HMA Blog

2026 Dental Fee Guide Increases

Wed, 04 Mar 2026 20:00:05 GMT

Each year, provincial and territorial dental associations publish updated dental fee guides that insurers use to set reimbursement limits, making them an important consideration for employers when planning and managing dental benefits.

As dental fees continue to rise across Canada, it’s important for employers to understand how these changes can impact their benefit plans, and what options may be available to help manage costs.

While the Ontario dental fee guide increases averaged 2.4% from 2012 to 2021, more recent years saw unusually large price increases (as high as 8.5% in 2023 for Ontario, with other comparably large increases across the rest of Canada). These high fee guide adjustments continue to have a significant impact on the cost of dental benefits, however, the 2025 and 2026 fee guides have seen a return to smaller increases.

Increases vary by province and provider type, as show below:

Sunlife (2026)

https://www.sunlife.ca/workplace/en/group-benefits/advisor/advisor-latest-news/dental-fee-adjustments-for-2026/

Employers should still consider how their dental benefits are funded, as well as whether current plan design matches both budget and the business goals of the benefits plan.

As the cost of services rises and visit frequency rebounds from the lows seen during the Covid-19 pandemic, employees continue to expect more robust coverage. It is important to select a design that is both meaningful to employees and sustainable for the business.

One increasingly popular option for cost management is Administrative Services Only (ASO) , a self-insured approach that can help improve cost control and transparency.

Dental benefits are well suited to ASO because they carry no catastrophic risk. Annual maximums, such as $1,500 per employee, are built directly into the plan design, providing a natural cap on exposure. Rather than paying fixed premiums, employers pay only actual claims, along with administration fees and applicable taxes. With fewer built‑in insurer margins and risk charges, self‑insured dental plans can often be more cost‑effective than traditional experience‑rated arrangements.

For employers who prefer to remain fully insured, HMA’s 3G profit-sharing plan offers another effective alternative. This approach uses standard experience‑rated renewal calculations, but when claims fall below the Target Loss Ratio (TLR), employers receive a portion of the unused premium back.

For example, if your plan has a TLR of 75% and annual dental premiums of $10,000, expected claims would be $7,500. If actual claims come in below that level, a portion of the difference is returned through profit‑sharing and loyalty dividends, helping offset future costs.

By reviewing funding arrangements and exploring alternative strategies, employers can protect both their employees’ dental coverage and their bottom line. Talk to your HMA advisor to explore dental benefit strategies that deliver value without unnecessary cost.

Why Life Insurance is a Valuable Addition to Your Employee Benefits Plan

Tue, 11 Mar 2025 14:09:28 GMT

One benefit companies can offer their employees that offers exceptional value without breaking the bank is life insurance. Often seen as a critical yet affordable addition to an employee benefits package, life insurance provides both employees and employers with significant advantages.

Budget-Friendly Coverage

One of the most compelling reasons life insurance is such a valuable addition to an employee benefits plan is its affordability. Group life insurance policies are typically much more cost-effective than individual ones. This allows employers to provide meaningful coverage for their employees at a fraction of the cost they might expect. Often, the premiums for group plans are subsidized or fully covered by the employer, meaning employees can receive solid protection without paying a hefty price. For businesses, it's a cost-effective way to enhance your benefits package while keeping expenses in check.

Scalable and Flexible

Life insurance is also highly scalable, meaning it can be tailored to suit the needs of your workforce, regardless of its size. Whether you have a small team or a large organization, you can offer life insurance coverage that fits your budget and meets the needs of your employees. This flexibility allows you to enhance your benefits plan without overspending.

Adds Value Without Straining Your Bottom Line

When compared to other forms of insurance or retirement benefits, life insurance offers a relatively low-cost option that packs a big punch in terms of employee value. By providing life insurance as part of your benefits package, you're giving your employees peace of mind that their families will be taken care of financially in the event of the unexpected. And for the employer, it's a relatively small investment that can yield long-term benefits in terms of employee loyalty, engagement, and retention.

Ready to Enhance Your Benefits Plan?

Want to learn how life insurance can fit into your organization’s benefits strategy? Book a meeting with an HMA advisor today to explore cost-effective, tailored options that will strengthen your benefits plan and support your employees' futures.

Why Healthcare Spending Accounts (HSAs) are a Smart Choice for Your Business

Tue, 18 Feb 2025 18:01:07 GMT

As a decision-maker responsible for employee benefits, attracting and retaining top talent is a priority. Offering competitive benefits is essential, and while traditional health insurance has long been the standard, more companies are now turning to Healthcare Spending Accounts. These accounts provide a flexible, cost-effective way to support employees' healthcare needs.

