Initial Benefit Plan Design (Benefit Tips ® - © 2001)
Companies introducing an employee benefit program today often reject the traditional plan design of previous decades in favour of one that addresses current issues.
The following plan design balances the need for income security with flexibility and stable costs.
Medical and Dental Spending Account
1% of earnings for every year of service ($100 minimum and $250 maximum per month) deposited to a Health Spending Account to reimburse employees for any expenses permitted by Revenue Canada.
Any expense that can be covered by a group medical and dental plan is reimbursed during the calendar year with contributions made during the prior or current calendar year.
This relieves the employer from the effects of health inflation and empowers employees to make personal health care decisions.
In some provinces catastrophic drug claims are paid by the provincial plan.
Cost = 3-5% of earnings.
Long-term Disability Insurance
Pays 67% of earnings to age 65 while totally or partially disability after 17 weeks of disability.
Relieves both employee and employer from concern over income replacement during a prolonged illness or injury.
Cost = 1-2% of earnings
Profit Sharing Plan
Deferred profit sharing with the employer matching (50-100% based on performance) employee's contribution to a structured group RRSP.
Employee contribution of up to:
- 1% during the first year or participation
- 2% during the second year
- 3% during the third year
- 4% during the fourth year
- 5% after 4 years of participation.
Employees are encouraged to save for their retirement.
Employees benefit from positive performance.
Cost = up to 5% of earnings depending on participation and performance.