Understanding Cost-Sharing in Employee Benefits

Understanding Cost-Sharing in Employee Benefits: The Employer’s Role in Premium Contributions and Standard Practices



In the fiercely competitive job market, employee benefits play a crucial role in attracting and retaining top talent. Among the many decisions that employers face in crafting an appealing benefits package, one of the most significant is determining the benefits premium cost-sharing arrangement between the company and its employees.

This article aims to delve into the complexities of ‘cost-sharing’ and shed light on standard practices for designing sustainable and attractive employee benefit programs.

Firstly, if you were not aware, it’s quite common for part of the cost of the benefits program to be paid for by employees via payroll deduction. This is typically a ‘condition of employment’ and is outlined in a contract of employment. Premium amounts can vary significantly depending on the scope of the program, the demographics of the group and other factors, meaning the dollar amount of the payroll deduction can differ significantly from employer to employer. No greater than 50% of the overall cost can be passed along to the employee, per insurer guidelines. The “cost sharing” per benefit line is indicated to the insurance carrier at the implementation of a program, and most carriers will indicate the “employee” and the “employer” premiums, per benefit line, on each monthly invoice simply to assist with payroll.


What should Employers consider when determining cost-sharing?

The cost-sharing ratio between employers and employees is not a one-size-fits-all equation. It depends on a multitude of factors, including:

  • the size of the company,
  • plan design,
  • the premiums in dollars for various benefit lines,
  • demographics,
  • employee classifications,
  • and of notable importance, the tax implications.

Striking the right balance requires careful consideration, and the differing taxation of various benefits (link to taxation of benefits page) is usually one of the primary considerations.


Three different ways to view Cost Sharing:

An employer might approach cost sharing by considering the benefits to be covered by the employee:

  • Employee pays Long Term Disability premiums only
  • Employee pays all pooled benefits premiums (Life, AD&D, Disability and Critical Illness).
  • Employee pays all pooled benefits premiums plus 50% of health and dental premiums

In all the above scenarios, the Employer must ensure that no greater than 50% of the overall cost is passed along to the employee.

Alternatively, the employer might apply a percentage to the entire cost of the program, with the maximum allowable percentage of 50%. For example:

  • Employee pays 25% of total premium costs.
  • Employee pays 50% of total premium costs

In the event that a percentage is applied, the premium should be applied first towards the benefits for which an employee-paid premium ensures a tax-free benefit (most notably, Long Term Disability). The tax implications of cost sharing should be carefully considered in order to reduce or eliminate the possibility of a taxable benefit.

Less commonly, an employer might charge a flat dollar amount:

  • Employee pays $25 per pay period towards benefit premiums
  • Employee pays $100 a month towards benefits premiums

Regardless of the approach to cost sharing, the formula must be viewed with the actual dollar amount of premiums taken into consideration, per benefit line.


How should an organization approach cost-sharing? What is typical?

As mentioned, it is essential to understand the cost for the various benefit lines (and yes, these change year to year!) and the tax implications. In addition, employers must consider how their cost-sharing arrangement compares to their industry, and to their particular company’s philosophy. Beyond the tax implications, there are several factors that influence the cost-sharing structure:

  1. Plan Design: The specific design of the benefits plan can impact the appropriate cost-sharing scenario. For example, a plan with high life and disability coverage may see higher premiums for these benefits.  If the employee is covering these premiums for tax reasons, the employer may wish to cover 100% of the remaining benefits.
  2. Industry Norms: Employers often look to industry benchmarks to ensure their contribution levels remain competitive and appealing to potential employees; what are your main competitors doing? If your primary competitors are advertising that they cover 100% of benefit premiums, you may need to follow suit.  
  3. Company Size and Financial Resources: The financial capabilities of the company, combined with its size, can influence the employer’s ability to contribute significantly. Generally speaking, larger, most established companies tend to cover a greater share of benefit costs, because they can afford to do so. 
  4. Talent Demand: In high-demand talent markets, employers may need to offer higher contribution levels to attract and retain top performers, in addition to offering a more comprehensive program.
  5. Company Philosophy: what are the core values of your company, and how does your cost-sharing formula fit into this?


Balancing Employee Needs and Cost Containment

Employers face the delicate challenge of balancing attractive benefits with cost containment. While it is vital to provide robust benefits that meet the diverse needs of employees, it is equally crucial to manage expenses efficiently.

Beyond the cost-sharing of the premiums, please keep in mind that the plan design itself offers an element of “cost-sharing” through coinsurance and deductibles, and additionally, through reimbursement limits. Please consider:

  1. Deductibles: flat deductibles are paid out-of-pocket before coverage is applied; while deductibles can incentivize employees to be more conscious of their benefit usage, thus reducing unnecessary expenses, they penalize lower claimers and are less common these days.
  2. Co-Insurance: this refers to the percentage of coverage, such as “80%” for basic dental. Co-insurance requires employees to share a portion of the costs for specific services, encouraging them to make more informed healthcare choices.
  3. Reimbursement limits; items may have limits that leave the employee out-of-pocket for the remainder of the cost (i.e. orthotics that cost $500 for which the employee only receives $300 back). Potentially in combination with points 1. and 2. above, reimbursement limits can erode the overall percentage of an expense for which an employee is covered. 

All of the above can encourage employees to make informed choices when it comes to their healthcare spending. However, with most employers stating that the overall goal of a benefits program is to facilitate employee health and wellness, employers should be mindful that employees are not bearing too great of a costs for their coverage, from a holistic perspective.

As we said, approaching the cost-sharing that is right for your company is not one-size-fits-all; you need to carefully consider the factors outlined above, and work with an experienced advisor to ensure the right approach that allows for excellent coverage in combination with cost-sustainability.


Decoding cost-sharing in employee benefits is a complex task that demands careful consideration of multiple factors. Employers must keep abreast of industry trends, assess their financial resources, and regularly evaluate their benefit packages to ensure competitiveness and relevance in the job market.
In today’s competitive landscape, employers must recognize that ongoing evaluation and adjustment of benefits packages are necessary to attract and retain top talent. By striking the right balance between attractive benefits and cost containment, employers can demonstrate their commitment to their workforce’s well-being while maintaining financial sustainability. The key lies in crafting a benefits package that aligns with the company’s values, meets the evolving needs of their employees, and supports the organization’s overall goals.


Cost-sharing in employee benefits refers to the arrangement where both the employer and the employee contribute to the cost of the benefits program. It helps strike a balance between providing attractive benefits and managing expenses.

Several factors influence the cost-sharing ratio, including company size, plan design, benefit premiums, demographics, employee classifications, and tax implications. Striking the right balance is crucial for an effective cost-sharing strategy.

Employers can approach cost-sharing by considering the benefits to be covered by the employee, applying a percentage to the total premium costs, or charging a flat dollar amount. Each approach has its considerations and implications.

Industry benchmarks and norms are essential considerations when determining cost-sharing arrangements. Employers often align their contribution levels with industry standards to remain competitive and appealing to potential employees.

Employers must balance attractive benefits with cost containment strategies. This includes considering elements like deductibles, co-insurance, reimbursement limits, and designing a benefits program that promotes employee health while managing expenses efficiently.

The ultimate goal of a benefits program, including cost-sharing strategies, is to facilitate employee health and wellness while ensuring employees are not burdened by excessive costs. It’s about providing excellent coverage in a sustainable manner.

Employers should regularly evaluate industry trends, assess their financial resources, and work with experienced advisors to ensure their cost-sharing approach aligns with industry standards and meets the needs of their workforce.

Decoding cost-sharing in employee benefits requires careful consideration of multiple factors. Employers need to maintain an ongoing evaluation and adjustment of benefits packages to attract and retain top talent while ensuring financial sustainability. The key is crafting a benefits package aligned with company values and employee needs.

Key Takeaways
  1. Importance of Cost-Sharing: Cost-sharing in employee benefits is a vital strategy that helps strike a balance between providing attractive benefits and managing expenses, ensuring both employers and employees contribute to the cost of the benefits program.

  2. Factors Influencing Cost-Sharing: Several factors, including company size, plan design, benefit premiums, demographics, and industry norms, influence the cost-sharing ratio between employers and employees. Employers must carefully consider these factors to determine an effective cost-sharing arrangement.