A Healthcare Spending Account helps cover out-of-pocket expenses not included in traditional group health plans and supplement payments for partially covered services. It can also be used for deductibles, co-pays, dental and vision care, prescriptions, paramedical services, and medical devices—offering employees flexibility to meet their unique healthcare needs..

The HSA is a tax-free benefit

The HSA is a non-taxable benefit, which means any reimbursement an employee receives is tax-free.

By using your HSA for eligible expenses, you spend pre-tax dollars instead of after-tax income. This means your money goes further since you’re not paying taxes before using it, giving you full purchasing power.

Eligible HSA Expenses and the Canada Revenue Agency (CRA)

HSAs are designed exclusively for eligible health and dental expenses. While the list of covered items is extensive, some examples include:

Dental Services
Vision Care
Medical Cannabis
Crutches
Fertility Treatments
Hearing Aids
Heart Monitoring Devices

For more information about what can be claimed under the HSA, visit the CRA’s website on a regular basis as their list of eligible expenses may be updated at any time.

Common types of claims

Health or dental claims that have already been maxed out on your benefits plan
Expenses not covered by your health and dental plan for you and/or your eligible dependents. Example: Orthodontics
Extended Health and Dental premium repayment. If you offer a HSA to your team, they may choose to buy an individual Health and Dental plan and use the HSA to supplement the premium.

Popular ways to use an HSA

Example:

Greg is single and has extended health coverage under his group benefits program and receives $375 in his HSA. During the HSA year, Greg spends $250 on a new pair of glasses and submits a claim under his plan. His plan covers glasses for up to $200 every 24 months. He uses HSA credits to cover his out-of-pocket costs:

Amount submitted to benefits program: $250

Amount paid by benefit plan: $200

Expense automatically flows through to HSA: $50

Total annual HSA credits: $375

Amount paid by HSA: $50

Remaining HSA credits: $325

With his HSA credits, Greg is fully reimbursed for the cost of his glasses, and he still has $325 in credits to use for other expenses. Without the HSA, Greg would pay $50 (in after-tax dollars) for the expense not covered by his group benefits program.

Incorporating a Healthcare Spending Account into your benefits offering is an effective way to enhance your employees’ healthcare coverage while keeping costs under control. With its tax-free advantages and flexible use, an HSA can be a valuable tool in attracting and retaining top talent. If you’re ready to explore how an HSA can work for your business, reach out to one of our benefit consultants today!

Is it time to update your Group Retirement Plan?

Tue, 06 Feb 2024 17:03:48 GMT

Understanding the nuances between retirement options like Deferred Profit Sharing Plans (DPSPs) and Group RRSPs is essential for maximizing benefits while minimizing costs. Below we explore the differences, highlighting the advantages of modernized group retirement benefits that prioritize accessibility and low fees, ensuring employees can confidently plan for their futures.

Group Retirement Fees

Group retirement plans have minimal employer fees. The cost to the employer is the amount they choose to contribute towards the plan. Fees still exist and are built into an Investment Management Fee (IMF) that is based on a percentage of your employees’ investment. Are your employees paying too much with your current provider?

If you’re a small to medium sized business, your employees could be paying 1.8% or higher on their investment fees in your group retirement plan, and even more if they leave your plan. Doing a fee review of your plan, while not changing the employer costs, can significantly impact the amount employees can grow their retirement fund during their working years.

Using a DPSP?

One group retirement option for employer contributions, the Deferred Profit Sharing Plan (DPSP), provides significant advantages for plan setup, such as a vesting period and the ability to avoid additional payroll expenses. If your company is only using RRSP accounts, you may be missing out.

Many carriers use the term GRSP for Group Retirement Savings Plans, but a GRSP is not an actual account. The main accounts available to small businesses for group retirement are the RRSP, DPSP, and DCPP (Defined Contribution Pension Plan). The DCPP was historically a good option, but with all the background regulations required by the carrier to manage a pension plan, they generally have higher fees for employees than a DPSP/RRSP plan.

Our most common setup for a for-profit business is a matching structure where the employer contributes a percentage of employee income into a DPSP account to match an employee contribution from payroll into an RRSP account. For example, an employee chooses to deposit 3% of their income into their group RRSP, so the employer matches that 3% with a deposit into a DPSP account. The employee may choose to contribute above the 3%, but the employer’s plan design will determine the maximum they are willing to match on each payroll deposit.

