How to choose benefit plans for employees at your company

The Canadian labour market in today’s business environment is extremely competitive. HR managers and freelance recruiters need to come up with enticing offers for talented employees. For cost efficiency, the employee benefits package should attract and keep top talent.

As an HR professional, you may also notice that an attractive compensation package is no longer enough. Most jobseekers would choose a better employee benefits package over a larger salary.  

So, what is an HR professional to do? One option is to ensure that your company offers the best benefit plans for employees in Canada. In this article, Benefits and Pensions Monitor gives more insight into the importance and payoffs of a well-crafted employee benefits plan. We’ll show you how to come up with an employee benefits plan that suits your organization and increases your chances of attracting and retaining top talent.

The importance of benefit plans for employees

Employees and potential hires place a lot of value on the common employee benefits that a company offers. According to a recent study:

• 81% of employee respondents said that an employer’s benefits package is a deciding factor for whether they accept a job offer or not
• 72% of employers said that their benefits package was crucial to potential hires accepting their job offer

Savvy managers know that a solid employee benefits plan that meets the needs of employees (current and potential) is a powerful tool in their recruitment repertoire. When job seekers weigh the offers of companies with similar compensation packages, the one that has better employee benefits is often the tiebreaker. 

What are employee benefits?

Employee benefits, also called workplace benefits, group insurance, or group benefits, are benefits provided by employers to employees apart from their salaries. This combination of benefits and salaries comprise employees’ overall compensation package.

Employee benefits are there to bridge the gap between what the Canadian government provides and what employees must pay themselves.

Benefit plans for employees are provided by employers to ease their employees’ financial burden. These help them pay less for medical care while helping them look after their mental and physical well-being.

In Canada, employers should provide benefits that are required by the government. Some of these government-mandated employee benefits include:

• legislated paid leaves
• paid general holidays
• provincial workers’ compensation plans
• provincial healthcare insurance
• employment insurance
• Old Age Security (OAS)
• survivor’s insurance

These are only a sample of some of the government-provided benefits in Canada. For some eligible Canadians, the list may get longer. For example, Prime Minister Trudeau approved a new Canadian Dental Care Plan (CDCP) for seniors in May 2024.

Private sector companies have had to become creative in offering more supplementary benefits to employees. These supplementary benefits are among the most popular benefits in Canada. On the top of the list are:

• health benefits
• dental insurance
• paid time off
• retirement benefits
• vision insurance

How does the employee benefit plan work?

It’s the employers who sponsor these benefit plans for employees. Your company will have to enlist an insurance provider, and in some cases the employer and employee pay the premiums for their coverage.

On the employee’s side, their payments for the premiums are deducted from their pay cheque.

It’s not unusual for the employer to pay for the entire cost of the employee’s benefit plans. Some plans have more flexibility in their benefits, allowing companies to choose their coverage options. Other providers of benefit plans for employees offer the same coverage across the company.

In some instances, the employer can choose to take what’s known as the Administrative Services Only or ASO plan. In this type of benefits plan, any claims that employees submit to the benefits provider must be paid by the employer.

A group insurance provider handles the benefits in an ASO plan. The most common ASO plans cover health and dental benefits.

Must employees make contributions to their benefits plan?

In some cases, yes. Separate charges can apply if the company chooses a flexible plan, and if their employees choose to get benefits that are beyond what the employer paid for. In this case, the employees will have to pay for the added benefits or coverage; payments are deducted from their pay cheque.

There are more instances where employers complement their existing benefit plans with voluntary benefits, provided by the plan’s group insurer. Such coverage is sold directly to the plan member at discounted rates. In situations where the employees do not choose to get more benefits and accept what the employer pays for, they pay no contributions.

How can I develop benefit plans for employees at my organization?

When designing an employee benefits package, it should be unique and appealing to your workforce. At the same time, the benefits plan should be put together with care and with great consideration for their needs.

Whether you are creating an employee benefits plan for the very first time or redoing an existing one, here are some key considerations:

Step 1. Set clear goals.

Your company's benefits objectives and budget will serve as the basis for choosing and designing the plan. You can use this guide to help you do the cost-benefit analysis for your employee benefits package.

Step 2. Get to know what your employees want.

Do a needs assessment within your organization to determine exactly which benefits your workers are looking for. An assessment of these benefits can be critical. Not only does this make creating the benefits plan more efficient, but employees also feel that they’re valued, and their needs are acknowledged.

Be prepared to receive a mixed bag, as your workforce can run the gamut of different generations and people in different life stages. If the geographic and demographic distribution is wildly different across your organization, assemble a benefits plan that offers a balance of flexibility and value.

Step 3. Create the benefits program.

When designing the program, ensure that your offerings fit your budget. With the data collected in the previous step, your employer can prioritize the benefits offerings that are preferred by your workforce.

Step 4. Communicate the program to employees.

The downfall of most benefit plans for employees is the lack of communication of what the benefits offer and how to use them. This results in low awareness, which in turn makes the benefits go unused – causing your company’s budget to go to waste.