  3. Diverse Approaches to Cost-Sharing: Employers can approach cost-sharing in different ways, such as defining specific benefits for employee contribution, applying a percentage to total premium costs, or charging a flat dollar amount. Each approach has its considerations and implications.

  4. Balancing Employee Needs and Cost Containment: Employers face the challenge of balancing attractive benefits with cost containment. Elements like deductibles, co-insurance, and reimbursement limits play a crucial role in promoting informed healthcare choices while managing costs effectively.

  5. Ongoing Evaluation and Adaptation: Employers must regularly evaluate industry trends, assess their financial resources, and work with experienced advisors to ensure their cost-sharing approach remains competitive and relevant. It’s essential to align the benefits package with company values and the evolving needs of employees for long-term success.

Howard 2

A Proven Strategy for Containing Employee Benefit Plan Costs

A Proven Strategy for Containing Employee Benefit Plan Costs

With elevated inflation causing everyone to take a closer look at their expenses, we wanted to introduce (and remind those who are already members of the Immix Group Client Community!) the many advantages of our broker-managed pools.

Table of Contents

Back in May 2020, we wrote about the value of benefits inside a broker managed pool, especially during times of uncertainty. With inflation hitting everything, the markets so volatile, interest rates and business expenses increasing, benefits cost containment is more crucial than ever.

Our stance then- and now- is that belonging to a broker-managed pricing pool is an extremely beneficial strategy for the majority of our clients at the Immix Group.

Our stance then- and now- is that belonging to a broker-managed pricing pool is an extremely beneficial strategy for the majority of our clients at the Immix Group.

What does this mean? It means for most of our client’s benefit programs, the Immix Group sets the pricing at renewal, and often at the onset of the plan as well. The rates are based on predetermined administrative charges and other factors that are more competitive than a group could obtain outside of the unique strategy we have created.  

This stands in contrast to groups insured on a stand-alone basis, where pricing is negotiated back and forth on individual renewals with the insurance provider.


Broker-Managed Pools through the Immix Group: Proven Results

Those in the Immix Group Client Community have greatly benefited from our strategy of broker-managed pricing pools. As we wrote about previously, a review of our block of business showed the following results for our 2022 renewal rates:

  • 43% of our clients saw a reduction to their Extended Health Care rates
  • 30% of our clients saw a reduction to the Dental Care rates
  • 75% of our clients saw their pooled rates held without change

Despite the high inflation we saw in 2022, those within our broker-managed pools fared very well. This has been the case for many years; one of our pools now has an 18-year track record of providing cost containment to its member groups.

Immix Pool makes sense

The 5 Key Advantages of the Immix Pool

The main advantages of our strategy? We’ve categorized the key benefits of our broker-managed pool strategy into 5 distinct areas:

  • Transparency- when it comes to the claims experience and rate calculations for your group.
  • Diversity – be grouped with an entire range of industries to spread the risk.
  • Buying Power- leverage economies of scale when it comes to plan design opportunities.
  • Service- we handle almost everything in-house, without TPA charges.
  • Reduced Administrative Charges- access to the low admin charges usually reserved for just the largest groups, rate guarantees, and customized pricing plans.


Transparency is a Key Value at Immix Group

One of the biggest misconceptions of a ‘pool’ is that you will not be able to see the details of your groups claims, and that your rate adjustments will be based on ‘the block’ perhaps leaving you in an unfair position. This is not the case with how our pools are designed; each group is experience-rated, with claims details clearly shown. In those high-claim years, you have downside protection and flexibility.


Diversity of Member Groups Means Greater Risk Management

We want to include groups of all sorts of backgrounds; construction, tech, professional services, retail and hospitality. This proved to be a great strategy during the pandemic where the strength of our pools allowed us to protect and continue coverage for those experiencing extreme disruptions to their businesses, employees and cashflow.


Power to Access Competitive Coverage for Small Groups

You may think you’re not a big enough group for disability, certain dental benefits or certain paramedical coverage levels. Inside the Immix Group pools, we have additional buying power when it comes to providing extremely competitive benefits to even very small groups.


Service by the Immix Group: An Extension of your HR Team

The Immix Group understands that for many smaller businesses, you do not have a dedicated HR team. For businesses that do, HR often prefers to focus on more essential matters than daily benefits management; our service model means we are able to handle the majority of the daily admin for your program, at no additional cost, and to provide our expertise when challenging employee situations arise.


Reduced Administrative Charges

Because the Immix Group has taken on the bulk of daily servicing and removed the requirement for the insurance carrier to create renewal documents, our clients receive much lower administrative charges than they could obtain as a stand-alone group. This translates into the ability to spend more in claims, compared to the premiums you’ve paid, than under a typical stand-alone plan. This means more of your benefits dollars go straight to paying claims for members, NOT to the insurance provider for expenses or profit. Think of it as wholesale pricing, but with the same coverage options of a custom plan, combined with the enhanced service experience the Immix Group strives to achieve on a daily basis.

As we’ve written, one size does not fit all!

A common question we get is about plan design: rest assured; you can customize your plan to meet the needs of your team. Unlike many other pools, the Immix Group does not require you to select from pre-determined plans. Immix will guide you in choosing the right plan for your team; we can survey and benchmark and determine the best fit within your budget.


How can belonging to the Immix Group’s broker-managed pool help a business to control costs?

Lastly, we wanted to share a story that illustrate how we have been able to assist clients within our broker-managed pools.

A long-time manufacturing client was hit with a series of very unexpected events that caused a significant downturn to their business. With high employee turnover occurring in connection with this, the business found itself in a terrible financial situation. Their employee benefits claims were much higher than in previous years (tied to the turnover, but also the coincidental timing of many new high cost claims), and we calculated an increase to their costs of around 35%. This cost increase was simply not feasible for the business to take on. But as a family-owned multi-generation business, the last thing they wanted to do was significantly reduce the coverage or cancel their benefits.

Because they were within the Immix Group’s pool where we ‘hold the pen’ when it comes to their rates, we were able to hold the costs for a year, and implement a 3-year plan to adjust the premiums to the levels required to properly fund the claims. This gave them time to get their financial footing, and to also address some of the causes of the high claims, with our assistance.

Ten years later, the client is still insured within our Immix Group pricing pool; they have grown and are thriving. As they achieved stability, so did their benefits costs. Over ten years, they have never had a renewal rate increase over 5%.

While this is one example, similar situations occur every year, where we are able to assist businesses to control this area of their balance sheet.

Still have questions? Interested in learning more? The benefits advisors at the Immix Group would love to help you optimize your benefits program. We love to hear from you!

“When it comes to managing employee benefit program costs, we learned a long time ago that the key to long-term cost control is to leverage the buying power of a large and diverse group of businesses. Working with- not against- our chosen insurance providers, we are able to provide sustainable, cost-effective employee benefit solutions to businesses both large and small. We created our first broker-managed pool nearly 20 years ago, and over this time the advantages for those in our Client Community have grown and grown.”

Key Takeaways

The Immix Group has longstanding broker-managed pools that provide lower employee benefits administration costs to small and medium-sized businesses.

Belonging to an Immix Group pool means full transparency as to your group benefits claims experience.

You can customize your plan design, while still benefiting from the advantages of belonging to a pool.

Lower administrative costs mean more of your employee benefits premiums go towards paying claims for your employees.

The Immix Group employee benefits model provides sustainable, long-term cost control, rather than the short-term reduced premiums that are available when switching insurers.

Asked Questions

For many groups (typically under 100 lives, but sometimes even higher!) the administrative costs for an insurer to run your program on a stand-alone basis are higher than if your program is within a pool, where admin costs are negotiated and applied on an aggregate basis.

This means that the pricing for the groups within the pool is set by the Immix Group, rather than by the insurance carrier who underwrites the benefits and pays the claims.

No, you can completely customize your plan coverage to match the requirements of your business, within the parameters offered through the insurance carrier.   

Yes, savings are typically available even for large groups, as administrative costs are often lower than stand-alone pricing. As well, because the Immix Group ‘holds the pen’ when it comes to your renewal pricing, we have flexibility to adjust the rates to a competitive level.

