Group Health Insurance in Canada: Coverage, Eligibility and Key Features

Published
Last updated

EBsource is committed to providing reliable, well-researched information so Canadians can make confident decisions about their employee benefits. Our content is carefully reviewed to align with EBsource editorial guidelines .

Group health insurance refer to insurance plans purchased by employers to provide healthcare and related coverage for their employees. These plans are offered as part of an overall employee benefits in Canada. But what exactly do group health plans cover, and how do they benefit both employers and employees? Learn more below.

What is Group Health Insurance?

In Canada, group health insurance is a type of group insurance provided by employers to help employees pay for medical and other services not covered by government health plans.

This employer-sponsored health benefits program covers a group of employees and their dependents under one single insurance contract. Rather than each person purchasing individual coverage, the employer negotiates with an insurance provider to create a pooled plan in which risk is spread across all participants.

Group health insurance helps employees cover the cost of common medical needs, such as prescription drugs, dental care, hospital stays, vision care, paramedical services, and ambulance transportation.

A typical group health insurance plan includes:

  • Extended Health Care (EHC)
  • Dental insurance
  • Disability insurance
  • Employee Assistance Programs (EAPs)

Employers purchase group policies from insurance companies and may cover some or all premium costs as an employment benefit. Employees can also add dependents for additional fees. By pooling the risk among individuals, insurers can offer these benefits at a lower cost than individual health insurance plans. Group health insurance is essential to many employee compensation packages in Canada and plays a crucial role in attracting and retaining talent.

How does Group Health Insurance work in Canada?

Group health insurance in Canada helps employees cover medical costs
Group health insurance in Canada helps employees cover medical costs

Canadian employers typically contract with employee benefits providers to provide group health insurance to their employees. Others may work with an insurance broker who helps compare providers and plan options.

The employer then determines coverage levels, premium costs, and how much employees will contribute. Plan design also involves choosing which benefits to include, setting coverage limits, and establishing deductibles.

The cost of the premiums is usually shared between the employer and the employee, with the employer often paying a significant portion.

This fair cost-sharing arrangement demonstrates the employer’s commitment to the health and well-being of its employees. Employees can enroll in the plan during designated enrollment periods, such as when they are first hired or during an annual open enrollment period.

When an employee or their covered dependent requires healthcare services, employees can visit an eligible healthcare provider (often any licensed provider, and sometimes a preferred network provider) and submit claims. The insurance company will then reimburse all or a portion of the cost, while the employee may be responsible for a deductible, co-insurance or any amounts above plan limits.

Who Is Eligible for Group Health Insurance in Canada?

Group health insurance eligibility requirements vary by employer and insurance company. However, some standard requirements include:

Employment status

Generally, to qualify for your company’s health insurance plan, you must be a permanent employees who typically work an average of 30 hours per week. If you’re a new hire, you usually have to complete a probationary period, often lasting 30 to 90 days, before your coverage begins.

However, not every worker falls under the same eligibility rules. Here’s how it usually applies to other types of employees:

  • Part-Time Employees: You may be eligible if your employer’s plan includes part-time staff and you meet the minimum work hours.
  • Contract Workers: Independent contractors are typically not eligible because they are not considered employees.
  • Employees on Leave: If you are on an unpaid leave, your coverage may be suspended until you return.

That said, exact eligibility thresholds are set by each employer and insurer, not by law.

Family (Dependent) Eligibility

Most plans allow you to add eligible family members, known as dependents. This usually includes:

  • Your legal spouse.
  • Your common-law partner. Your plan will define how long you need to live together, which is often one year.
  • Your dependent children (biological, adopted, or stepchildren). Coverage for children typically ends at:
    • Age 21, or
    • Age 25 if they are enrolled full-time in a college or university.
    • There is often no age limit for children with a disability.

You may need to show some basic documents to add your dependents. So, check your benefits booklet to see what is required.

Pre-existing conditions

A major advantage of group health insurance is how it handles pre-existing conditions. If you enroll on time, you and your family are typically guaranteed acceptance into the plan, regardless of your health history. This means you will not need to complete a medical questionnaire.

To get this benefit, you must sign up during your initial enrollment window, which is usually the first 30 days after your waiting period is over.

