance company and the funds are then reimbursed directly to the account holder’s personal account. There is a 10% administration fee and an additional claims administration fee added to this as well as appropriate taxes, in order to satisfy Revenue Canada and allow this contribution to remain 100% tax deductible for the business owner. There are different protocols for Health Spending Accounts for business owners than for employees.
If a business owner uses all his money and still needs more, at the end of the his term/year, he can dump in the excess amount into the Health Spending account and have it used as a tax deduction. Alternately, if the money has not been used, there is a carry over to the next year. This is slightly different for an employee. For an employee, the money can be carried over, but once the set amount of money is utilized, that is it until the next year and the money left in the spending account remains the employees.
The benefit of this type of plan is that you can choose the amount you wish to contribute to your plan and where that money goes ie. your family may not use many prescription drugs but do need glasses and contact lenses and go for regular massages. This plan allows you the flexibility to use the money where you see fit based on your chosen money limit and not the limits set out by the insurer. You also save 35% or more on your healthcare expenses because you are using pre-tax dollars.
One of the limitations of this type of plan though is that it does not have the “insurance” factor of protecting against catastrophic losses ie. Life insurance or extreme drug expenses covered outside of what is in your account. For this reason, many people or companies choose a traditional plan and often supplement it with a Health Spending account in order to cover all bases. Alternately, CWF Group can offer an Insurance option along with the plan.
CWF Group lends clarity to these questions and so many more. To find out more click here to speak with one of our specialist.