Group insurance gives great benefits to Canadian employers and workers. By bringing all the staff together under one plan, companies can offer robust, affordable protection that attracts top talent. This lets employees gain access to benefits like health, dental, and disability coverage at much lower costs than individual plans.
What is Group Insurance in Canada?
Group insurance in Canada is a type of coverage where multiple individuals are insured under a single collective policy, typically sponsored by an employer as part of employee benefits. It differs from individual insurance in that a single policy covers the entire group of employees under one contract.
With group insurance, employers purchase a policy from an insurance company, such as Sun Life, Manulife, or Canada Life. The employer then structures a benefits package and offerings for employees. At open enrollment periods, employees can select the coverage they want under the policy and add any dependents. Premium costs are typically split between the employer and the employees.
What Does Group Insurance Cover in Canada?
Group insurance plans are extensive, going far beyond basic health insurance to offer more complete financial protection. Here are six key coverages typically included:
Group Health Insurance
Group health insurance is a core part of any group benefits package. It focuses on covering medical expenses not paid for by the provincial health care plan. These coverages include:
- Prescription drug costs – Paying for prescription medications
- Hospital stays – Coverage for semi-private or private hospital room fees above what provincial plans cover
- Paramedical services – Services like physiotherapy, massage therapy, chiropractors, psychologists, and more
- Ambulance transportation – For emergency medical transport
- Medical equipment – Such as wheelchairs, hospital beds, braces, etc.
- Home care – Nursing care and supervision services at home
Dental Insurance
Dental care is essential but costly, especially without insurance. Dental insurance encourages preventive care and eases the financial burden of both routine treatments and major procedures. Common dental coverages include
- Oral exams and cleanings – Typically covered at 80-100%
- Basic treatments – Fillings, extractions, root canals (covered at 80-90%)
- Major restorative treatments – Crowns, bridges, dentures (covered at 50-70%)
- Orthodontic treatment – Braces (often 50% coverage with a lifetime limit)
Vision Care
Vision care benefits help employees maintain good eye health and reduce out-of-pocket costs for exams and glasses. Vision care may include:
- Routine eye exams – Fully covered annually
- Prescription glasses – Hundreds of frame options; lenses often covered at 80-100%
- Contact lenses – Covered up to an annual maximum amount for contacts
- Corrective laser eye surgery – Some plans contribute up to a lifetime limit
Life Insurance
Group life insurance pays out a lump sum cash benefit to an employee’s named beneficiaries in the event of their death. By providing a lump-sum payment upon an employee’s death, this benefit ensures your loved ones have support when they need it most. Typical features include:
- Coverage for accidental death – Some plans offer additional benefits for accidental causes
- Lump sum payouts – Often 2–3 times an employee’s annual salary
Disability Insurance
Disability insurance is vital for protecting an employee’s income during periods when they can’t work due to illness or injury. There are two main types of group disability insurance:
- Short-term disability – Replaces income for illnesses/injuries lasting less than 2 years
- Long-term disability – For those unable to work for more than 2 years
Benefit amounts aim to replace 60-80% of employees’ pre-disability earnings.
Critical Illness Insurance
Facing a serious illness can bring financial stress on top of emotional and physical challenges. Group critical illness insurance pays a lump sum if an employee is diagnosed with a specified serious illness, including:
- Cancer
- Heart attack
- Stroke
- Paralysis
- Multiple sclerosis
- Parkinson’s disease
- Kidney failure
How Does Group Insurance Work in Canada?
The typical process for getting and using group benefits is as follows:
- Employer chooses package – Selects group insurance carrier and plan offerings based on workforce needs and budget.
- Employees enroll – Staff enroll during open periods, choosing benefits and coverage levels right for them.
- Payroll deductions are set up – The employee’s premium share is deducted automatically from their pay.
- Premiums paid – Employer and employees pay monthly premiums to the insurance provider.
- Claims submitted – Employees complete forms and submit receipts when they need to make claims.
- Insurer pays benefits – Carrier approves claims and pays out to reimburse employees as applicable.
The insurance company usually handles ongoing benefits management through their website. Workers can log in to make changes or add family when needed.
This setup lets employees get benefits that fit them at good rates. Some perks for the company include tax breaks, helping get and keep great people, and having a healthier and happier team.
Who Pays for Group Insurance in Canada?
There are four typical arrangements when it comes to paying premiums:
| Arrangement | Description |
| Employer-paid | Employer covers 100% of premiums |
| Shared contribution | Employer and employee split costs (e.g. 80/20 split) |
| Employee top-up | Employer and employee share base cost, employee pays extra for enhancements |
| Payroll deduction | Premiums are deducted automatically from an employee’s paycheck |
The most common approach is a shared contribution model. A typical ratio is that employers pay 80%, while employees pay about 20% of the group benefit premium costs. (Source)
Factors Affecting Your Group Insurance Rate in Canada
There are eight important factors that determine the premiums an employer will pay for group benefits:
- Group Size – Larger groups receive better rates due to volume discounts. Groups under 50 pay more.
