Beyond federal mandatory benefits, job seekers nowadays consider additional employee benefits packages as important as salary when evaluating job offers. Yet many small businesses struggle to compete with the quality plans offered by reliable corporations.
Tailored employee benefits packages cut through the complexity. This solution can help small business owners attract and retain top talent while promoting productivity. By understanding the available options and implementing cost controls, you can build a perfect benefits plan that avoids costly mistakes.
Key Benefits for Small Business Employee Packages
Not all businesses need the same benefits. Your options should align with your industry standards, budget, and workforce. However, the 4 most standard employee benefits packages for small businesses to consider are group health, group retirement plans, group disability, group life and critical illness.
Detailed explanation below will help you to choose the best plan for your situation:
Group Health Insurance
While provincial and territorial health care plans provide essential services, group health plans often leave Canadians with significant out-of-pocket medical expenses. There is also extended health coverage that covers prescription drugs, paramedical services (physiotherapy, chiropractic, massage therapy), vision care, and dental services.
Prescription Drug Coverage
Prescription drug plans are the most used health benefit, which can reduce costs for necessary medications. Insurers use 4 strategies to optimize and control costs:
- Regular reviews to add cost-effective new drugs
- Access to generic drug options
- Dispensing fee controls and negotiations
- Healthcare management for complex conditions
Paramedical Coverage
The second-most-used benefit is paramedical services. They provide preventative care and treatment for health conditions. This plan provides annual dollar limits per coverage type that members can use towards paramedical visits.
Their 8 services include:
- Physiotherapy
- Massage therapy
- Chiropractic
- Naturopathy
- Osteopathy
- Dietetics
- Podiatry
- Psychology services
Access to these services enhances overall wellness and reduces the burden on the healthcare system.
Vision Care Benefits
Vision care coverage provides financial assistance with routine eye exams, eyeglasses and contact lenses, and laser eye surgery. They ensure employees can access both exams and corrective products.
Dental Plans
Dental benefits cover preventative, routine, primary restorative and orthodontic dental treatment. Typical plan coverage includes:
- Essential Services: Oral exams, cleanings, fillings, X-rays
- Primary Services: Crowns, dentures, bridges
- Orthodontics: Braces, retainers
By funding primary preventative dental care, employers reduce absenteeism and enhance workforce health.
For those who do not have any dental insurance, you can apply for the Canadian Dental Care Plan with no cost.
Group Retirement Plans
RRSP-matching programs are popular for small business retirement benefits. In these programs, you match your employees’ RRSP contributions up to a certain percentage of their salary. It can encourage loyalty and offer tax benefits.
Group Disability Plans
Illness and injury can occasionally render employees unable to work. Yet, disability insurance for small-business employees helps against these disruptions. There are 2 compatible benefits on this plan:
- Short-Term Disability: Covers absences up to 3 – 6 months
- Long-Term Disability: Covers more extended absences beyond short-term periods
In addition to income replacement benefits, quality disability carriers provide resources to support employee recovery and return to work. In other words, this prevents and reduces the impact of disability benefits on both employees and small businesses.
Group Life & Critical Illness Insurance
Life insurance provides a lump-sum payment to beneficiaries upon the policyholder’s death. This financial protection eases the burden during a difficult time.
Similarly, critical illness insurance pays out a lump-sum amount after diagnosis of a covered serious illness, such as cancer, heart attack, or stroke.
This funding can help pay bills and cover treatment costs. Employees have peace of mind knowing their families are protected from the financial impacts of unexpected life events.
Additional Specialty Benefits to Strengthen Coverage
In addition to core employee benefits packages for small businesses, a variety of supplemental “specialty” benefits can enhance wellness coverage.
Travel Insurance
Business travel insurance safeguards employees away from home:
- Emergency Medical Coverage: Up to $5 million per person for unexpected illness or injury.
- Travel Assistance: Helps locate medical facilities, provides emergency transportation and more.
Especially after pandemic travel restrictions, employees value coverage that protects them during work-related trips.
