Building a better employee benefits plan
Attracting and keeping top-notch employees is absolutely essential in today’s hyper-competitive labour market. It’s a truism today that many businesses offer some form of group medical and dental insurance plan to employees, as an employment incentive. But finding the right benefits package – and the right insurance provider – can be a challenge.
That’s where Castlemark Wealth Management comes in. We’ll work with you to develop the benefits program that matches your business philosophy and your coverage requirements to build a cost-effective plan to match your needs.
What do you want your benefits program to do?
It’s important that your benefits program align with your corporate philosophy and mission. Will your benefits program be tied into compensation packages or will it be a separate business component? Castlemark Wealth Management will help you assess and understand your workforce, both as it is now and where you expect it to be in the future, to help you build the employee health benefits package that’s right for your business.
What can group medical and dental coverage offer?
Group plans can include any or all of the following benefits, depending on how your plan is structured:
HEALTH CARE OPTIONS
- Hospital admission
- Nursing care
- Ambulance service
- Medical equipment (e.g., orthopedic, prosthetic,
- Medical services and practitioners not covered by provincial health plans (e.g., physiotherapists, message therapists, chiropractors, psychologists, dieticians, acupuncturists, etc.)
- Travel medical insurance
- Vision care
- Hearing aids
- Prescription drugs
- Regular maintenance and
care of teeth and gums
- Preventative care and treatment (oral hygiene)
- Diagnostic services (e.g., x-rays, casts)
- Minor restorations (e.g., fillings)
- Oral surgery and adjunct treatment
- Crowns, dentures, bridges
- Endodontics and periodontics
What kind of coverage is best for your business?
Group health and dental benefits coverage is available in a seemingly endless variety of options and add-ons. Group benefits packages can range from complete extended medical, prescription, and dental coverage for employees and their dependents, including such items as disability insurance, long-term care, critical illness, private nursing care, physiotherapy, travel medical coverage, and so on, to fewer benefits, more exclusions, and higher deductibles and co-payments with coverage restricted to employment hours. And will you have enhanced coverage for senior management or owners?
Small business benefits from group RRSPs, DPSPs
At Castlemark Wealth Management, we specialize in custom designing and executing Group RRSP and DPSP strategies for small businesses and their owners. And because our plans use insurance-based segregated fund products, risk to investment capital can be effectively reduced or even eliminated depending on the type of plan you choose. It’s another layer of risk management and careful investment stewardship we add as part of Castlemark’s top-shelf small business service.
GROUP REGISTERED RETIREMENT SAVINGS PLANS (RRSPs)
RRSPs are employer-sponsored savings plans that make it easy for company employees to save for retirement. Contributions are made by payroll deduction, and employee contributions may be matched by the employer, usually up to some pre-set limit. The plan is administered on a group basis by the employer, and is usually contracted out to investment specialists. With regular contributions to the Group RRSP, employees no longer need to worry about scraping together enough money for a last-minute contribution in February of each year. A Group RRSP works the same way as an individual Registered Retirement Savings Plan and is subject to the same individual contribution limits. However, for small business owners and managers who set up Group RRSPs, plans come with extra benefits.
GROUP RRSPs – EXTRA BENEFITS
- Members in a Group RRSP receive the advantages of volume purchasing power, making for lower investment management fees.
- Reduced administrative costs.
- Employer contribution is deductible by the company.
- Employer contribution is a taxable benefit for the employee and must be reported as earned income, but employees still receive a tax deduction for the contribution.
- Creditor-proof, providing another level of security for the business owner.
- Spousal contributions allow for income-splitting opportunities.
- Plan members own their own contributions and income earned. Funds may be withdrawn at any time, but are added to taxable income at year-end.
DEFERRED PROFIT-SHARING PLANS (DPSPs)
A DPSP is a registered tax-deferral vehicle that lets an employer share company profits with some or all employees. It may be used to share actual profits, but may also be used as a retirement savings plan or to pay other types of compensation benefits, such as bonuses, overtime hours, or sick days. For small business owners, the DPSP can offer many lucrative benefits.
DPSPs – LUCRATIVE BENEFITS
- Economical. A DPSP has low administrative costs compared with other types of retirement or pension plans.
- Tax-efficient for the company. Contributions are made by the company from pre-tax profit, and are totally tax-deductible to the company.
- Tax-efficient for the employee. DPSP contributions are not deemed to be a taxable benefit to the employee and thus are not subject to withholding tax.
- Tax-sheltered. Returns on investments are tax-sheltered as long as they remain inside a DPSP.
- Flexible contributions. The company is not bound by any commitment to contribute at a set rate or time. Contributions may be made in any amount at any time the company wishes (for example, monthly, weekly, quarterly, when it achieves a profit for the year, and so on).
- Vesting. Contributions to a DPSP are subject to vesting, but no more than two years of plan membership. The employer may shorten the vesting period.
- ACCESS. Funds are not necessarily locked in and may be withdrawn depending on the company’s vesting schedule. Employees who leave the company after contributions have vested may withdraw funds, which will be subject to withholding tax, or may roll funds over tax-free into another registered plan, such as an RRSP or even another DPSP.
Castlemark Wealth Management will work with you to build the best benefits program to fit your corporate structure and cost framework. To learn more about the best group medical and dental coverage, or RRSP or DPSP plans for your business, contact Castlemark Wealth Management.