Suggestions and Reminders for Employers & Plan Administrators

Taxation Issues

  • Employer paid Life, AD&D, Dependent Life, Critical illness premiums are a taxable benefit for employees.

  • Short Term and Long Term Disability benefits are not taxed when received if the premium is 100% paid by the employee.

  • STD and LTD benefits are taxed if ANY portion of the premium is paid by the employer.

  • Ensure the proper premium is being deducted especially when premium is shared (e.g. 50/50).

Liability Issues

  • Do not have a plan that allows employees to opt out fully. ALL plans should have mandatory enrolment. If you insist on a non-mandatory plan, maintaining a signed waiver on file for each employee who declines coverage may provide only limited protection. All benefits should be reviewed in full, and updated both annually and at status change. Waivers should be signed by dependents as well as witnessed.

  • Always enroll new employees within the waiting period (usually 3 months) and within 30 days of a status change (e.g marriage, separation, birth, salary change etc.) to avoid large back premium charges, late enrolment limitations or declines AND benefit reductions.

  • Consider implementing a policy to terminate employment after a prolonged absence (usually a minimum of 1 year to meet WSIB/WCB law and often two years + 120 days).

  • If Cost Plus is used, define a class of employees eligible for this benefit. Check with your accountant regarding the tax status of claims paid for shareholder benefits.

  • Check to be sure that your General Liability covers Plan/Benefits Administrator Liability. This may be available as a rider to your general business liability policy, often included automatically, but not always. Many insurers only provide this coverage upon request– discuss with your Property & Casual (General Insurance) broker, or feel free to contact us if you have any questions or concerns.

  • Advise employees in writing of conversion privileges available under the group plan at time of termination. Remind them that the conversion privilege must be exercised within a certain period of time after termination (usually 30 days) or if it is lost, inform the employee of the name and phone number of the insurer to contact to make the application, or contact us for further options.

  • Make sure benefit booklets are up to date and accurately reflect the terms of the benefit plan.

  • Ensure any changes to the plan are communicated to the employees in a timely manner.

  • Confirm that the staff member receives the maximum life & LTD amounts that they are eligible for using the definition of earnings shown in your policy. Obtain a signed waiver from the employee if they choose not to apply for excess Life or LTD benefit (above the Non-Evidence Maximum).

  • If you are making offers of employment (or terminating an employee), do not offer any benefit coverage (or extension) until you have checked with your broker/insurance company or lawyer as to what coverage (if any) may not be available.

  • Advise your employees in writing that the company reserves the right to discontinue or alter employee benefits at any time.

Privacy & Confidentiality Issues

  • Have employees, NOT the employer, retain a copy of all receipts & claim forms submitted. Select a plan with drug cards, and one that allows claims to be mailed directly from the employee to the insurer and benefit cheques to be sent directly to the employee’s home.

  • Claims Experience Reports (broken down by employee) should NOT be maintained on file by the employer. Have employee’s complete (keep a copy for themselves) and forward Employee Statements of Health/Evidence of Insurability forms directly to the insurer.

Administrative Issues

  • Obtain a signed letter from each employee acknowledging that employee benefits are mandatory and allowing payroll deductions if the premium is shared. Premium must be at least 50% paid for by the employer with most insurers.

  • Maintain copies of enrolment, termination, change forms and correspondence to the insurer.

  • Most plans will not allow sub-contractors to be included without a separate class and individual consideration if at all. ONLY full time T-4ed employees should be enrolled.

  • Ensure that all salary changes and employee terminations are reported promptly.

  • Ensure all staff are covered by either the provincial health plan or an approved Provincial Plan Replacement (PPR) policy to be eligible for benefits.

  • Ensure premiums are paid on time. Most insurers have EFT (auto withdrawal) programs to make payments easier. Premiums that are in arrears can lead to suspensions, denied claims, and increase liability for the employer. This situation is critical if employees are also required to make contributions.

  • Inform your broker and insurer ahead of time, of any absence that may lead to a WSIB/WCB or LTD claim (usually within 6 weeks of last date worked).

  • Remind staff to call the insurer IMMEDIATELY in the event of an out of province emergency and about possible pre-existing medical condition clauses that may limit travel coverage.

Disclaimer:
The above information is for general reference only. It is not intended as legal or tax advice. You may or may not be affected by any or all of these issues. Changes to interpretations, conventions, and legislation or individual company policies may affect these guidelines. Please check with your insurance provider, lawyer, accounting or human resources professional for further information.