How Much Do Group Benefit Plans Cost Employers

The cost of group benefit plans for employers depends on several factors, including the company demographics, company size, what supplementary benefits the employer wants to offer, the industry in which they do business, and in which province the company is based. 

Mandatory employee benefits are required by law, but the extent of the supplementary benefits is the company’s prerogative. So how would you know if specific group benefit plans will work for your business? Besides asking your employees what they value as core benefits, it is sensible to benchmark your plan against companies with similar demographics.

The Average Cost of Group Benefit Plans for Employers

What is the average cost of employee benefits for employers? For some smaller companies, the average annual premium for non-mandatory benefits is approximately 15% of payroll and up to 30% of payroll for larger businesses. There are, however, benefit plans for small companies where the premium might be as low as 1% to 5% of payroll. 

Nour Private Wealth works with Nour Insurance Services (NIS), a related and separate company, to deliver bespoke and competitively priced group benefit plans to our clients. We provide this service to small businesses (less than 51 employees), medium to large companies, industry associations, and union groups.

How Is the Cost Determined?

The cost of employer-provided benefits varies based on plan offerings, company size, province of operation, and industry, to name a few factors. Monthly costs increase as more products are added to the plan, and some large insurance companies automatically include accidental death and dismemberment (AD&D), life insurance, and/or disability insurance in their plans, which affects the cost. Is there any good news about the average employee benefits cost? Most providers use the per-employee model to provide volume discounts to larger companies, and employers can offer group benefit coverage tiers to mitigate costs. 

Should You Offer Additional Benefits? 

Additional benefits have become standard in many businesses and industries to attract quality employees. The supplementary benefits often expected by employees are health insurance, retirement plans in addition to the mandatory Canadian Pension Plan (CPP), life insurance, and disability insurance. For example, every company has to decide whether the cost of employer-sponsored health coverage is justifiable based on the return on investment. Some executive-level employees might also deem stock options and profit sharing as standard benefits of a remuneration package before they even consider joining a company.  

Pros and Cons of Offering Employee Benefits

Nour Insurance Services (NIS), a related and separate company from Nour Private Wealth, is a leader in the group benefits space, as many Canadian employers trust us to deliver their employee benefit programs. In our experience, the pros of offering employee benefits are their ability to help you retain staff, their convenience, how they can be tailored to your needs, and how they protect your workforce. Then there is the additional benefit of tax breaks for employers and employees. 

What might the cons be? Smaller employers might find the cost of benefits prohibitive, and fewer plan options are available for them. In addition, managing group benefit plans often burden human resources and financial departments, and legal costs are incurred due to complicated contracts.

Will You Get a Return on Your Investment if You Offer Employee Benefits?

Whether you will get a return on your employee benefits investment depends on how you value tangible returns and intangible returns. Tangible returns include:

  • Tax benefits.
  • Discounts are offered for group benefits.
  • The positive financial year-end results were achieved through a productive workforce. 

Intangible returns would be employee contentment when they know they are financially protected and insurance covers the health expenses of their loved ones. Each company has to decide what they deem a valuable return on investment. 

That said, offering employee benefits can provide a return on investment for a business in various ways, including increased employee satisfaction and retention rates, improved productivity, and enhanced recruitment of top talent. However, the specific return on investment will depend on the particular benefits offered and the needs and preferences of the workforce.

Did you know Nour Private Wealth (NPW) has a team of wealth advisors servicing clients across seven Canadian provinces? We offer a selection of retirement savings solutions and are available if you want to discuss the cost of group benefit plans for employers. Contact Nour Private Wealth today.  

Disclaimer: Insurance products and services are offered through Nour Insurance Services Inc., a related and separate company from Nour Private Wealth Inc. Only products and services offered through Nour Private Wealth Inc. are covered by the Canadian Investor Protection Fund.

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