Here’s a breakdown of some of the differences between the accounts:

Modernized Group Retirement Benefits

Does your current provider allow every employee to easily book a personal online session to set up their investments, ask investing questions, and get advice on making changes to their plan? Are you reaching to a general inbox with a hope of a response after days of waiting?

Whether you’re setting up a plan for the first time, or already have something in place, most carriers fall behind the needs of your employees. Choosing a modern group retirement provider with low fee options available will allow your employees to feel the value you are providing them.

If you're interested in learning more, want to start a plan or have or our team review your current fee structure, get in touch with one of HMA's advisors today and take the first step towards a stronger financial future for your team.

Term Life Insurance vs Mortgage Insurance: Which One is the Right Choice for You?

Thu, 21 Sep 2023 13:04:39 GMT

Imagine this: a protective net cast over our homes, cars, health, and lives to weather life’s storms. So why not drape that same shield over our most significant debt – the mortgage? Mortgage insurance has its appeal, but taking a closer look, term life insurance steals the spotlight when life throws us curveballs.

Keeping an Eye on Premiums

Mortgage insurance comes across as straightforward, but that premium can change when you renew your mortgage.

On the other hand, term life insurance could give you a better deal if you’re a non-smoker or generally healthy. The premiums stay steady throughout the entire term, which helps you budget without any sudden surprises.

Will it Pay Out?

Getting approved for mortgage insurance is easy, but you won’t know if your claim will pay until you make a claim. This is due to post claim underwriting double checking the initial application answers on claim to make sure everything you answered was correct. This means you could pay for insurance and end up with nothing when you need it most.

Term life insurance is more upfront. They check your health on application and decide if you’re eligible. Plus, you might not need a full medical exam.

The Value Journey

Mortgage insurance’s value shrinks as you chip away at your mortgage. You’re paying the same premium, but the amount of debt you cover is shrinking.

Term life insurance is directly associated with you, not your debt. As you chip away at your mortgage, your amount of insurance stays the same.

Who Gets What

With mortgage insurance, the bank is the winner if something happens to you. They get the payout because they are the beneficiary of the policy.

Term life insurance lets you call the shots. You choose who gets the payout – it could help with the mortgage, education, medical bills, or whatever your loved ones need most.

Moving House?

Mortgage insurance is tied to your mortgage. If you move or change lenders, you have to start all over again.

Term life insurance is more flexible. It stays with you no matter where you go or who you’re working with.

Do You Really Need It?

You may not need coverage for your entire mortgage. Term life insurance lets you cover your mortgage, income replacement, education, and anything else you want to cover all in one policy.

If you’re looking for a well-rounded safety net that covers everything, have a chat with one of HMA’s advisors. They’ll help you navigate the options based on what you want to achieve and protect.

Cost-Effective Solutions for Dental Benefits in a Rising Premium Landscape

Mon, 24 Apr 2023 19:53:23 GMT

Businesses use benefit plans to attract and retain top talent. Offering dental coverage for employees and their families is vital to remain competitive, but costs continue to rise for employers. Each province has a dental association that sets their fee guide for the year. In recent years, these costs have grown, leading to higher claims and increases in premium or funding levels at renewal.

The government of Canada has announced a federal dental plan with the goal of covering all uninsured Canadians earning under $90,000/year of family income by 2025. This program is starting in 2023 for uninsured Canadians under 18, persons with disabilities, and seniors within the income requirements. This plan won’t help reduce dental premiums for employers as the plan only pays to uninsured individuals. Employers should continue covering their staff for dental to remain competitive in the talent pool. If the federal dental plan expands its limits enough, employers may choose to focus their benefit dollars towards other employee compensation in the coming years.

Over the last five years the dental fee guide has increased, with the largest jump coming in 2023. Dental services are billed at 20%+ more than five years ago, leading to claims rising and higher costs for employers. Here is the average increase in cost of services offered for Ontario over the last five years:

2023 Ontario Average Increase: 8.5%

2022 Ontario Average Increase: 4.75%

2021 Ontario Average Increase: 4.6%

2020 Ontario Average Increase: 1.27%

2019 Ontario Average Increase: 4.19%

As prices continue to rise, it’s essential for businesses to use a cost-effective solution for their benefits package. One option is to self-insure the dental portion of your plan (called ASO or Administrative Services Only). There is no catastrophic risk associated with dental, as plan limits, such as $1,500/year per member, are set in the plan design. ASO essentially works as a pay-as-you-go system. Rather than setting a Single/Family premium rate for the year, you only pay claims, adjudication fees and taxes. Compared to an experience rated dental benefit, built-in fees can be significantly cheaper on an ASO platform.