- Industry – Higher-risk jobs, such as mining, oil & gas, forestry, or policing, have higher premiums.
- Location – Rates are higher in areas with a high cost of living and healthcare usage.
- Average Age – Younger groups represent lower risk and get lower rates. Older demographics increase rates.
- Claims History – Frequent past claims indicate higher future risk, so increase rates. Low past claims lead to discounts.
- Coverage Type – More comprehensive coverage with lower deductibles leads to higher premiums.
- Spousal Coverage – Including spouse benefits increases costs due to expanded risk pool.
- Tobacco Use – Groups with more smokers typically face higher premiums.
Companies should look at their budget, worker needs, and plan options to pick the right coverage. At the same time, get quotes to compare costs for different levels of benefits.
How Do You Apply for Group Insurance in Canada?
Applying for group benefits coverage involves six key steps:
Step 1: Assess Workforce Needs
The process should be started by looking at your workforce demographics, job types, and existing benefits to determine the ideal coverage mix. Ask employees what kind of coverage they care about most.
Step 2: Select Group Insurer
Research group carriers like Manulife, Sun Life, Canada Life, and others to find one that is the best fit based on costs, plan options, and service reputation.
Step 3: Choose Specific Offerings
Work with brokers or insurer reps to select the precise benefits and coverage levels you’ll offer employees. Balance costs with the depth of coverage.
Step 4: Enrollment Period
The next step is setting an open enrollment window for employees to sign up for benefits, add dependents, and select coverage quantities suitable for their situation.
Step 5: Payroll Administration
Coordinate with payroll to set up premium deductions from wages automatically.
Step 6: Policy Management
Leverage insurers’ online management platforms to administer the plan, updating employee changes when needed.
That said, consulting with group insurance brokers or advisors is highly recommended when applying to get the best rates and plan alignment for your workforce.
How to Claim Group Insurance in Canada
Filing a claim with your group insurance provider to receive reimbursement for eligible expenses is as simple as follows:
- Obtain Claim Forms: Claim forms are available from your insurer’s website or your employer’s benefits administrator. Forms may be specific to the type of benefit, such as health, dental, vision, etc.
- Complete the Forms: Fill out all required fields on the form, such as your name, policy number, date of service, expenses incurred, provider information, and details about the treatment or service.
- Gather Supporting Documentation: Make copies of all applicable receipts, invoices, prescription records, dental records, doctor’s notes, etc. These documents prove the expenses claimed.
- Submit the Claim: Send the completed claim forms and copies of supporting documentation to your insurance provider by mail, electronically through their portal, or via their mobile app.
- Claim Processing: The insurance company will review your claim, verify the expenses against your coverage, and process the reimbursement in accordance with the plan limits. This usually takes between 5-10 business days.
- Receive Payment: Once approved, the insurer will issue a payment either by check or direct deposit based on your preferences. Explanation of benefits statements provide claim status details.
Be sure to retain copies of all claim paperwork and submit forms promptly. Reaching out to your insurer or benefits administrator if you have any questions can speed up the process.
Is Group Insurance Taxable in Canada?
Whether group insurance benefits are taxable in Canada depends on the type of coverage offered, as different benefits are treated differently under tax laws:
Health and Dental Benefits
This type of group benefit is not taxable to employees if the employer pays the premiums for private health and dental plans.
However, there is one main exception in Quebec, where the amount your employer pays is considered a taxable benefit and must be included as income on your provincial tax return.
Any money you get back from the plan for medical or dental costs (like for glasses or a filling) is always tax-free, no matter where you live in Canada.
Life Insurance
It’s important to know the difference between the cost of the insurance and the money it pays out.
If your employer pays for your group life insurance, the government sees that as a taxable benefit for you. The value of this benefit will be calculated and added to your income on your T4 tax slip.
However, the money paid out to your beneficiary when you pass away is completely tax-free.
Disability Insurance (Short-Term & Long-Term)
The taxability of disability benefits depends entirely on who paid the premiums.
If your employer pays any part of the cost, even a small amount, then any disability money you receive while you’re unable to work is taxable income.
If you pay 100% of the cost with your own after-tax money, then any disability money you receive is tax-free.
To ensure the favourable tax treatment described above, the benefits must be provided under a formal plan that meets the criteria set out by the Canada Revenue Agency (CRA), such as a Private Health Services Plan (PHSP).
How Many Employees Do You Need for Group Insurance?
There is no legal minimum number of employees required to set up group coverage. However, in practice, most insurance plans require a minimum of at least two or three employees.
