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Basic Group Benefits Checklist (Canada): Mandatory vs Supplementary

Introduction and scope (outside Quebec)

This checklist is designed for Canadian employers operating outside Quebec. It separates statutory payroll programs you must have in place before offering benefits from the supplementary group benefits most employers include in a “basic” plan. It also flags key tax and compliance rules and provides a practical implementation sequence.

Statutory programs you must set up first

Before launching group benefits, ensure these payroll-linked programs are implemented and administered correctly.

  • Canada Pension Plan (CPP)

  • Who contributes: With very few exceptions, employees aged 18–70 working in Canada (outside Quebec) and earning over the $3,500 annual basic exemption contribute to CPP; employers match the employee share. Stop contributing the month the employee turns 70. See Employment and Social Development Canada and CRA guidance. CPP contributions (ESDC) • Payroll formulas, 2025 basic exemption table (CRA)

  • Employment Insurance (EI)

  • Employer obligations: Deduct EI from insurable earnings and remit; employer portion is generally 1.4× the employee premium. Ensure ROEs are issued on interruption of earnings. EI for employers – responsibilities • EI rates and MIE for 2025

  • Workers’ compensation (provincial/territorial)

  • Registration is mandatory for most businesses with workers; rules and timelines vary by jurisdiction. Examples: Ontario requires registration within 10 days of hiring your first employee; BC requires registration when you hire one or more workers. WSIB registration (Ontario) • WSIB 10‑day rule • WorkSafeBC – who must register

What to include in a basic supplementary benefits plan

Core, easy-to-administer components most Canadian SMEs adopt first.

  • Extended Health Care (EHC) under a Private Health Services Plan (PHSP): Prescription drugs, paramedical, emergency travel, vision. Employer contributions to a qualifying PHSP are not a taxable benefit to employees outside Quebec. CRA – PHSP

  • Dental Care: Preventive, basic, and (optionally) major/orthodontics.

  • Life and AD&D: Commonly 1× annual salary (optionally 2×). Employer-paid group term life premiums create a taxable benefit; report per CRA rules. CRA – Taxable benefits (T4130)

  • Long‑Term Disability (LTD): Income replacement for extended disability. Tax treatment depends on who pays the premium and whether the plan is a wage‑loss replacement plan (WLRP). Employer‑paid WLRP benefits are taxable when received; employee‑pay‑all plans generally produce non‑taxable benefits. CRA – Wage‑loss replacement plans

  • Health Spending Account (HSA): A PHSP‑compliant spending allowance to complement EHC/dental; employer contributions are generally non‑taxable to employees when the HSA meets PHSP criteria. CRA – PHSP

Basic plan components at a glance

Component Typical baseline Why include Tax treatment (employee, outside QC) Implementation tips
Extended Health (PHSP) 80% coinsurance; drug formulary; $5k–$10k annual max Covers common out‑of‑pocket medical costs Employer contributions: generally non‑taxable Confirm PHSP compliance; coordinate with HSA
Dental 80% preventive/basic; $1.5k annual max High‑frequency, valued benefit Non‑taxable if part of PHSP Consider 6–12 month major/ortho deferral to manage cost
Life & AD&D 1× salary (rounded) Foundational financial protection Employer‑paid premiums are a taxable benefit Verify beneficiaries; ensure evidence of insurability rules
LTD (WLRP) 60–67% of earnings; 90–120‑day waiting period Income continuity If employer‑funded WLRP, benefits taxable; employee‑pay‑all typically non‑taxable Decide who pays premiums upfront; align with EI Premium Reduction Program if offering STD
Health Spending Account $500–$1,500 per employee Flexible, budget‑controlled Generally non‑taxable when PHSP‑compliant Define eligible classes; set rollover rules

How to implement a basic plan in 10 steps (outside Quebec)

1) Confirm statutory compliance: CPP, EI, workers’ compensation accounts active and remittances set up. CPP overview • EI employer guide 2) Define eligibility: Employment class(es), minimum hours (e.g., 24+ hrs/week), waiting period (e.g., 3 months), domestic versus international employees. 3) Set a benefits budget and cost share: Commonly 50/50 employer/employee for EHC/dental; decide premium payer for LTD (tax consequences) and life. 4) Choose core coverage: Start with EHC, dental, life/AD&D, LTD; add HSA for flexibility. 5) Prepare a clean census: Names, birthdates, genders (if required by carrier), provinces, salaries, classes, family status, hire dates. 6) Go to market via an independent broker: Compare carriers, pooling, non‑evidence limits, contract wording, stability provisions, and drug controls. 7) Select funding and controls: Fully insured for SMEs; set coinsurance, deductibles, annual maximums, and prior authorization for high‑cost drugs. 8) Bind and enroll: Review contracts; complete enrollments within waiting period; capture evidence of insurability where required. 9) Communicate: Plain‑language summaries, how to claim, mobile app setup, emergency travel cards; confirm taxable/non‑taxable treatment on payroll. 10) Operate and review: Monitor utilization, claims trends, and renewal; adjust plan design, HSA limits, and cost share annually.

Compliance and taxation notes (outside Quebec)

  • PHSP (EHC/dental/HSA) employer contributions are generally non‑taxable to employees when the plan meets PHSP criteria. CRA – PHSP

  • Group term life insurance premiums paid by the employer are a taxable benefit; report per CRA guidance (T4130). CRA – Taxable benefits

  • LTD/WLRP: If the employer funds any part of a WLRP, benefits are taxable when received; employee‑pay‑all plans generally produce non‑taxable benefits. Ensure payroll reporting aligns with payer structure. CRA – WLRP

  • CPP: Start deductions the month after an employee turns 18; stop in the month they turn 70; apply the $3,500 basic exemption prorated by pay period. CRA – Payroll formulas, 2025

  • EI: Employers remit 1.4× the employee premium up to the annual MIE ($65,700 for 2025; employee rate $1.64 per $100). Consider the EI Premium Reduction Program if you provide qualifying short‑term disability benefits. EI 2025 notice

  • Workers’ compensation: Registration and coverage are mandatory in most jurisdictions for employers with workers; timelines and industry rules vary. WSIB – register within 10 days • WorkSafeBC – who needs coverage

Frequently asked questions

  • Are employee group benefits mandatory in Canada?

  • No. Outside Quebec, only statutory programs (CPP, EI, and provincial/territorial workers’ compensation) are mandatory. Group benefits are optional but common.

  • How many employees do we need to start?

  • Minimum group size varies by insurer and product; many carriers will quote with as few as two eligible employees. A broker can advise on current market rules.

  • What’s a sensible “starter” plan design?

  • EHC (80%), dental (80% preventive/basic), life/AD&D at 1× salary, LTD at 60–67% with a 90–120‑day waiting period, plus a modest HSA ($500–$1,500).

  • Who should pay LTD premiums—employer or employee?

  • Decide based on tax preference: employer‑paid WLRP generally produces taxable benefits on claim; employee‑pay‑all LTD typically produces non‑taxable benefits. CRA – WLRP

  • Are employer‑paid health and dental premiums taxable to employees?

  • Employer contributions to a qualifying PHSP are generally non‑taxable to employees outside Quebec. CRA – PHSP

  • What EI administrative steps should HR know?

  • Deduct and remit premiums, keep to the annual MIE, and issue ROEs promptly on interruptions of earnings. EI for employers

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