Further Reading

Lindsay Byrka

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

Top Benefits Conversations of 2022

It’s a wrap! As we begin the New Year with refreshed energy and excitement for what 2023 may bring, we wanted to share a recap of the key stories in benefits over 2022.


Extreme Difficulty in Hiring

The theme of our client meetings this year can be summed up in one simple sentence “Where did all the people go?” Businesses struggled to hire (and retain) qualified people. Employers told us they had candidates ‘ghosting’ interviews or simply not showing up to their first day, a trend that most had never previously experienced.

Time and again we were told by employers that they were desperately in need of staff, and that their existing team members were stretched too thin or in roles they were not hired or properly qualified to fill. The labour shortage is evident with a record-tight labour market, according Stats Canada: Labour shortage trends in Canada (statcan.gc.ca).

“Salary and benefits” continue to top the list of most important job factors for employees. Providing and more importantly communicating and highlighting a competitive benefits offering will make you stand out.

top benefits2

The Shift to Hybrid Work

There has been a massive shift in how we work over the past few years. Hybrid work, or working partly remote and partly in-office became the norm post-pandemic, with most employees reporting they prefer working from home.

This has had a big impact in terms of managing and hiring, measuring performance, and ensuring engagement. We wrote about hybrid work and posed the question: Is working from home an employee benefit in two parts. The basic takeaways are that remote work is here to stay, employees prefer a hybrid model, and a formalized WFH policy is a must. 


The Great Resignation, or rather, the Great Retirement

The much-discussed Great Resignation did not occur in Canada like it did in the US, but what Canada experienced is actually more concerning:  a record number of retirements.

A record 300K people retired in Canada in the 12 months up to July 2022 (up 30% from the same period the previous year). Early retirement, so those between age 55-65, made up almost half of the overall number of retirees. With our demographics here in Canada, it will only grow larger. With the most experienced people exiting the workforce, there is a real risk to businesses due to the lack of mentorship and transfer of knowledge for younger generations.

How does this tie into benefits? Offering those in the final stages of their career enhanced coverage and work flexibility are potential solutions to entice your most experienced people to stay a few additional years.


Continued Focus on Mental Health and Well-being

As we transitioned out of the pandemic, the focus on mental health remained at the forefront. Employers continued to ask for resources and coverage options to ensure their staff had access to the mental health support they required.  

Far beyond the EAP or the dollars available for counselling visits, employers sought various ideas to support mental health including: return to work plans, 4-day work weeks, assisting employees with financial concerns through financial literacy and group savings plans and other programs designed to provide the flexibility needed to better support individuals and families and remove barriers to care.

More than one third of all 2022 Long Term Disability claims are mental health related. Claims for mental health are up 75% from 2019, and experts anticipate this will rise in 2023.


High Inflation

A key conversation in 2022 was the inflation we saw across the board; this was especially noticed with the cost of groceries. After years of low interest rates, Canada experienced eight interest rate adjustments in 2022. For many people, this directly impacted their borrowing costs, affecting both personal and business expenses and decisions.

2022 saw increases to the Dental fee guides far higher than historical averages. Unfortunately, it appears that the Dental Fee Guide increases for 2023 will once again be much higher than usual, with 8.5% for Ontario and 9.8% for Quebec already reported. With costs for practitioners and other insured expenses also rising, we anticipate larger than typical increases to claims across plans.


Federal Dental Plan

The Federal Dental Plan was rolled out the end of 2022. Employers had many questions on this program, wondering the impact to their Employer-sponsored insured dental plans. Generally speaking, there is little or no impact on existing plans, due to the qualification parameters for the new Federal plan.

The program provides coverage for children under 12 only. In order to qualify for any level of coverage, family income must be under $90K, and the children must not have access to private dental coverage (i.e. Employer plans). The government states that this is the first stage in developing a more comprehensive federal dental plan; only time will tell!


Change to EI Sickness Benefits

Effective for December 18th, 2022, the Federal Government announced a change to EI Sickness benefits, extending the duration of pay from 15 weeks to 26 weeks. Employers had many questions about this and the impact on their insured Long Term Disability programs which typically begin at week 17, at the expiration of EI Sickness payments.

In short, Employers are not required to adjust their LTD plans. Generally speaking, it is not in the best interest of those who are insured under LTD plans to remain on EI Sickness rather than transitioning to LTD. 

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Flexibility in Benefits

Finishing up the list, an underlying theme to benefits conversations in 2022 was the desire for flexibility and customization. As we know, one size does not fit all when it comes to benefit plans, which these days must include elements of flexibility to ensure everyone’s needs are met. We saw employers embracing customized work arrangements including hybrid work models and four-day work weeks.

From a product standpoint, the Immix Group set up more Health & Wellness Spending Accounts than ever before as Employers sought a simple way to provide spending flexibility to their team.

As always, we are happy to discuss your program with you!

Please reach out to us to discuss how we can help with your program; we love to hear from you.


Read more:


Labour Shortage Stats Can:








Hybrid Work:









8 Reasons for Increases to your Employee Benefit Plan Premiums    – Latest News from Immix Group


Mental Health:

More than a third of disability claims in 2022 due to mental-health reasons: survey | Benefits Canada.com

Mental health claims soar by 75 per cent | Canadian HR Reporter




Flexibility in Benefits:

One size fits all? Not when it comes to employee benefits. – Latest News from Immix Group

Lindsay Byrka

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

8 Reasons for Increases to your Employee Benefit Plan Premiums   

Pondering the question: “Why do my benefit plan costs keep going up?” We’ve got answers.

If you’ve walked away from your renewal meeting scratching your head at the rate adjustment, you’re unfortunately not alone. Many advisors don’t do a great job explaining a rate change, and the math used by insurers can be quite (unnecessarily!) complicated. Our goal with this article is to give you insight into what causes rates to increase or decrease, and hopefully help you to better understand your program and what you can do to achieve cost sustainability.

Renewal rate reductions DO happen! We promise.

Before we get into why rates increase, we’d like to point out that for many of our clients, they see their rates reduce from time to time! Approximately 30-40% of our clients in a given year experience an overall rate decrease, rather than an increase.

We conducted a quick review of our block of business, and for their 2022 renewal rates:

  • 43% of our clients saw a reduction to their Extended Health Care rates
  • 30% of our clients saw a reduction to the Dental Care rates
  • 75% of our clients saw their pooled rates held without change

It’s a fact! Employee benefit program rates do not always increase, even in times of high inflation.

We want our clients to understand how benefit plan pricing works

During a renewal meeting, one of our primary goals is to ensure that our client understands WHY rates adjust. One of our key values at Immix is transparency; showing the details of the claims experience and how the rates are calculated is important to us.

First, as your advisor, we are responsible for determining fair pricing is presented to you for the year ahead. On a typical non-refund insured program, this means assessing the claims experience and projecting the required premiums for the upcoming renewal year, using some basic mathematical formulas. We look closely at the composition of the claims, the inflationary trends applied, the IBNR (Incurred But Not Reported) factors etc., but once we are satisfied we have arrived at fair pricing, our goal is to ensure you also understand.

However, if you’ve walked away from a meeting with your benefits advisor and you’re googling to attempt to understand why your pricing has increased, here are some insights:

1. Your claims experience is high.
This is the obvious one! In short, what was paid out in claims was too high relative to the premiums you paid for the benefit. This applies to health, dental, and to an extent, short term disability.

In very simple terms, if you paid $100 in premiums, and the claims paid back to members were $125, you have a Paid Loss Ratio of 125%. If you paid $100 in premiums, and the claims paid back were $50, you have a Paid Loss Ratio of 50%. While other factors come into play some of which are described below, in short, the premiums need to be sufficient to cover the claims, at a certain break-even mark.  

2. Your group is not fully credible/ has low credibility.
What is credibility? The simple explanation is that it’s the portion of your own claims experience used in the renewal rate calculation, versus the percentage that is based on the insurer’s block of business or manual rates. This is expressed as a percentage.