If you miss this window and enroll late, you may be asked to provide medical information, and there is a risk that coverage could be limited or denied.

Who Pays for Group Health Insurance?

There are three common ways employers and employees share the cost of group benefits:

  1. Employer-Sponsored: The company fully funds worker health premiums. This represents a significant investment in human capital for staff wellbeing and retention.
  2. Cost-Sharing: Premium expenses are divided between the employer and employees at a fixed rate, often an 80/20 or 50/50 split.
  3. Employee Add-On Costs: Employees may pay extra for optional upgrades that go beyond the basic plan. These add-ons can include enhanced coverage, added family members, or additional benefits like upgraded vision or hospital coverage.

What Coverage Can You Get Through Group Health Insurance in Canada?

Canadian group health insurance plans offer different kinds of coverage to support your overall health. These are key benefits you may get through your employer’s plan:

Extended Health Care

Extended health care benefits in Canada are the core of many group health plans that cover a wide range of medical services not fully covered by the Canadian public healthcare system, such as physiotherapy, chiropractic care, massage therapy, prescription drugs, vision care, and medical equipment like braces or wheelchairs.

Dental Care

Dental care benefits are usually separated into three categories, with different levels of coverage for each.

  • Preventive Care: These are routine procedures that are typically covered at the highest percentage. Examples include regular check-ups and cleanings (usually once or twice a year) and x-rays.
  • Basic Services: This category covers common procedures required to treat existing issues like cavities or tooth pain. Coverage is typically at a mid-range level. Examples include fillings, root canals, simple tooth extractions, and periodontal services.
  • Major Procedures: These are more complex and expensive procedures that are needed to restore or replace teeth. These services are covered at a lower percentage. Examples include Crowns, bridges, and dentures.

In Canada, where the public healthcare system does not typically cover dental care, employer-sponsored dental benefits are valuable, demonstrating the employer’s commitment to their employees’ health and well-being.

Prescription Drug

Prescription drug coverage helps employees pay for medications that a licensed healthcare provider prescribes. While some provinces in Canada offer public prescription drug coverage, it is often limited and may only cover some medications.

Vision Care

Vision care benefits cover eye exams, glasses, and contact lenses. Like dental care, vision care is not typically covered by the Canadian public healthcare system, making employer-sponsored vision benefits an integral part of an employee’s overall health coverage.

Financial Protection and Insurance

Beyond immediate health needs, many group plans provide a financial safety net against unforeseen life events.

  • Disability Insurance: This provides income replacement if you are unable to work due to illness or injury.
  • Life Insurance: Provides a payment to your beneficiaries in the event of your death.
  • Critical Illness Insurance: Included in some enhanced plans, this benefit pays a one-time, lump-sum amount if you are diagnosed with a specific, life-threatening illness covered by the policy. (e.g., cancer, heart attack, stroke).

Travel Medical Insurance

Travel medical insurance provides coverage for employees who require medical care while travelling outside their province or country of residence. This is particularly important for Canadians, as the public healthcare system may not cover medical expenses incurred abroad.

Employee Assistance Program (EAP)

EAPs provide confidential support services to employees facing personal or work-related challenges, such as mental health issues or substance abuse. All services are completely private.

The growing popularity of EAPs across Canada is more than just a workplace trend. It shows that employers are increasingly committed to the well-being of their people. By providing these programs, employees can feel seen, heard, and supported whenever they need it.

Health Spending Account (HSA)

HSA is a flexible account funded by the employer with a set amount of money each year. You can use these funds to pay for a wide range of eligible medical and dental expenses that may not be fully covered by your main plan.

What are the Advantages of Group Health Insurance?

Group health insurance offer four main advantages for both employers and employees:

Cost savings

By pooling the risk among individuals, insurers can offer group health insurance at a lower cost than individual health insurance plans. This is particularly important in Canada, where the public healthcare system does not cover all healthcare expenses.

Comprehensive coverage

Group health plans in Canada often provide a wide range of healthcare services, ensuring that employees and their families have access to the care they need beyond what the public healthcare system covers.

Improved health outcomes

With access to preventive care and timely treatment, Canadian employees with group health insurance may experience better health outcomes and reduced absenteeism.

