Group benefits
Group benefits for employers
A group plan covers a workforce under one contract. For an employer it is a recruitment and retention tool with a budget attached; for an employee it is often the only cover they have, and the one they understand least.
Worth knowing: Group life is usually a multiple of salary and usually ends with the job.
What a plan is usually built from
Most plans combine some of: extended health, prescription drugs, dental, vision, paramedical services such as physiotherapy, life insurance, accidental death, short-term and long-term disability, and an employee assistance programme.
Each component carries its own limits, and the design decisions — what is covered, to what maximum, and how much the employee shares — are what set the cost.
What employees misread
Group life is typically a multiple of salary, which sounds substantial and rarely matches what a household actually depends on. It also generally ends when employment does, so it disappears at the moment income stops.
Group long-term disability often uses a stricter definition of disability after an initial period, and benefits are usually taxable where the employer pays the premium. Both are in the booklet, and the booklet is rarely read before it is needed.
What an employer is deciding
Cost per employee, how much of it the employee shares, and how the plan will behave at renewal, which depends partly on the group's own claims experience.
Small groups are often pooled to smooth that volatility. How a plan is rated, and what happens after a bad year, is worth asking before the first renewal rather than after it.
Questions people ask
Do employees still need personal cover?
That depends on the household. The usual approach is to read the group booklet first and treat personal cover as filling what it leaves, rather than duplicating it.
Are benefits taxable?
It varies by benefit and by who pays the premium. Employer-paid life insurance premiums are generally a taxable benefit, and disability benefits are usually taxable where the employer paid. An accountant should confirm for a specific plan.
How small can a group be?
Plans exist for very small employers, including a handful of people. The structure and the pricing differ from large-group plans.