With Credibility of 25%, this means that 75% of the experience used to calculate your rate adjustment is based on the insurers block of business or manual rates, not your own claims experience. This can have the effect of helping or hurting your renewal rate calculation, depending on whether your claims experience is better than or worse than the insurer’s.

Credibility is based on the size of the group and the number of years with the insurer. The larger and longer you are with a carrier, the higher the credibility. It’s worth noting that within Immix Group’s broker-managed pools, we have full credibility for all groups, from day one.

More Reasons for Increases to your Employee Benefit Plan Premiums

3,Inflationary trends come into play.
Benefit programs are not immune to basic inflation, and an inflationary factor is incorporated into rate calculations.

Firstly, inflation affects claim costs, including fees charged by benefit providers such as paramedical practitioners, medical supply offices and dental clinics. In particular, we saw a huge increase to the 2022 Dental Fee Guide in BC, at 7.35%. With inflation hitting everything right now from groceries to gas to wages, you can also expect to see claims dollars increasing, across the board.

When calculating the renewal rates, the anticipated higher cost of future claims is taken into account.

An inflationary trend* is typically applied to the paid claims (along with the change in IBNR reserve) to arrive at the Incurred Claims, the number that is used in the calculation to project the required premium for the year ahead. Although the term “Incurred Claims” is a bit confusing, it’s basically your claims, trended for inflation and reserve adjustments.

4.You have a low Target Loss Ratio.

This might be based on the size of your group, how long you’ve been with the carrier, or perhaps you are inside of a pool. Nevertheless, this directly affects your renewal rate calculation under a typical insured plan.

If you’re not familiar with this term (read more here), Target Loss Ratio refers to the ‘break-even’ mark for the experience-rated benefits (typically health and dental, and partially, short-term disability). The Target Loss Ratio is the goal as far as where the Incurred Loss Ratio will fall, for the plan to not lose money. Assume the following:

  • 75% Incurred Loss Ratio, and 72% Target Loss Ratio
    • 75/72= 1.0417 (a 4.17% rate increase applied)
  • 75% Incurred Loss Ratio, and 84% Target Loss Ratio
    • 75/84= 0.8929 (a -10.71% rate decrease applied).

As illustrated, Target Loss Ratio is a key factor in your renewal pricing calculation. It’s a reflection of the costs to run the plan and includes the payment to the advisor.

5.You’re inside a pool where the experience of the pool drives your pricing.

Perhaps you had very low EHC claims, but the rates are still going up 15%, because under the pool model you are in, everyone in the pool gets the same adjustment based on the overall experience of the pool. Fair? Not at all. However, that’s how many pools are managed.

Even worse (in our opinion!) if you’re inside a pool where you are not allowed to see a breakdown of the types of claims or even the claims dollars compared to the premiums, you have no way of knowing if your pricing is fair. While it’s a lot easier for the advisor and insurer to give everyone the same rate adjustment, in addition to unfairly punishing groups with low claims experience, it doesn’t provide the transparency needed to properly manage the program.

6.You have aging demographics or a generally ‘older’ group.

We have discussed mostly the factors that affect health and dental pricing, but the pooled benefits (Life, AD&D, Dependent Life, Disability, Critical Illness) are also subject to rate changes. These are primarily driven by shifts in the overall group of people with regards to the headcount, male vs female split and the distribution over age brackets. As a group becomes “older” or there are higher concentrations of people in the older age brackets, rates tend to increase for pooled benefits.

A higher percentage of males vs females will drive life insurance rates up, whereas the opposite is true for disability pricing; proportionately more females drives the disability pricing up. This is simply a reflection of mortality and morbidity tables (likelihood of death or disability, respectively).

For the health and dental, an “older” group also will impact claims. Older groups are more likely to claim for prescription drugs, and often the more costly and ongoing drugs associated with chronic conditions. When it comes to Dental, older people are also more likely to be claiming for more expensive procedures such as crowns, bridges and dentures as opposed to just regular cleanings.  

Other Reasons for Increases to your Employee Benefit Plan Premiums

7.Your plan was set up with manual pricing.

Perhaps you are setting up group benefits for the first time meaning there is no claims history for your group of employees. The pricing that is implemented when a group is first established is based primarily on the demographics of the group, in combination with the selected plan design (known as book rates, or manual rates). As there is no information as to the medical or dental needs of the group, the pricing is really just an estimate based on data held by the insurance carrier. After the expiration of the initial rate guarantee period (15-24 months, or even longer for some benefits), the rates will be adjusted based on the factors described above for a typical non-refund insured plan. What may happen is that claims are far higher than estimated, meaning a rate increase is required. Alternatively, you could see your rates drop.

8.Your plan was set up with discounted pricing when you moved carriers.

Perhaps you decided to switch insurance carriers due to the reduced pricing presented to you. If it was not carefully analyzed and explained, you may be surprised to see a large increase at the first renewal with the new carrier. One reason for this is to recoup the sales discounts that were applied to entice you to make a move.  As we have written about, sometimes a discount is warranted (i.e. in assessing the claims ratios, the rates were too high) and sometimes they are illogical (the premiums proposed are far less than the historical claims). It is when the proposed rates seem far too low, where one needs to be cautious.

These discounts can be significant; insurers can offer 15%, 20% even beyond 30% discounts to obtain business, along with lengthy rate guarantees. As moving a group can be onerous, they anticipate they will likely retain the business for at least a few years, so will have the opportunity to increase the rates and recoup any sales discounts.


The answer? There are a lot of reasons for pricing to go up, but also reasons it can reduce.


As you can see, there are a variety of reasons why benefit plan pricing changes, whether it relates to your people, your pricing model, the broker and/or insurer you’ve engaged, or quite simply factors going on in the world. Working with an experienced and qualified employee benefits consultant is essential in ensuring your program remains sustainable for your organization.  

*Inflation: This is often expressed with a time lag factored in, so the number you see is higher than the annual expected inflation. For example, if the inflationary trend is displayed as 14%, this is divided by 12 and spread over the full year plus the additional months to the point the rates will change. Therefore, 14% over 16 months is actually 14/16×12= 10.5% inflation.


Not always. For fully-insured non-refund plans, rates can increase or decrease depending on the claims experience of the group or shifts in the demographics.

The credibility of a group refers to the portion of the groups own experience that is included in the renewal rate calculation.  

This refers to the ‘break-even’ mark for the program, or the projected point of profit vs loss for the experience-rated benefits, for the insurance carrier.

The ratio of paid claims, trended and with reserve adjustments factored into the premiums, expressed as a percentage.

The ratio of the paid claims to the premiums, expressed as a percentage. 

These are the ‘book rates’, or the rates used by an insurance company based on the demographic composition of the insured group, in combination with the plan design.

Lindsay Byrka

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

Check to Ensure your Benefits Quote is Actually for a Comparable Plan

5 Key Areas to Check to Ensure your Benefits Quote is Actually for a Comparable Plan

Inflation is on everyone’s mind; wherever you look, prices are rising. Unfortunately, benefit plans are not exempt from this. When the cost of dentist visits, medical items and procedures goes up, the result is often higher claims. This can sometimes end up passed along to employers as a renewal rate increase. 

Many of you may be considering getting a quote on your benefits plan or may have already received quotes from alternative providers.  Before you make a decision on moving your program, there are a few key points to check to ensure your quote is not too good to be true.

Is it truly apples-to apples?

Consider this scenario: you’ve been presented with a quote for a benefits plan. You had asked for the quote to be apples-to-apples to your current plan. The good news is the price is significantly cheaper than what you’re paying, and supposedly, the plan designs are equal. But are they?

In our line of work, it’s not uncommon to come across what is positioned as a comparable plan, only to find there are many details that have resulted in the lower price. They can be glossed over in a plan summary, and when the time is not taken to examine every nuance to the coverage, it can leave owners- and their employees- disappointed. There is nothing worse than rolling out a new program only to hear from an employee that their prescription -which was always covered under the old plan- is now excluded.

As we have written about in the past, it’s very common to get discounted pricing from an insurer. In short, the carriers usually need to extend some level of reduced pricing in order to gain your business.

And certainly, there are opportunities for true savings on administration costs.  But discounts aside, and beyond the summary of the coverage, we have compiled a list of specific plan elements to check and compare. 