Tax advantages

In Canada, employer contributions to qualified group health and dental plans are generally deductible as a business expense. In most provinces, these premiums are not a taxable benefit to employees (Quebec is the main exception).

When employees pay part of the premium themselves, those amounts are usually paid with after-tax dollars. However, employee-paid premiums to a private health services plan can often be claimed as eligible medical expenses on the employee’s personal tax return, which may result in a tax credit.

How Can Group Health Insurance Help Attract and Retain Employees in Canada?

Many Canadian employees consider health insurance a crucial factor when evaluating job offers, and a strong benefits package can set an employer apart from competitors. By investing in their employees’ health and well-being, Canadian employers demonstrate their commitment to their workforce, fostering loyalty and job satisfaction. This, in turn, can lead to reduced turnover and the associated costs of recruiting and training new employees.

Robust group plans drive measurable organizational lift across four aspects:

Support Recruitment and Retention

In Canada’s competitive job market, offering a group health insurance can be a powerful tool for attracting and retaining top talent. Offerings like orthodontics and retirement saving accounts not only attract applicants, but encourage loyalty long-term.

Boost Productivity

Rather than taking unpaid leave to undergo surgery, robust health insurance empower quick recovery and workplace reentry. The same applies to chronic conditions managed through expensive medications. Canadians with benefits through work or spouses consume prescription drugs, underscoring how care options eventually manifest into heightened presenteeism.

Deliver Tax Advantages

Come tax season, 100% of group insurance plan premiums paid by employers qualify as tax-deductible business expenses. Once statutory contributions like CPP deductions max out, benefits present tax-efficient channels to invest back into the workforce with maximum returns.

Promote Employee Wellbeing

Covering more frequent dental cleanings, access to mental health professionals and early cancer screening facilitates a culture of prevention. This collectively minimizes absenteeism due to sickness. Healthy, fulfilled workers sustain long-term success.

Does Your Small Business Qualify for Group Health Insurance?

As a small business owner, you might be wondering if you have enough employees to qualify for a group health insurance plan.

The Minimum Number of Employees Required

The first thing insurers look at is your employee count. This isn’t your total staff number, but the count of “eligible” employees. An eligible employee is typically someone who works full-time or a set number of hours per week. Part-time, seasonal, or temporary staff usually don’t count toward this minimum.

  • The most common rule: You need at least two eligible employees.
  • Stricter requirements: Some insurers may require 3, 5, or even 10 employees, especially for more comprehensive plans.

Employee Sign-Up Requirements (Participation)

Having the minimum number of employees is just the first step. A certain percentage of them must also agree to join the plan. This is called the participation rate.

  • The standard rule: Insurers typically require that 70% of your eligible employees must enroll in the plan. (Source)
  • The key exception: If an employee already has health coverage elsewhere (for example, through a spouse’s or parent’s plan), they are not counted against your participation rate. The insurer understands they don’t need double coverage.
  • For very small companies: In a business with only two eligible employees, this often means both must sign up unless one can prove they have coverage from another source.

Options for Businesses That Don’t Meet the Minimums

If your business is too small to qualify for a traditional group plan, you still have excellent alternatives to offer benefits.

  • Health Spending Accounts (HSAs): You contribute pre-tax funds into an account for each employee. They can then use this money to pay for a wide range of approved medical expenses, from dental work to prescription glasses. This option is very flexible.
  • Association Health Plans: Many professional and industry associations (like a local chamber of commerce or a trade group) offer group health plans to their members. By joining, your small business can access the rates and benefits typically reserved for much larger companies.
  • Individual Insurance Plans: You can help your employees purchase their own individual health insurance. While this can be more expensive than a group plan, it’s a direct way to provide coverage and can be offered as a taxable benefit or through a reimbursement arrangement.

