GROUP INSURANCE BENEFITS ARE A GREAT VALUE FOR EMPLOYEES

Group insurance benefits protect employees at a cost much lower than they can purchase on their own individually. Group benefit protection, like life and disability insurance, provides great protection for your employees at the lowest cost.

Group insurance premiums are a taxable benefit to the employee, attract income and payroll taxes for the employee, and payroll taxes for the employer.

Group insurance premiums are a taxable benefit to the employee, attract income and payroll taxes for the employee, and payroll taxes for the employer.

When LTD premiums are paid by the employee as a payroll deduction, payments paid to the employee are tax-free.

From a tax point of view, an employer would be well advised to have employees pay for group insurance benefit premiums through payroll deduction. This is particularly true given the favourable tax treatment for employees of LTD claims when the premium is paid by the employee.

“EMPLOYEES SHOULD PAY GROUP INSURANCE PREMIUMS”

GROUP HEALTH BENEFITS

All CRA allowable medical expenses are 100% tax-free to the employee. The Fraser Institute has found that the average Canadian family in 2014 spends $2500 on health benefits.

Without a plan, a family purchasing $2500 of health benefits using after-tax wage would be required to earn approximately $4000–$5000 in order to purchase these benefits.

With a health benefit plan, which pays 100% of health benefits of $2500, the additional value in wage of equivalent to the compensation package is $1500– $2500 for each employee.

For an employee in Ontario making $45,000 per year in gross pay, an increase in wages of $4000 would cost the employer approximately 12–15% in additional payroll taxes (i.e., an additional $480 to $600).

If the employer paid compensation as DC health benefits, the employer would save in payroll taxes and their employee would save in payroll and income taxes on this amount (approximately 40% or $1600).

EMPLOYERS SHOULD PAY GENEROUS DC HEALTH BENEFITS AS PART OF A TAX-WISE COMPENSATION PACKAGE.