Top 5 things to Review if a Benefits Quote seems Too Good to be True


  1. Review the details of the Prescription Drug Plan:

What are the details of the drug plan? Is there a managed drug formulary, excluded drug categories or drug caps? Does the plan mandate generic substitution or not?

A drug formulary is simply a list of the drugs that are covered on the plan. Oftentimes, a drug formulary is designed to exclude certain medication categories (fertility drugs or oral contraceptives are typical examples), in order to cut costs. In some instances, a drug plan may even exclude specialty drugs, the expensive but often lifesaving/ lifestyle saving drugs. While it’s often positioned as a benefit to employers, this could leave your employees with major uncovered drug expenses.

It is important to understand the implications of the drug plan. Generally speaking, a drug plan is a key part of the extended healthcare and is intended be an insurance plan. A plan that covers antibiotics (roughly $10-15) but excludes drugs for MS or Chrohn’s disease ($10K+ per year) is not providing coverage against a financially significant, often unexpected expense. While it’s true that a more open drug plan could mean higher drug claims than under a more restricted, managed formulary, the program’s stop-loss max will typically work to limit the plans exposure to high-cost drugs.

How the program adjudicates brand name versus generic drugs should also be clearly known; it’s standard these days to have generic substitution on a program, but this can work differently depending on the carrier or how the plan is set up (for example, will the plan allow the doctor to indicate ‘no substitution’ and therefore cover the brand name version of a drug?). Differences in this area have cost implications.

Lastly, is the annual limit for prescription drugs ‘unlimited’ or is there a dollar limit? You may be okay with implementing a capped drug plan, but again, you need to understand the details and implications. A qualified and experienced benefits advisor will be knowledgeable on all the above points, and most importantly, should be open and transparent about what you are getting.

Reviewing the health benefits plan
  1. Check the Dollar Maximums and Limits for Key Items:

You may have checked in the plan summary that the coinsurance is the same; 80% on certain lines of coverage, 100% on others. But what are the per item or category maximums?


The following are the most common items where benefit maximums may be listed, in the fine print:

      • per visit limit for paramedical services, such as $10 or $25 per visit reimbursement, rather than up to the practitioners reasonable and customary limits (i.e. $100 for massage visit)
      • annual per person dental limits in dollars; is this per level of coverage, or combined?
      • dental procedure limits such as scaling units
      • dental recall limits; is it the standard 6 months or has it been pushed to 9 months or even 12?   
      • eye exam limits; is it set to “reasonable & customary” meaning it will adjust with inflation, or is it a set amount? Is the amount reasonable given the cost in your area?
      • Orthotics, surgical stockings and other medical items
      • and as mentioned, is there an annual drug maximum, vs an ‘unlimited’ drug plan


While item reimbursement limits are standard practice, they do vary by carrier and many can be customized in a quote. It is important to understand how this may compare to your current plan, and whether the limits are reasonable, given the overall cost of the item, and the intent of your program.



  1. Check the Contract Wording and Coverage Details of the Disability Insurance


We say it all the time: long term disability coverage is the most important but often the most overlooked part of a benefits plan. This is an area to pay close attention to; in the event of a claim, how the claim is handled depends on the contract that is in place which could greatly impact the plan member, potentially for decades. Things to watch for:

      • What is the definition of disability, in words? How does this compare to your current plan?
      • Are commissions, bonuses and overtime pay or T5 earnings properly addressed? If the contract covers salary only, and this is a small percentage of total compensation for certain people, that could leave them grossly underinsured.
      • Cost of Living Adjustment; is there a COLA clause, or an inflationary adjustment included for the benefits payments? Is this important to you?
      • Is the program set up as taxable or non-taxable (is the employer or the employee paying the premiums?)
      • Is the duration of disability benefits to age 65? While this is the norm, we are seeing a trend towards a 5 or even 2 year benefit duration, to reduce costs. If someone goes on disability, they could be disabled for the duration of their life; an insurance plan that only pays them for a few years may not meet your requirements as an employer.


There is no bigger waste of money and potential liability than a disability plan that fails to cover people adequately and accurately; reviewing this area with an expert is crucial.

Reviewing details of a health benefits quote
  1. Check the Termination Ages: How long can people remain on various parts of the plan?

Different benefit lines typically have age-based termination or reduction schedules. For example, many life insurance benefits reduce the coverage by 50% at age 65, and then terminate completely at age 70 or 75. For health and dental, coverage is often in place right to age 75 or even ‘retirement’, meaning there is no actual termination age so long as someone is still actively at work.

We have noticed a trend towards lowering termination age and have seen coverage ending at 65 or even 60! For many employers, this is a big deal and it’s often not highlighted in a summary of benefits as a deviation. It is a good idea to additionally check the travel coverage and ensure this part of the extended health care is retained in alignment with the EHC, if possible.      

  1. Review the Mechanics of the Pricing:

Many people fail to review how the quoted premiums compare to the historical claims, or to do a basic ‘reality check’ on a too-good-to-be-true quote. On a typical experience-rated program, the premiums must be adequate to pay the claims, with the other pricing factors such as inflation, IBNR and target loss ratio taken into account.

Some questions to ask are: What is the actual discount that the carrier is investing? What is the duration of the rate guarantee?  What will be the process (financially speaking) when the plan is renewed? What is the Target Loss Ratio? If the plan is to be part of a pool, how does it work? Many times, you can find this out and often the carrier will be transparent as to how they plan to recoup any losses. A qualified benefits advisor should be able to explain this in detail and understand exactly what the renewal process will look like with a specific provider.  


Some plan design differences may be acceptable to you

There are always going to be nuances to carriers that are unique to them, and where they simply won’t directly align with your existing plan. Sometimes this means a slight improvement, and sometimes this could be perceived as a takeaway. At the end of the day, what’s important is that you understand the small deviations and that you are not buying something under misleading or mistaken circumstances.

An experience and qualified benefits advisor will do a detailed analysis

With the help of an experienced benefits advisor who knows the terminology and nuances to a quote and contract, the details can be understood. You may review any differences and be totally fine with the program not providing the same level of coverage. The key is to be aware, understand any implications, make an informed decision, and communicate any changes to your staff.

At the Immix Group, our benefits experts can help you obtain a quote, understand the quote and what it means for the future, and manage not only the onboarding of your new program, but the ongoing plan management. 

As always, feel free to reach out to us. We love to hear from you!  

Lindsay Byrka

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca


Top 8 FAQs for Business Owners when Implementing an Employee Benefits Plan

By Howard Cheung, Account Executive, Immix Group: An Employee Benefits Company


1. How much does it cost to provide Employee Benefits?

Cost is often first thing that comes to mind when considering employee benefits. How much to budget, per employee, and what does this cover? Without an existing benefits program or past claims experience, insurers use “manual rates” which is pricing that factors in the demographic and occupational details of your group, for the requested coverage design(s), to provide your group with rates.

As for how much to budget, consider researching your sector’s benchmark salary and go from there to calculate a rough percentage. The % of total rewards cost (benefits is part of this) can range from 5% to 13% of payroll.

On the lower end, benefits could be under \$100 a month per employee, and on the higher end far upwards of \$1,000. It all depends on the details of your group and the plan you choose.


2. What do Employee Benefit plans typically cover?

Common coverage lines on benefit plans are:

  •  Basic life insurance
  •  Accidental death & dismemberment
  •  Long Term Disability
  •  Short Term Disability
  •  Critical Illness
  •  Health Care (drugs, paramedical, vision, travel)
  •  Dental Care
  •  Employee Assistance Programs (EAPs)
  •  Other common benefits include: Health Spending Accounts, Wellness Spending Accounts, Pensions, or Group Savings Plans.

Keep in mind that extended health care coverage (in particular, items covered under the Health Care portion of plans) is complementary to provincial healthcare (i.e. MSP in BC) and is not intended to replace or overlap.


3. When do employees receive benefits? Do they have to wait?

You can begin a new plan for existing employees at the first of any month. For new hires, most employers implement a waiting period of 3 months before benefits begin. You can customize this based on the needs of your business, but once determined, this needs to be followed unless a waiver is requested for an individual, or you change the waiting period for the whole program.