Group Health Insurance vs. Individual Health Insurance: Key Differences

While group and individual health insurance serve similar purposes by supplementing provincial coverage, they differ fundamentally in structure, cost, and accessibility. These distinctions below help Canadians choose the right coverage option:

Feature
Group Health Insurance
Individual Health Insurance
Monthly Premium
~$50 – $150 (Employer contributes 50-100%)
~$250 – $500+ (Individual pays 100%)
Eligibility
Guaranteed acceptance for all eligible employees
Subject to medical underwriting and approval
Pre-Existing Conditions
Covered after waiting period (typically 90 days)
May be permanently excluded or result in higher premiums
Coverage Scope
Comprehensive package:
• Extended health
• Dental
• Vision
• Disability
• Life insurance,…
Extended health benefits only
(Dental and vision purchased separately)
Portability
Terminates upon leaving employment
Continues regardless of employment status
Customization
Employer contributions are tax-deductible.
Employee benefits are non-taxable
Standardized plan selected by the employer
Tax Treatment
Employer contributions are tax-deductible.
Employee benefits are non-taxable
Managed by the employer with payroll deduction
Administration
Managed by the employer with payroll deduction
Self-managed with direct premium payments

When to choose each option: You should choose group health insurance whenever it’s available through an employer, since it almost always provides better value. Consider individual insurance if you’re self-employed and don’t qualify for group coverage, your employer doesn’t offer benefits, or you have specific needs not met by your employer’s group plan.

Conclusion

In conclusion, group health insurance is a valuable investment for Canadian employers looking to support their employees’ health and well-being while also attracting and retaining top talent.

By offering coverage beyond what is provided by the Canadian public healthcare system; employers can create a win-win situation for their organization and their workforce.

As the healthcare landscape continues to evolve in Canada, group health insurance will remain an essential component of competitive employee compensation packages. By staying informed about the types of plans available, eligibility requirements, and the advantages of offering group health insurance, Canadian employers can make informed decisions that support the health and success of their organization and employees.

FAQs of Group Health Insurance

What are group health insurance, and how do they differ from individual health insurance plans in Canada?

Group health insurance are insurance plans offered by employers to their employees and their families, providing coverage for various healthcare services. Unlike individual health insurance plans, group health Iisurance are typically more affordable due to the risk pooling among a larger group of people.

What types of healthcare services are typically covered by group health insurance plans in Canada?

Group health insurance plans in Canada often cover a wide range of healthcare services, including dental care, prescription drugs, vision care, extended health care (e.g., physiotherapy, chiropractic care), travel medical insurance, and employee assistance programs (EAPs).

Are group health insurance mandatory for Canadian employers to provide?

No, group health insurance are not mandatory for Canadian employers to provide. However, many employers choose to offer these benefits as part of their employee compensation package to attract and retain top talent.

What are the eligibility requirements for employees to be covered under a group health insurance plan in Canada?

Eligibility requirements for group health insurance in Canada can vary depending on the employer and insurance provider. Common requirements include working a minimum number of hours per week, completing a waiting period, and meeting dependent eligibility criteria.

How do group health insurance complement Canada's public healthcare system?

While Canada's public healthcare system covers many basic healthcare services, it does not typically cover dental care, prescription drugs, vision care, and certain other services. Group health insurance help fill these gaps, providing employees with more comprehensive healthcare coverage.

Can small businesses in Canada afford to offer group health insurance to their employees?

Yes, many small businesses in Canada can afford to offer group health insurance. Insurance providers often have plans tailored specifically for small businesses, and the cost of premiums can be shared between the employer and employees.

What are the tax implications of offering group health insurance for Canadian employers and employees?

In Canada, employer contributions to group health insurance are generally tax-deductible, while employee contributions are often made with pre-tax dollars. This can result in tax savings for both employers and employees.

How can offering group health insurance help Canadian employers attract and retain top talent?

Offering a group health insurance package can be a powerful tool for attracting and retaining top talent in Canada's competitive job market. Many employees consider health insurance a crucial factor when evaluating job offers, and a strong benefits package can help employers stand out from their competitors.

Are there any cost-saving strategies for Canadian employers looking to offer group health insurance?

Yes, there are several cost-saving strategies for Canadian employers, such as sharing premium costs with employees, choosing plans with higher deductibles or copayments, and promoting preventive care and wellness programs to reduce overall healthcare costs.

How can Canadian employees make the most of their group health insurance plan?

Canadian employees can make the most of their group health insurance plan by familiarizing themselves with the coverages and services available, using in-network providers when possible, taking advantage of preventive care and wellness programs, and carefully reviewing their benefits statements to ensure accurate claims processing.