Employee benefits: indirect financial payments given to employees. They may include
supplementary health and life insurance, vacation, pension, education plans and discounts on
- Research indicated that benefits do matter to employees and that if they are aligned with
business strategy, they can help to attract and retain the right people to achieve business
- For aging workforce, health-care benefits are becoming increasingly important.
1. Employment Insurance
2. Canada/ Quebec Pension Plan
3. Worker’s Compensation
4. Vacation and Holiday
5. Leaves of Absence
6. Pay on Termination of Employment
VOLUNTARY EMPLOYER-SPONSORED BENEFITS (DISCRETIONARY)
1. Life Insurance
- Group life insurance plan: Insurance provided at lower rates for all employees,
inclyding new employee, regardless of health or physical condition.
- Accidental death and dismemberment coverage provides a fixed lump-sum benefit in
addition to life insurance benefits when death is accidental. It also provide a range of
benefits in case of accidental loss of limbs or sight and is often paid for by the employer
- Critical illness insurance provides a lump-sum benefit to an employee who is diagnosed
with and survives a life-threatening illness. This benefit bridge the gap between life
insurance and disability insurance by providing immediate funds to relieve some the
financial burden associated with the illness or enabling employees to enjoy their
remaining time by pursuing activities that would normally be beyond their financial
2. Supplementary Health-Care/ Medical Insurance
- Supplementary health-care insurance is aimed at providing protection against medical
costs arising from off-the-job accidents or illness.
- It provides major coverage to meet medical expenses not covered by government health
care plans, including prescription drugs, private or semi-private hospital rooms, private
duty bursing, physiotherapy, medical supplies, ambulance services and so on.
- Deductible expense: the annual amount of health/ dental expenses that an employee must
pay before insurance benefits will be paid. Reducing health Benefit Costs
- The main reasons for these increases of benefit costs are increased use of expensive new
drugs and rising drug utilization by aging population.
- #1 The simplest approach to reducing health-benefit costs is to increase the amount of
health care cost paid by employees. This can be done by increasing employee premiums,
increasing deductibles, reducing company coinsurance level, instituting or lowering
annual maximums on some services or even eliminating coverage of spouses, private
hospital rooms, and other benefits.
- #2 Another cost-reduction strategy is to publish a restricted list of drugs that will be paid
for under the plan to encourage the use of generic rather than more expensive brand-name
drugs. This approach should be combined with employee education to effectively manage
the demand for drugs.
- #3 Health promotion: have exercise class, nutrition counseling and etc
- #4 Implement risk-assessment programs. A third party conducts a confidential survey of
health history and lifestyle choices of employees in order to identify common health risk
factors. So problem specific programs can be implemented
- #5 Health care spending accounts (HCSA) are employer establishes an annual account for
each employee containing a certain amount of money. Then employee can spend the
money on health-care costs as he or she wants. Provides the flexibility for employee.
(popular in Gen Y)
Retiree Health Benefits
- Another cost that need to be concern.
- Includes life insurance, drug and private/ semi-private hospital coverage.
- Employers can cut costs by increasing retiree contributions, increasing deductibles,
tightening eligibility requirements and reducing maximum payouts.
3. Short-term Disability Plans and Sick Leave Plans
- It provide a continuation of all or part of an employee’s earnings when the employee is
absent from work because of non-work related illness or injury.
- Usually medication certificate is required if absence is beyond 2 to 3 days.
- Provides full pay for some period and then gradually reduce the % of earnings paid as the
period of absence lengthens.
- Sick leave plans operate quite differently from short-term disability plans.
- Grant full pay for specified nmber of permissible sick days- usually up to about 12 per
- There are problems with employees using sick leave as extension to their vacations.
- Also, seriously ill or injured employees get no pay when their sick days are used up.
- Some buy back the unused sick leave at the end of year by paying their employees a daily
equivalent pay for each sick leave day not used. The drawback for this is people come to work with their illness.
4. Long-Term Disability
- Aimed to provide income protection or compensation for loss of income because of long-
term illness or injury that is not work-related.
- The number of this claim is expected to accelerate as the average age of the workforce
continues to increase because the likelihood of chronic illness, such as arthritis, heart
disease, and diabetes, increases with age. Therefore, disability management programs
with a goal of returning workers safely back to work are becoming a pr