A “late applicant” situation occurs if a new employee is not enrolled in the program on time (after the waiting period). In this instance, the member may be required to go through underwriting and receive limited benefits.


4. Are part-time, temporary or hourly employees eligible to get employee benefits?

Standard employee benefit plans require a minimum of 20 working hours average per week in order to be eligible, plus completion of the waiting period. Employers may set their own minimum hours to determine who is eligible (eg. minimum 35 hours per week), and their own waiting periods.

Benefits classes may be used to set distinctive eligibility rules for different classes of employees (eg. management and other employees), and also to provide different coverage to different classifications of employees.


5. Will Employee Benefit plan premiums increase if my employees use the plan a lot?

New policies often have an initial rate guarantee period between 16 to 24 months for health & dental rates and even longer for pooled benefits (up to 48 months). After the initial period, most plans renew on an annual basis. The renewal pricing is generally based (at least in part) on assessing the claims of your group compared to the premiums you have paid. While a lot of factors come into play, there are many different ways that renewal pricing is determined and your premiums could either increase or reduce.

It is important to work with your advisor to thoroughly understand the pricing model recommended for your group, whether this is fully insured, refund account or ASO.  


6. Are Employee Benefit costs tax deductible?

Yes, employer-paid premiums for employee benefits are typically tax deductible to the corporation. In contrast, reimbursing an employee directly for medical expenses is not usually deductible, per CRA rules.

Whether a premium is paid by the employer or by the employee vis payroll deduction makes a difference with regards to taxation. To avoid taxable benefits for employees, some benefits should be employee-paid. 


7. What are the advantages for a company in providing a benefits plan? Does providing benefits improve morale? 

There are numerous reasons to provide a benefits program for your team:

  •  Is a tangible form of compensation to attract the best people and keep them.
  •  Health, Dental & EAP coverage helps improve health both proactively and reactively, reducing pain, stress & depression thereby increasing productivity
  •  Group retirement savings help reduce financial burden and stress
  •  Promoting and communicating about provided benefits is an additional channel to reinforce company culture and values.
  •  Studies show employees value benefits more highly than the equivalent in a pay raise


8. Should I shop around multiple places for benefit plans?

An independent benefits consulting firm can provide quotes from various suitable insurers. Insurers themselves are not typically equipped to provide consulting services and do not have access to the entire market.

In addition, once an insurer has been approached to provide a quote for a business, they cannot release another quote for the same business to a different benefits consultant. Only the benefits broker who is able to provide a current dated “agent of record” or “authorization” letter can work on your behalf to obtain quotes.

Given the industry rules outlined above, it is not efficient to utilize multiple brokers or to shop around. It is better to ask for a referral from a trusted peer or interview reputable benefit firms to find the right fit. Once you have decided with whom you want to work, it’s then time to have your trusted advisor look for quotes on your behalf.


About myself and Immix

I’ve been a licensed benefits consultant and broker for businesses in the Lower Mainland for 14 years. I work with the Immix Group team toward benefits solutions for organizations of varying sizes. We would be happy to help you, no matter what your organization’s size!


Any questions, please feel welcome to reach out to me at howard@immixgroup.ca.

Disclaimer: All organizations and groups are different and applicable strategies should be reviewed with a licensed benefits advisor to review your situation.

Howard 2

Hybrid Traditional + Flexible Employee Benefits: A Sample Design for SMBs

By Howard Cheung, Account Executive, Immix Group: An Employee Benefits Company


You are a small or mid-size business. You want affordable employee benefits with costs that you partially control – while having peace of mind that you can provide for unexpected health/drug claims. Read on! This article might just be the benefits blueprint you’re looking for.

In the 2020s, many businesses are being forced to adapt how they attract, hire and retain employees. Even for small businesses, it is not uncommon to have a five-generation age gap with significantly different health and wellness (a.k.a. personal) needs. The challenge: How to satisfy everyone, while keeping a sustainable budget and maintaining the ability to evolve as you free up cash flow and grow?

In this article, I illustrate a sample design that combines the best of two types of benefits:

  1. Traditional Insured Benefits: coverage for unexpected, catastrophic claims related to health
  2. Combined Health and Wellness Spending Accounts (CHWSA): cater to modern workforce needs (five-gen age gap) + budget customization.

Note that this is not the only way to design benefits to meet modern needs. There is no one-size-fits-all solution, as every group’s needs, budget and demographics are different.

Matthew Wong, CGA/CPA and Co-founder of Purpose CPA, gives a great high-level overview of the different types and lines of benefits available to SMBs. Matthew helps guide SMBs to navigate the accounting and tax nuances of the different types of benefits, as well as making sure you’re ready for future growth. Read more here:Employee Benefits for Small Businesses — (purposecpa.ca)


Traditional Insured Benefits (base plan)

A Traditional Insured Benefits program provides a set schedule of coverage for a set premium. Annual renewal adjustment is based on claims experience. Insured benefits have an important role in an overall comprehensive benefits plan because they include coverage for catastrophic claims, such as high-cost drugs and out-of-country claims. Including an insured program as the base layer can offerprotection for you and your employees from unforeseen, possibly devastating, health needs. Granted, for some SMBs with limited cash flow a fully insured health and dental program may be out of reach. Additionally, a traditional insured program does not include coverage for any personal/wellness-related expenses.

So, how to implement a benefits program that provides for unforeseen health claims and satisfies a wide variety of health/dental/wellness needs – all the while with limited cash flow? One way is to implement an insured program that provides a minimal amount of coverage for life and accidental death and dismemberment (AD&D), and basic health. The gaps can then be offset with a Combined Health and Wellness Spending Account (CHWSA).

The following three steps build a solid-but-basic insured health benefits plan:

  1. Secure the base-insured benefits program under a broker-managed pool for the most efficient use of your benefits dollar. See our article “Value of Broker-managed Benefits Pool for a sound long-term benefits strategy.
  2. Shift premiums around to minimize “money-in, money-out” type benefits. These are benefits that tend to have more predictable claiming patterns and, typically, a cap.
  3. Have 80% or lower co-insurance. This helps to reduce premiums while shifting a small amount of expense to the member.


Now to add the CHWSA!

A Combined Health and Wellness Spending Account provides employees with a pre-determined dollar amount of reimbursement for a wide range of expenses outside of their insured benefits, or beyond the plan maximums.

A CHWSA offers the element of flexibility, as each employee has control over how they allocate their funds between the two accounts, that is, Health Spending and Wellness Spending. As the employer, this is where you have the ability to control the cost and empower your employees to fit the plan to their needs.

The differences between the two accounts are:

Health Spending Accounts (HSA): an increasingly popular alternative or top-up to traditional health and dental plans. Only items considered an eligible medical expense by the Canada Revenue Agency (CRA) can be claimed through an HSA. Examples of eligible expenses are medical, dental, vision, diagnostic tests, lab scans and laser eye surgery.

Wellness Spending Accounts (WSA): extend coverage beyond the traditional type of expenses. Through a WSA, items such as work-from-home expenses, gym memberships, transit passes, yoga classes and even e-bikes can be covered. Employees may even choose to allocate the CHWSA dollars to a group savings program, e.g., Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA).

This is how it works, along with a sample blueprint you can follow:


  1. Employer decides $X amount for the CHWSA
    • a) Optional: Set-up different eligible classes. For example, you may decide families get two times more the base amount. Or employees with two or more years of tenure also get two times more the base amount.
  2. At the beginning of each year (or at time of benefits eligibility), each member allocates $X into HSA and/ or WSA. This allocation is locked in until the next renewal period.
  3. Any health-related/CRA-eligible expenses paid out of pocket (e.g., expenses not covered under base-insured health, over-limit physio expenses, or dental or vision) may be claimed under the HSA. (See below for a sample list of CRA-eligible expenses.)
  4. Any other expenses not under CRA-eligible expenses paid out of pocket may be claimed under the WSA. (See below for a sample list WSA expenses.)
  5. Each time there is a claim/reimbursement, the employer will get an invoice of the claim + fee.
  6. Once the benefit year ends, employees may again change their allocation mix. Carrying forward any unused balance is optional (employer decides).
  7. Review your claim reports annually and see where the trends are for future tweaking and decision-making re benefits.
  8. No renewals (the only “renewal” is the reset of the benefits amount).