Another cost-effective solution, without self-insuring the dental benefit, is to use HMA’s 3G profit-sharing plan. This plan uses the same renewal calculations as any experience rated health and dental plan, but gives back the profit an insurance company would normally receive when claims come in lower than the expected Target Loss Ratio (TLR). For example, if your TLR is 75% and you pay $10,000 as a dental premium for the year, you are expected to claim $7,500. If claims come in below the $7,500 you can receive the difference back through the plan’s profit sharing and loyalty dividends.

While higher dental costs are inevitable with the raises to the Fee Guide, using one of the solutions above can help mitigate some of the costs. Your broker should be bringing solutions to the table. Send us a message today for a full no-pressure review of your benefits plan.

3 Reasons Group Benefits Attract Top Talent

Wed, 30 Nov 2022 15:58:21 GMT

Your business needs great employees to grow, yet the present talent shortage highlights the necessity for effective employee recruitment and retention strategies. A group benefits plan can be a highly effective recruitment and retention tool for employers.

There are many methods to make a business more appealing, and here are three reasons why a benefits package can help you attract top talent.

Benefits Show You Care

A strong benefits package is a great way for a business to demonstrate its care for its employees. When employees feel valued, they are more satisfied with the job, committed to their employer, and motivated to produce quality work.

A prospective hire will get a sense of the workplace culture through the company’s benefits package. Promoting wellness improves morale and promotes a great workplace culture, something that individuals are starting to value more when looking for a company to work for.

Benefits Can Provide More Value Than a Higher Salary

The premiums paid by the employer for a benefits plan are often a tax-free benefit to the employee, unlike an increase in pay that is subject to income tax. When the employee uses their benefits, they can cover costs that would have normally been paid for with their after-tax dollars.

On top of tax efficiency, having expenses covered that would have otherwise been paid for out of pocket contributes to financial stability for an employee. This enables individuals to ensure their and their families' well-being without jeopardizing their financial situation.

An employee who has previously received benefits from an employer is likely to be aware of the value they offer and will appreciate their significance within the overall compensation package.

Not Every Business Is Offering a Benefits Plan

Similar to how a business could scan through the resumes of potential employees looking for specific skills or qualifications, a job seeker might scan job advertisements looking for a business that provides a benefits package. Top talent may not even consider working for your company if you don't have a benefits plan in place.

Having a group benefits plan helps your business stand out from the competition.

To learn more about an employee benefits package, speak to an HMA advisor today . We are happy to help.

What is a target loss ratio?

Thu, 22 Apr 2021 15:00:10 GMT

The Target Loss Ratio, or 'TLR', on an insured benefits plan illustrates the percent of health and dental premium that can go towards paying for claims compared to what goes towards the administrative costs of the plan.

How does TLR work?

A TLR splits each dollar of premium spent on health and dental into claims costs and administrative costs. For example, on a 75% TLR, 75 cents of every premium dollar goes to claims and 25 cents goes towards administrative costs. Therefore, if your group has a higher TLR, there is more money to pay claims before seeing an increase in costs at your renewal.

An insurer will base your TLR on the size of your firm while trying to compete in the market with other insurers. For a 3 to 10 employee firm, a common TLR would range from 68-75%. For a 11-50 employee firm, a 75-80%+ TLR is more likely in a competitive market. Any group above 50 employees should follow this pattern with a 80%+ TLR.

On the administrative side, the insurer cost, premium tax and advisor commission are all built in. Many advisors will charge higher than market average commission, which may be why your group has a TLR that is lower than the suggested numbers above. If you have a low TLR, make sure you are getting value from your advisor as you are definitely paying for it!

Understanding TLR at your renewal

TLR is taken into account when it comes time to renew your group benefits plan. Your insurer will base your renewal rate off of your TLR along with inflation, trend, weighting, credibility and other factors. To keep things simple today I will just show the numbers with TLR.

Let’s just look at Extended Healthcare (EHC) and a 75% TLR for this example. If you had

$10,000 EHC premium paid
$5,000 EHC claims

With the above numbers, you should see a decrease in your premium costs. Ignoring the other factors and just looking at TLR, your new rate for EHC should be $6,666/year instead of $10,000 (Math: $5,000 divided by 75%). This would give the insurance company $5,000 to cover expected claims and $1,666 for administrative costs.

