5 Factors to Consider When Reviewing Your Employee Benefits Plan

According to a survey by Monster.com in collaboration with group benefit provider Unum, an attractive employee benefits package was rated very important by 74 per cent of those surveyed.

Less important were dollars and cents issues. In this regard, a high base salary was very important to 66 per cent and a little more than one-half of the people surveyed indicated that bonuses were very important.

Here are five issues to consider when reviewing your group employee benefit plans:

1. What kind of plan makes sense for your organization?

It could be (i) a traditional plan which normally includes heath & dental, long-term disability, accidental death & dismemberment, and group life insurance; (ii) a flexible benefit plan; or (iii) a hybrid plan.

Did you know that under most group plans, the extended health and dental
plan primarily drives premium costs.

2. Should your organization buy insurance for group benefits or self-insure?

Did you know that if your claims history is constant and relatively predictable then a self-administered plan may made sense for your organization. If an employer pays premiums to the insurer then generally any disputes about
benefit coverage is between the employee and the insurer.

3. Who pays the premium costs for group benefit insurance?

If your organization decides to purchase group benefit insurance then who pays the premium costs? Most insurers require employers to pay at least 50 % of the premium costs.

Did you know that if an employee pays the premium costs for LTD insurance then the employee receives the benefits tax free; otherwise, the benefits are taxable.

4. What group benefits can be continued for a terminated employee?

This can be an important issue in wrongful dismissal cases. If the employer does not continue the employee’s benefit coverages then it may be required to, in effect, self-insure for the value of the benefits.

Did you know that most insurers will continue many benefit coverages until the end of the minimum notice periods have expired under the Employment Standards Act? And there is at least one insurer who sells LTD coverage for terminated employees.

5. When can an employer terminate group medical coverage for an employee who is on LTD?

This is a very difficult question to answer and an employer must be mindfulof its obligations under the Human Rights Code. There is no arbitrary time that an employer can rely upon such as the time when the LTD insurer determine the employee is incapable of performing any job. Each case must be assessed on its own facts. An employer should obtain legal advice before terminating the employment of an employee who is receiving LTD benefits.

Thanks to Drew Hubbard of Hubbard Insurance at [email protected] or (905) 712-4668 for providing us with valuable background information in connection with this blog.

If you have questions about your organization’s legal exposure in connection with employee benefit plans, please contact us at [email protected] or at 416 977-9894.