What to look for in a CHWSA platform?

Work with a benefits team who can set you up with a CHWSA platform, ideally a fully online digital platform, easy to manage, to maximize efficiency in admin/claims/processing. The platform would provide:

    1. Adjudication of claims to adhere to CRA guidelines and privacy of members
    2. Claims processing
    3. App or online claims
    4. Payments and reimbursement processing
    5. Live support
    6. Fees that range from 8-10% of claims
    7. Ideally, no setup or subscription costs or float requirements.


Eligibility guidelines

  1. Must be an incorporated active business with at least one employee. The business cannot only be generating passive income
  2. The benefit is available to all employees, not arbitrarily given
  3. Employees who are also shareholders must be collecting income.


So, what’s covered under a Health Spending Account (HSA)?



What’s covered under a Wellness Spending Account (WSA)?


As you can see, there are a lot of items wellness can cover. This is a comprehensive list that can be customized to better align with your business philosophy.


Tax considerations of allocated amounts to HSA vs. WSA

It is important to note that HSA and WSA benefits are taxed differently. The benefit dollars used up in a HSA are tax-free, whereas WSA dollars are taxable benefits. That is, if you claim $1,000 worth of childcare under your WSA, that will be counted as taxable income and you will get a tax slip. This is why there’s a lot of flexibility around WSA – and why we advise that you select wellness categories that align with your philosophy. Unused dollars do not have any tax impacts.


Organization growth and the importance of insured benefits

As alluded to earlier, insured benefits play an important role in having a solid benefits program. The importance of traditional insured benefits is to cover for the unknown, unexpected and high-cost:

  1. Sudden severe illness
  2. Accident
  3. Injury (rehab + drugs + loss of income)
  4. Pandemic-triggered expenses.


An actionable step right now: Do a benefit survey!

Whether you are applying the above or a different design, it would be wise to understand your own group’s needs by doing a benefit survey. Really quantify what matters to them. Aside from knowing what benefits matter, it may help form other areas of your culture. In knowing their personal needs – anonymously, of course — you can then better understand what type of benefits would work best.


About myself and Immix

I’ve been a licensed benefits consultant and broker for businesses in the Lower Mainland for 14 years. I work with the Immix Group team toward benefits solutions for organizations of varying sizes. We would be happy to help you, no matter what your organization’s size!


Any questions, please feel welcome to reach out to me at howard@immixgroup.ca.

Disclaimer: All organizations and groups are different and applicable strategies should be reviewed with a licensed benefits advisor to review your situation.

Howard 2

Market Update: Stay Calm, Stay the Course

By Anthony Ciccone, President

A message from Anthony Ciccone, President

Many of you are feeling concerned about the unprecedented events we are experiencing, and specifically, the severe impact on the financial markets. Three months ago, no one knew what COVID-19 was; now it is impacting everyone. This is uncomfortable; we are all feeling the angst. The ups and downs of the stock market over the last few months are a great reminder as to why being well-prepared is essential.

Perspective is vital in times like this. Throughout history, there have been dramatic upswings and downswings; but it also leads to lessons on what we should do and not do, when it comes to our investments. Here are three things everyone must think about. 


  1. Context is key. Over the past decade, the S&P 500 has averaged an annual return of 13.8%. The S&P 500 is now giving up years of returns, and it feels scary. What we can control is our own actions. Everything else is out of our control. The best thing to do is be well informed, have patience, and trust the process of your plan.
  2. Please stay invested. Over the past 11 years, we have seen very little volatility. The start of this extreme volatility, which started around one month ago, was only the 6th real drop in 11 years. Before this, the most significant drawdown was in 2018 (20%). Corrections are typical market behaviour. Being comfortable with market fluctuations is important as you should not be chased from the stock market, especially if you have a long-time horizon. 
  3. Diversification. We are exiting a cycle of low volatility, scarce drawdowns and high investor complacency. Many people, wanting to take advantage of the extended period of growth, didn’t see the purpose in owning bonds or negatively correlated assets. March 2020 has shown us the timeless lesson of diversification. There should always be investments in a portfolio that are designed to help when markets don’t go the way that is expected. Losing less right now means recovery is quicker once the markets turn around.


Risk makes everyone nervous, but it is also where the return comes from. As it works against our investments, as we see now, it can be abrupt and scary. True wealth is built by being disciplined in our plan and investments. 

Staying true to your plan, staying invested and staying diversified will be the most opportune way to weather the coming storms and capitalize on gains once the recovery emerges. 

If you’d like to discuss your account one-on-one, please feel free to call us at 604-688-5559.

anthony ciccone

Anthony Ciccone

President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E anthony@immixgroup.ca
W www.immixgroup.ca

BC’s Medical Services Plan: What is MSP – and what does it have to do with your benefits plan?

This blog is from 2017, and due to legislative changes in BC, MSP employer payments were cancelled.  Please read more here: https://www2.gov.bc.ca/gov/content/health/health-drug-coverage/msp/bc-residents/premiums


The three certainties that come along with living in British Columbia: death, taxes – and Medical Services Plan (MSP) premium increases.

Prior to joining Immix and entering the world of employee benefits, I shared the common misconception that the employer always pays MSP. I had worked for large companies and with the BC government in a union environment; in both job settings, my employer paid my MSP premiums as a part of the benefits package.

When I received my first MSP invoice with months of back charges, I had a rude awakening!

Now that I’m an Employee Benefits Account Executive with Immix, I get asked almost weekly what MSP covers and who should pay for it. With this article, my aim is to give you a brief overview of provincial health care – and how it relates to employer-sponsored benefit plans.

What is MSP?

MSP provides basic coverage and access to medically necessary health services in BC: doctor/hospital visits, emergency dental/oral surgery performed in the hospital, and some diagnostic services such as X-rays and eye exams.

Each province across Canada has its own version of provincial health care. The way each province bills health care varies.

Who pays for MSP?

MSP premiums are the responsibility of each individual/family, unless they’re lucky enough to have an employer who covers some or all of the cost. From my many years of experience in the benefits industry, many large corporations and unions will generally cover MSP costs, or have some sort of cost-sharing arrangement in place.

Smaller companies usually do not cover the cost of MSP premiums. However, that is not to say they can’t. Coverage is at the company’s discretion and is a generous perk. If an employer does pay provincial health care insurance premiums on its employees’ behalf, those premiums are considered to be a taxable benefit to the employee.

MSP premiums are based on an individual’s Adjusted Net Income. Effective January 1, 2017, minors and dependents enrolled in full-time postsecondary studies are no longer subject to MSP premiums.

As of January 1, 2017, the government further segmented income brackets to reduce the premiums for lower-income levels. For example, someone earning $30,000+ in 2016 (the highest-income bracket prior to 2017) was paying $75 per month in MSP premiums. In 2017, that same person earning $30,000 now pays $46 per month. The highest-income bracket has been increased to $42,000. Low-income individuals and seniors over age 65 may be eligible for premium assistance.

Premium Assistance- You might be eligible for a discount!

From personal experience, I highly recommend that anyone with senior parents or grandparents double-check to ensure they are receiving premium assistance, that is, lower monthly MSP premiums. MSP does not prompt them to do so – as my 88-year-old grandmother and I learned the hard way.

My grandma was paying way too much in MSP contributions. From my career in benefits, I recognized this – but MSP didn’t cooperate easily. We had to show them seven years of tax returns to prove her earnings! Only then, finally, did they backdate her significantly lower premium amount and refund those seven years of overpayment.

If we hadn’t taken the initiative, my grandma would still be overpaying to this day. So remember: MSP is quick to increase your monthly premiums when your income increases. But they don’t bother to reach out if you qualify for premium assistance. It’s up to each individual to apply for MSP premium assistance.

Here’s information on current premiums.

Do I need to have MSP?

The short answer is yes. British Columbia requires its residents to have MSP. In certain circumstances, adults can opt out of MSP, but this is very unusual. MSP covers access to physicians, hospitals and other services, regardless if care is needed for an emergency or non-emergency situation.