Your employees’ awareness and understanding of your benefits plan is crucial to their buy-in and ultimately, their use. Make it a point to work closely with your internal communications team and promote these offerings. Most importantly, find ways to make it a conversation instead of a one-way message.

Step 5. Assess the benefits’ effectiveness.

Once your benefits program has been rolled out to employees, assess how well the program performs overall, and how specific benefits meet company objectives and employees’ needs.

Types of benefit plans for employees

Over the years, the list of potential employee benefits has changed and evolved with the times. After the pandemic, for example, the benefit of a work-from-home or flexible work arrangement was kept on by many Canadian companies. Here are some examples that you can place in your benefits plans for employees.

Paramedical coverage

Paramedical care or coverage (aka Parameds) is a unique healthcare service that aids in pain management, stress management or reduction, and helps improve an employee’s well-being. Help for those with sleep disorders or those needing natural sleep aids falls under this category.

Examples of Parameds include:

• physiotherapy
• chiropractors
• massage therapists
• naturopaths and dieticians
• psychologists
• social workers

Prescription drug coverage

This is for employees who suffer from chronic illness. Several plan providers offer coverage for prescription drugs, which can help employees get the medication they need. This is not a blanket licence for just any type of drugs; the eligible drugs must:

• be prescribed by a medical professional
• be medically necessary
• have a Drug Identification Number (DIN), which makes its use authorized by Health Canada

Dental care or dental insurance

This form of medical insurance gives coverage for dental and oral health procedures from licensed professionals. Depending on the level of coverage, dental care or insurance includes a wide range of services, from routine check-ups and preventative care to major operations.

Dental benefits could help cover:  

• basic dental treatment, like x-rays, routine tests, cleanings and ongoing care
• major dental treatment, such as installing crowns, dentures, and bridgework
• orthodontic treatments, including braces and retainers

Eye or vision care

As a form of vision insurance, this benefit can include:

• routine eye exams
• glasses
• contact lenses

Life insurance

This insurance benefit provides a lump sum payment to an employee’s beneficiary. This amount can assist the deceased’s family with the funeral costs, pay outstanding debts, or help cushion their loss of income.

Insurance for critical illness

As with life insurance, this is a lump sum, but it’s paid out to an employee after they receive a life-altering diagnosis of a covered condition. This benefit is intended to reduce the financial burden on an employee as they strive to manage or recover from a serious illness. 

Accident insurance

This form of insurance is a lump sum paid to employees who have sustained serious injuries due to an accident. Accident insurance can also be used to provide an employee’s beneficiary with financial assistance in case the insured person dies. 

Disability benefits

A workplace plan can offer short-term or long-term disability coverage, or even both. This may cover some of the employee’s salary if they cannot work due to an injury or sickness.

Travel assistance and travel emergency medical care

Some benefit plans include coverage that will help employees if they have a medical emergency while travelling, whether on holiday or on official business.

This coverage can help with medical evacuation or assistance in finding a doctor or nearby hospital, which can be crucial when an employee finds themselves in a stressful situation in an unfamiliar environment. In some instances, this workplace benefit may also cover the cost of some or all of the employee’s medical expenses related to the emergency.

Retirement and savings plans benefits

Apart from offering health insurance, you may want to think about offering benefits packages that include retirement plans and pension plans.

A pension plan can be an attractive benefit – it can provide employees with another source of regular income, even if they’re no longer with the company. This benefit can fill gaps in employees’ savings and government-funded retirement benefits like Old Age Security (OAS), one of Canada’s pension plans.

You may also want to offer retirement vehicles like the Registered Retirement Savings Plan (RRSP), Tax-Free Savings Accounts (TFSA), or the Deferred Profit-Sharing Plan (DPSP).

Pension plans and retirement savings plans are both very attractive benefits to potential hires and current employees, since these essentially mean they are getting free money from their employer. Plus, these benefits can make employees more invested and loyal to the company.

Employee Assistance Program (EAP)

The Employee Assistance Program or EAP is a perfect complement to any employee benefits package. Since the pandemic, there have been a lot of Canadian workers who needed help with mental health issues but couldn’t afford them or hesitated to seek counselling.

To overcome these barriers and help promote workplace mental health strategies, some Canadian companies chose to establish an EAP in-house or enlist third-party providers.

Beyond the basic benefits for employees, there is an increasing need for benefits plans for employees that meet the needs of potential hires and current employees. To attract top talent, a competitive salary isn’t the only part of the compensation package. High-performing employees take a holistic approach to job offers and consider the employee benefits plan too.

Workers cite higher salary, better benefits and company perks and more flexibility as primary factors in their job search, according to our latest research. Tara Parry spoke with @bpmonitor_ca about what professionals are looking for in their job searches https://t.co/pNpo1MTooR

— Robert Half Canada (@RobertHalf_CAN) July 5, 2024

Your employees’ overall happiness dictates whether they work for your company and stay or go to work for your competition. That's why benefits are important to employees, both current and potential hires.

HR managers, business owners and other stakeholders must come together to plan and agree on benefits plans for employees that are of value to workers and consistent with company goals.

Is your company putting an employee benefits plan together or reconfiguring an existing one? Any insights you’d like to share? Let us know in the comments