Frequently Asked Questions

Why Group Benefits?

In a competitive work environment such as we have in Canada, offering benefits can attract new employees and encourage them to stay with your company. Providing your employees with a benefit plan goes a long way in adding value to their compensation through the security it provides.

Group Benefit Plan premiums in BC, when paid on behalf of the employee are, with the exception of life insurance, considered a non-taxable benefit to the employee. Dental and Extended Health, for example, are tax-free benefits to the employee when premiums are paid by the employer.

How many employees do we need?

We can put a group benefit plan in place for groups as small as one. What is important is that the benefits be affordable and appropriate for the group.

What is the process?

There are a few options for group plans these days - from simple pooled plans, to custom designed plans. It generally takes ~30 days to get a plan in place. See an overview of the process here. A Health Spending Account is also an option, for incorporated companies.

What is a Health Spending Account?

A Health Spending Account (HSA) or Private Health Services Plans (PHSPs) are the ability to have medical and dental expenses not covered by a provincial plan or traditional group health and dental plan paid for on a tax-free basis. PHSPs are increasingly popular, as employers are looking for ways to control their benefit costs.

Traditional employee benefit plans are designed and offered by insurance companies, PHSPs are designed and offered by the employer. Insurance company benefit plans define the benefit they are willing to offer on an annual basis and bill the employer accordingly. Employers with PHSPs have a defined cost i.e. the amount of premium the employer is willing to pay on behalf of each employee, and a flexible benefit design as the employees decide what medical and dental expenses they want to spend their benefit dollars on.

Employers choose PHSPs as a way of controlling the costs of their benefit programs. Employees accept the plan because it allows them the flexibility of purchasing medical or dental services that would otherwise be unavailable or limited under a more traditional group benefit plan. Under a PHSP these expenses could be paid as long as the cost did not exceed the defined dollar amount the employer was willing to contribute (for example, $1200/yr per employee).

For small incorporated companies, especially with only one employee (the owner), PHSPs can produce significant tax savings. The single employee/owner of an incorporated company, his spouse and/or children may require a knee brace for sports activity, adult orthodontic procedures, or laser eye surgery. The cost for just these examples could be $10,000. Assume that the business is successful and the owner well paid, being in the 50% tax bracket, he would have to earn $20,000 to pay these $10,000 expenses. On the annual income tax return, the $10,000 medical/dental expenses are listed, and the first $2,237 deducted (Revenue Canada does not consider the lessor of the first $2,237 or 3% of net income as claimable) leaving him $7,763 on which he will be entitled to a non refundable tax credit of 15% or $1,164.

Summarizing the above example: the employee/owner paid $10,000 in expenses, and had to have earnings of at least $20,000 in order to claim on his tax return a credit of $1,164. With a PHSP designed by Gilgunn Benefit Management in place, the business owner can have that $10,000 paid by his Company's PHSP written off as a business expense and given to him as a non taxable benefit.

The optimum environment for a PHSP is an employee group with diverse needs, the situation where traditional benefit plans are unable to address and respond to the individual needs of the group. For example, where one employee may require major dental work, another may need good quality eyeglasses, and yet another needs ongoing high cost prescription drugs, only PHSPs have the flexibility to give employees what they need and when they need it. It is likely that PHSPs will become a more common style of employee benefit compensation in future.

Do you offer other planning services?

Yes, through our sister company, Apple a Day Financial, individual financial planning and insurance services are offered.

How much does it cost?

Group Benefit Plans really vary in cost, due to the continually changing healthcare costs in Canada, demographics of the employee group, and the insurance companies experiences in claims. A group with young employees and simple benefits may pay less than $80/mo for single coverage, while a group with more robust benefits and older employees overall may pay over $100/mo. Cost-sharing with employees is always an option. The most important thing is that the plan is sustainable for the employer, and of value to the employees.