Employer-sponsored health coverage is additional coverage above and beyond MSP. The two types of coverage work in a complementary way, meaning an extended health insurance contract will not cover items paid for through MSP. Extended health care covers some or all of the cost of prescription drugs, medical equipment, health practitioner visits, etc. Without a group benefits plan, individuals are responsible for 100% of the cost of most health-care-related expenses not covered under MSP.

You need MSP to enrol in an employer-sponsored group health care plan. If you opt out of MSP, or become ineligible for other reasons, you won’t be able to enrol in the extended health care portion of the employer’s group benefits plan. (Note: dental will still be covered through group plans.) As well, you may not be able to purchase emergency travel insurance for trips outside the province.

The future of MSP…?

As noted earlier, provincial health care coverage varies by province; how the premiums are paid varies, as well. BC is the only province that charges a premium directly to individuals. Many other provinces have implemented a payroll tax or income tax charge to account for provincial health care premiums.

There has been a lot of talk in the media about the restructuring of MSP in BC. Minority political parties keep voicing their desire to change the way provincial health care premiums are collected. Generally speaking, the current administrative pricing arrangement is very unpopular with both individuals and the employers who administer the premiums for their employees.

The current BC government recently announced that as a part of BC’s plan to eliminate MSP premiums, they plan to cut premiums in half for individuals with an annual household net income under $120,000 effective January 1st, 2018. 

We’ll be sure to keep you posted on that and any other MSP developments.

Further reading 


Conversion Plans- Individual Health Care & Dental Plans

Help ensure individuals do not lose coverage between jobs and in retirement

When changing employers, leaving a company, or retiring from the workforce, considering healthcare and dental costs and options can be stressful for many people. 

A gap in health and dental coverage can mean significant out-of-pocket expenses for some families. Unfortunately, many individuals do not qualify for coverage due to health issues. The solution to this concern is a ‘conversion plan,’ which offers uninterrupted coverage without medical approval.

When a member applies for individual Extended Health and/or Dental coverage within 60 days of losing coverage under an employer-sponsored plan, they are guaranteed coverage with no medical underwriting.  Unlike typical individual health and dental plans, these plans cover pre-existing conditions and acceptance is guaranteed.


Most Conversion plans offer coverage for the following:

  • Prescription Drugs
  • Medical Equipment & Supplies
  • Nursing and Homecare Support
  • Vision Care
  • Hospital benefits
  • Registered Therapists and Specialists
  • Dental Care Services



To qualify, members must apply within 60 days from the date their group coverage terminated. They must have been covered under a group plan for at least 6 consecutive months. Action coverage under their provincial government health plan must be in place.


Each insurance provider offers several options to choose from so that individuals can select the coverage that best suits their needs and budget. Several insurance carriers offer conversion plans; the carrier does not have to be the same one through which the individual had group benefits.

Coverage will likely not be identical to the coverage under the plan; however, plans are comprehensive and cover most medically necessary expenses that individuals and families incur.

As an employer, you can educate terminating employees about this option. Please feel free to have them contact our office at 604-688-5559 or info@immixgroup.ca  for assistance in choosing the best option for their situation.

Lindsay Byrka

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262 E lindsay@immixgroup.ca
W www.immixgroup.ca

Generic Drugs: Fact vs. Fiction

Discussions surrounding prescription drugs tend to take up a large part of any employee benefits renewal meeting. On average, for a typical Canadian small business, prescription drug claims make up 50-70% of the extended health care claims in any given renewal year.

Over the past few years, we have been especially focused on discussing the changing role of generic drugs and building greater awareness.  Effective April 1, 2014, the price of generic drugs in BC was reduced to 20% of the brand name price for the equivalent drug. The reduction in the price of generic drugs was part of a five-year agreement that began in 2010; prior to the agreement in 2010, generics were 60-70% of the brand name price. This gradual reduction offers a significant cost savings to British Columbians and employer sponsored health plans

Education, and subsequently, the mindset around generic drugs has come a long way since legislation was first introduced. Working in the employee benefits industry, we have attended multiple education sessions and receive constant communication were the sole focus is generic drugs. 

As your benefits consultant, it is our role to educate employers and their employees so informed choices can be made.

Over the past several years, many insurance carriers have made the switch to mandatory generic substitution for all of their clients. What this means is that while other carriers offer the option to switch to a generic drug plan, it is usually accompanied by a small rate decrease.

The question is why doesn’t everyone make this change? Why is there still resistance?

Although the opposition to generics has decreased, from time to time we still encounter hesitation from plan administrators when discussing the option to implement a mandatory generic substitution plan.

The following are the 3 biggest misconceptions we have encountered surrounding generic drugs:


Myth #1- Generic drugs are not as effective or as safe as their brand name equivalents
A brand name drug and a generic drug must meet the same standards set by the Health Protection Branch of the Federal Government. Generic drugs are required by the FDA to have the same strength, quality and purity as their brand name equivalent. Generics are also required to scientifically show that their product performs in the same manner and delivers the same amount of active ingredients into the patient’s bloodstream in the same amount of time as the brand name drug. 

Myth #2- Generic drugs are often made in substandard, less modern facilities

The FDA conducts over 3,500 facility inspections per year to ensure their production standards are met. Approximated 50% of generic drugs are actually produced by the same firm in the same facilities that the brand name drug is produced in. Additionally, it is not uncommon for the producer of the brand-name drug to manufacture a generic equivalent once the drug is off-patent in order to maintain market share.

Myth #3- Generic drugs result in more negative side effects and allergic reactions

The difference between brand name drugs and generic drug composition lies in the non-active, non-medicinal ingredients (dies, fillers etc.). Individuals may have adverse reactions to the non-medicinal ingredients of the generic drug or the brand name drug. That being said, the non-active ingredients in both brand and generic drugs are regulated by Health Canada and must pass the same approval process.


So why do generic drugs cost less? 
The reason for the substantial price difference is that generic drug producers do not have to repeat the extensive research, testing, trials, advertising and promotions that the pioneer drugs are subject to. Patents for prescription drugs are 20 years in Canada. Once a patent expires on a brand name drug, producers can apply to produce a generic version of that drug.

Over half of all prescriptions in Canada are filled using a generic drug and this is likely to increase as more widely prescribed drugs come off patent over the next several years.

After clearing up any misconceptions people may have, the bottom line that we try to emphasize is that the only difference between brand name and generic drugs is the price!


For more information on generic drugs please visit: www.canadiangenerics.ca


Sources: http://www.choosinggenerics.ca/Myths.aspx 

Emergency travel: The hidden insurance in benefit plans

Did you know that most benefits plans include emergency travel insurance?

Most clients and their employees either don’t know of this hidden benefit, or they’ve forgotten it. And, if they do happen to remember it, they probably don’t realize just how extensive their emergency coverage is for travel outside the province or country. 

In fact, this extended health care benefit usually provides 100-percent coverage for all emergency expenses incurred while travelling. These expenses aren’t just direct medical treatment and hospital expenses. They’re also the costs of such things as prescription drugs, translation services, transportation home or to a different medical facility, return of lost luggage and passports, repatriation, return of vehicle and even hotel accommodations for family members.

Generally, this emergency coverage insures you and your dependents for up to 60 days of consecutive travel. The maximum coverage amount per person varies from insurer to insurer.

If you are covered under your plan, buying additional travel insurance not only isn’t necessary; it could complicate and delay things when you make your claim.

Be aware, too, that most emergency travel plans have exclusions to coverage. Most will not cover you for travel to an area with a travel advisory or similar warning. Before you leave, always check to make sure there are no travel warnings for your destination (http://travel.gc.ca/news-warnings/warnings).

Note that out-of-province emergency travel insurance covers emergencies only – in other words, unforeseen and unplanned medical expenses. That means you will not be able to claim a massage in Mexico, or plastic surgery in California!

Note also that trip cancellation is not usually covered. For that reason, make sure you purchase this coverage when you book your travel.

Before you book your next vacation, check with your benefits plan provider to see if you have emergency medical coverage!

Affordable and innovatively structured employee benefit programs