Most small business are too strapped for cash to afford benefits. So if you’re one of the few, then good on you for getting to this point. There are numerous studies that espouse the advantages of workplace benefits, so I won’t get into those. But safe to say, happy and healthy employees are more productive. And most entrepreneurs still rely on highly-productive people to grow their businesses.

Who is this for?

  • Small Business Owners

  • Entrepreneurs

  • Shareholder / Sole Proprietors

Keep reading if you’re…

  • Looking to provide benefits to your family

  • Thinking of giving benefits to your employees

  • On a limited budget and want to maximize benefits

Keep your Team in Mind

There’s a reason why few small employers offer extended benefits, it can cost over $200 per employee per month. Depending on your needs, coverages like vision, dental, drugs, and para-medicals can add up. And much like low strata fees in a new condo development, you may get a deal at the beginning, but your provider will increase the price by the next year.

When designing your extended benefits plan, consider the demographics of your team. An older team may find it beneficial to have drug and dental coverage for their spouses and children. While a younger team may require drug coverage infrequently and get the most use of from para-medicals like massage therapy and physio.

One of the issues of extended benefits is over-use which leads to progressively highly premiums. Employers can implement higher deductibles or cost-sharing to ensure employees have skin in the game.

Survey your Team and work with your Benefits Provider to structure a plan that suits your organization. Why pay for a plan if no one is using it?

Health Spending Accounts

For cost-conscious businesses, consider a health-spending account instead. As an employer, you set the annual amount per employee and your Benefits Providers will administer employee claims.


  • Cost Containment: HSA have an set annual limit and is self-funded, so you won’t get a higher bill next year. Employers can offer different amounts for different employee classes, say $500 for retail workers and $1000 for office staff.

  • Ease of Use: Most benefits providers have a mobile app or online portal to submit claims directly. The employee can claim themselves by uploading a receipt and entering a key few details.

  • Tax-Free Reimbursement: Only eligible medical expenses will be reimbursed by the HSA. As such, these reimbursements are considered non-taxable benefits to the employee.

  • Negotiate your Fees: Benefits providers charge 8-10% of claimed amounts along with setup and annual fees. Some will require a cash float to ensure you have enough funds for reimbursement. Negotiate away.

  • Enjoy HSAs as Shareholders and Sole Proprietors: Corporations with as few as one employee can be eligible and same with shareholder employees. As a sole proprietor, you can be eligible if you have at least one arm’s length employee. Now there are certain rules, so don’t go put yourself on a eight-hour payroll, hire your neighbour’s son and give yourself a $10,000 HSA.

Personal Spending Accounts

Also known as Wellness Spending Accounts, PSAs act similarly to Health Spending Accounts and instead reimburse employees for all things under the sun to improve their lives. Increasingly popular for younger workforces, employers can elect to reimburse staff for expenses such as:

  • Gym and yoga memberships

  • Personal training and sports registrations

  • Childcare

  • Classes to pursue hobbies

  • Transit passes

  • Fitness and sports equipment

PSAs are considered a taxable benefit and will be included on an employees T4 as such. Sorry, there’s no free lunch for your Crossfit World Championship registration fees.

Employee Insurance Benefits

For industries where there are higher risks of injury or disability, consider providing benefits such as:

  • Short-term disability

  • Long-term disability

  • Critical illness

  • Accidental death & dismemberment

  • Life insurance

We won’t explain the coverages in-depth but they’re available to provide earnings replacement across the broad spectrum of injury or worst, death. Yes, it’s morbid but life-altering things do happen in life and we should do our best to care to protect our staff’s livelihoods.

Employee-Paid STD & LTD

This is one of the few benefits where it is beneficial for the employee to pay the premium. If the insurance benefits are structured as non-taxable and paid by the employee, any future benefits payouts will be tax-free to the employee. The employer can pay for STD and LTD premiums, but benefits payouts will be taxable to the employee.

And be sure to indicate this with your Benefits Providers as you cannot arbitrarily switch.

As these premiums will be deducted from your employees’ payroll, this isn’t the easiest discussion to have with lower-pay workers. But the tax advantage is clear. Your Benefits Provider can provide communications.

Employer-Paid CI, AD&D, & Life Insurance

Similar to above, payouts for critical illness, AD&D, and life insurance are tax-free. Only difference is that the employer can pay for the premium without the above issue. And if the employer pays, it’s recorded as a taxable benefit. Yes, I know this is getting complicated.

Travel Insurance

Benefits plans can come with travel insurance to provide coverage to your Team traveling for work. Similarly, your employees would receive coverage for personal travel as well. And much like purchasing personal travel insurance, the standards limitations such as maximum coverage and out-of-country stay applies.

Employee Assistance Program

An EAP program provides employees and their families with access to counselling for mental health programs, financial issues, stress related to professional or personal issues. As an employer, its easy to identify and treat the physical ailments of your team, but its the mental ailments that are often insidious to their wellbeing.

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