Some programs, like association or chamber of commerce plans, are designed for smaller businesses and may be an option for companies with just one employee, depending on their specific rules.
That said, fewer than 50 employees is considered a “small group” by insurance carriers. Some important notes:
- The one employee cannot be a direct family member of the business owner or sole proprietor.
- Small groups may have fewer plan options and higher rates than bigger groups.
- Two-person groups can be husbands and wives or common-law partners who both work in the business.
Top 5 Group Insurance Companies in Canada
When setting up group benefits for your employees, you should choose a trusted insurance company that offers good plans and reliable service.
Here are the leading employee benefits providers that stand out for group coverage in Canada:
Sun Life
As one of the largest insurers in Canada, Sun Life offers customized group insurance solutions for companies of all sizes. Their plans range from basic dental/health to offerings including pensions, disability and life insurance.
Manulife
With over 130 years of experience, Manulife is a trusted name in Canadian insurance. They leverage their in-depth data to provide competitive group pricing. Manulife’s innovative plans include income protection, critical illness, and health spending accounts.
Canada Life (formerly Great-West Life)
Part of the Power Financial group, Canada Life provides group benefits to Canadian employers. Custom plans and personalized support give companies flexibility. Offerings like Best Doctors provide expert second opinions.
Green Shield Canada
As Canada’s only national not-for-profit health and dental insurer, Green Shield takes a unique community-focused approach. Their competitive rates and 65+ years of health and dental insurance experience provide affordable coverage.
Blue Cross
Active in every province and territory, Blue Cross is Canada’s largest provider of group health and travel benefits. Their plans can be customized down to the individual employee level based on a company’s needs.
That said, you should research insurers thoroughly to find the right group insurance partner for your Canadian company. The strongest plans will balance robust coverage with value, service, and ease of administration.
If you want to explore the top employee benefits providers in Canada, check out our list: 20 Largest Canadian Employee Benefits Providers.
Is Group Insurance Mandatory in Canada?
There is no legal requirement for Canadian businesses to provide group benefits coverage. Offering group insurance is optional based on the company’s budget and compensation strategy.
That said, the vast majority do provide access to group insurance, as it is vital for attracting skilled talent and keeping employees satisfied. Small businesses with less than 50 workers are the least likely to offer benefits.
Some alternatives, like Health Spending Accounts, provide more flexibility than traditional group insurance packages. Or the Canadian Dental Care Plan, the federal assistance for people without oral health care coverage. But they still enable vital coverage that helps employees manage health expenses.
Overall, group insurance remains a highly valued and commonly expected component of compensation, even if it is not an absolute requirement in Canada.
The bottom line
Offering group insurance delivers immense strategic advantages for Canadian employers and employees alike. Companies attract top talent with gold-standard benefits packages that protect their employees’ health and finances. Staff gain affordable coverage that provides peace of mind and financial security for them and their families.
With numerous options for customization tailored to business size, budget, and workforce demographics, group insurance solutions are available for organizations of all types. Consult with a group benefits advisor to craft the ideal plan for your workforce’s needs. Investing in your people through group insurance will pay dividends in recruitment, retention, and employee satisfaction.
FAQs about Group Insurance in Canada
How do I enroll in my company's group benefits plan?
There is an annual open enrollment period where you can select coverages, add dependents, and choose amounts. Enrollment is handled through your insurer's online portal typically.
What coverages are included in group insurance?
Typical coverages are health, dental, vision, life, disability, and critical illness. But plans can also have things like tuition assistance and retirement savings programs.
Where can I view my group plan details?
Plan details like covered treatments, reimbursement amounts, network providers, and claiming instructions can be accessed through your insurer's website or mobile app.
Why is group insurance cheaper than individual plans?
Group insurance spreads risk over a large pooled workforce. Because the risk is shared across many people, this approach typically results in lower premiums compared to individual plans, which are priced based on a single person's age and health.
Do group insurance benefits expire?
When you leave your job in Canada, your group benefits will end. You have a limited time to use your conversion privilege, which allows you to convert your group coverage into a personal plan without a medical exam.
Contact your insurance provider directly and ask about your "conversion options" before the deadline passes.
Can I join a new employer’s group plan if switching jobs?
If you switch jobs, you can get on your new company's benefits plan. But be aware, you'll likely have to wait a bit before your coverage actually begins. Also, if you want to sign up for optional benefits, you may need to provide some health information to qualify. It all depends on the specific plan.
Is my employer required to provide group benefits?
No, group benefits are optional in Canada. But most employers provide them to attract talent and satisfy employees.
What documents do I need to submit a group insurance claim?
You'll need a completed claim form plus supporting receipts, prescriptions, dental records or doctor's notes applicable to your claim.
