Group Benefit Plan Provides More Savings than a Raise

Employees for a Delta based construction company were given a choice for 2021, a 4% raise or Employee Benefits. With everything that has happened the past year it’s no surprise the employees all chose Group Benefits.

Initial Setup

The business owner was referred to me and we got started preparing his plan. He was happy to reward to his awesome staff, but I could tell he was concerned with how much this was going to cost.

After we customized the Group Plan to his business and his awesome staff, the cost savings were apparent.

Breakdown of Cost

We decided on a plan design with unlimited drugs, 80% coinsurance for most benefits except for Hospital, Vision and Dental coverage which was 100% coinsurance.

The 100% coverage for dental was something the staff really wanted.

There are 5 employees in the company. For the purpose of this blog let’s say all 5 employees were receiving an average wage of $4,000 a month which is about the average for a construction worker in Canada according to PayScale.

According to StatsCan the average salary in Canada in 2020 has risen by 4% since January 2019. 5 Employees each making $4,000 a month, with a raise of 4%, would cost the business $9,600 a year.

Our Employee Benefit Plan had the following rates:
Single rate per month = $89.46 (3 employees)
Family rate per month = $235.33 (2 employees)

Total cost per month is $739.04 and total cost per year is 8868.48

The business will save $731.52 a year. Not much in the grand scheme however we must also take into consideration taxes for both the employee and the business owner.

With a raise the business will pay extra for CPP, EI and Worker’s Compensation and the employees will have to pay tax on the salary increase.

When a Benefit Plan is offered the premiums paid by the business are a tax-deductible expense. Employers can choose to pay between 50% to 100% of the Group Plan premiums. The employee will receive the full benefit of the Group Plan tax free.

The employee will receive the full benefit of the Group Plan tax free.

Savings and More

In the end the business owner saved money, protected his staff, improved morale, increased employee involvement and as a result created a stronger organization.

If you think Group Benefits would be a good fit for you and your staff, I would be happy to provide you with a free quote.

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