Health Spending Accounts
Healthcare Spending Account (HCSA) reimburse employees for health and dental expenses not covered under other benefits. They provide tax-effective flexibility using:
- Credits/debit cards to direct bill-eligible expenses
- Online portals for easy access and tracking
- Rollover of unused credits
HSAs allow small businesses to control costs by setting annual limits while providing customized supplemental coverage.
Why Small Businesses Should Offer an Employee Benefits Plan
Employee benefits packages for small businesses function as compensation components, often more tax-efficient than equivalent salary increases. Implementing strategic choices can recruit exceptional staff, enhance workforce quality, and deliver the best return on investment. Here are the detailed advantages of having this plan:
Attract and Retain Top Talent
A key strategy for recruitment and retention is providing a competitive benefits package. It shows employees that the company cares about their well-being.
As a result, with the current labour shortage and competition for skilled talent, a quality benefits plan can give small businesses an advantage in attracting top candidates.
Improve Employee Health, Happiness, and Performance
Providing health insurance and other wellness benefits demonstrates an investment in employees’ physical and mental health. That said, employees are less distracted by the worry of uncovered medical costs.
Tax Advantages and Savings
A key incentive for benefits packages for small businesses is the tax deductibility of premiums. Benefit plans also provide cost-reduction opportunities:
- Premium Deductibility: Premiums paid for employee health and dental benefits are considered an eligible business expense for tax purposes. This provides a tax deduction for benefit costs.
- Payroll Savings: Contributions to group retirement and savings plans can sometimes reduce Canada Pension Plan (CPP) contributions, decreasing payroll costs.
- Premium Cost Savings: Insurers offer lower premiums for group and individual plans. Small businesses can benefit from these group savings.
- Custom Cost Controls: Small businesses can implement cost controls like plan limits and employee contributions to manage benefit expenses.
Benefit plans make financial sense by providing tax and potential payroll advantages along with options to control costs.
How to Customize Employee Benefits for Your Small Business
Then now, the question should be asked is that, how to customize employee benefits packages?
Benefits packages are highly customizable based on company priorities and budget considerations. Ways benefits packages for small businesses can be tailored as plans include:
Setting Limits and Cost Controls
Managing benefit costs for small businesses is not a big deal at all. Small companies can use these 6 strategies to implement cost controls to create affordable benefits plans:
- Coverage maximums on health and dental benefits
- Deductibles require employee payment before coverage
- Co-insurance payments or co-pay to share costs
- Tiered health and drug formularies
- Health spending accounts with annual limits
- Employee contributions toward premiums
These measures allow benefits packages for small businesses to be planned with high quality benefits while optimizing value and controlling expenses based on their budget and risk tolerance.
Options by Employee Class
Rather than a one-size-fits-all approach, benefits packages for small businesses can be offered with customized options by 4 employee classes:
- Executives: Enhanced coverage with low deductibles
- Full-time: Comprehensive core health/dental benefits
- Part-time: Basic plans with higher deductibles
- Seasonal: Optional limited benefits like telemedicine
Tiering plans help attract talent at all levels while aligning coverage and costs. HR can analyze company demographics and roles to develop tailored solutions.
Voluntary Portable Benefits
Voluntary or optional benefits packages let employees purchase supplemental coverage at their own cost. These portable plants have 4 advantages:
- Increased satisfaction: Employees can customize to their needs
- Broader offerings: Include supplemental life, disability and critical illness
- Seamless administration: Easy payroll deductions facilitate enrollment
- Portability: Employees can take coverage with them if they leave
Rather than subsidizing total premiums for specific offerings, voluntary options provide affordable flexibility. Employees appreciate the ability to buy customized protection.
Research from BlueCross shows that 49% of employees value health benefits more than salary increases. Therefore, select group benefits providers for small businesses and packages that align with your business needs and employee demographics to maximize the ROI.
The bottom line
By understanding what employees need, setting a budget, researching providers, comparing quotes, and communicating effectively, small businesses can offer valuable benefits at a lower cost. Focus on flexible options, such as HSAs, to manage expenses while still offering great value. This investment leads to lower employee turnover, improved productivity, increased morale, and potential tax benefits for all parties involved. Instead of asking if you can afford benefits, consider if you can afford not to in today’s job market. Use this guide to find the right provider for your business and start discussions with your team about their coverage needs.