One more example for an increase on a 75% TLR:

$10,000 EHC premium paid
$12,500 claims paid

With the above numbers, you should see an increase in your premium cost. Your new rate should be $16,666/year to cover all expected claims and administrative costs. This will be higher when you include the other factors, but it shows the importance of having a higher TLR on your yearly renewal so more of your premium dollars go towards covering claims.

Want to learn more or have our team review your benefits plan? Reach out to an HMA Advisor, we would be happy to help!

Is my group’s TLR fair?

As a business owner or HR professional you want to make sure that your benefits plan provides optimal value for your employees based on the expected premium dollars you have built into your budget. If you have been with the same insurer and advisor for many years, having a new pair of eyes to review your plan can help confirm if your plan stands up compared to insurers current offerings. Who knows, you may even be overpaying your advisor compared to fair market rates.

The benefit market shifts, so even if you are happy with your advisor, you should have them market your group plan every three years to make sure the rates and TLR you are renewing is fair compared to the current market. When reviewing a marketing proposal, make sure you include TLR in your decision as the lowest price may come from an insurer offering a large discount up front, but a low TLR that will impact your group with higher increases at each renewal.

While taking a discount might be nice in the first 1-2 years, a higher TLR and plan sustainability may be more important to you and your staff if they share in the cost of the plan.

Have any questions or want to learn more? Contact us today!

What about the profit?

Your rates can go down after a year with low claims, but you may wonder where the extra money that was paid through monthly premium deposits goes. On a regular insured benefits plan, all excess will go back to the insurers as profit. This creates a bit of a dilemma, as your group may consistently spend less than the insurer anticipates, and you never get that premium back.

At HMA, we have built a proprietary product called 3G that fixes this problem. On years with low claims, we have the ability to return the excess premium back to all the groups on the 3G plan through profit sharing and a loyalty dividend. Ask an HMA advisor today to see if your group is a fit for the 3G plan.

Have further questions? Call us today at 905-999-9510.

Everything You Need To Know About Stop Loss

Thu, 22 Apr 2021 15:00:09 GMT

Stop-loss coverage is catastrophic insurance coverage that may be built into the Extended Healthcare (EHC) portion of your employee benefits plan.

How Does Stop-loss Work?

Stop-loss coverage removes liability from your claims experience after an individual spends a set amount (the Stop-loss level). The cost of stop-loss is either based on a set monthly premium for the number of single/family employees you have on your EHC plan or it is based on a percentage of claims.

If your stop-loss level was $10,000, all claims within the yearly experience period for an individual above $10,000 would not add liability to the plan. For sake of the example, we will continue to use the $10,000 as an example stop-loss level throughout this article, but the actual amount for a group will vary based on the group size and usually ranges between $5,000 (only common now on older plans) to $15,000 (where the market is starting to move).

Want to learn more or have our team review your benefits plan? Reach out to an HMA Advisor and we would be happy to help!

Stop-loss on an Insured Plan

For an insured plan, this means that all individual claims within the yearly experience period above $10,000 do not affect claims experience on renewal. Insurers base a business’ renewal cost for EHC on claims experience, inflation/trend and administrative costs. If one of your employees ends up on a high-cost drug that is $40,000 a year, your claims experience at renewal would only be $10,000 for that drug claim. This can keep your cost significantly lower as you have moved the catastrophic risk of a high claim over to the insurer.

Stop-loss for Administrative Services Only (ASO)

For an administrative services only (ASO) plan, all EHC claims within the yearly experience period above $10,000 are taken on by the insurer rather than paid out of your company’s benefit account. ASO plans work on a pay-as-you-go or budgeted basis where your business pays for claims rather than an insurer. For either style of ASO plan, once an individual on your EHC plan has over $10,000 of claims, any additional claims will get covered by the insurer instead of by your business.

Have any questions or want to learn more? Contact us today!

Adding Stop-loss to Your Benefits Plan

If you are starting a new benefits plan that has stop-loss coverage built-in, the insurer you end up with will likely choose your level of coverage (i.e. $10,000, $12,500, $15,000). Once you have claims experience, stop-loss becomes a conversation at renewal. The higher your stop-loss level, the lower your monthly Stop-loss premium will be. When facing the decision to increase your stop-loss, there needs to be significant savings, as you are adding more risk to your plan.

Have further questions? Connect with our team today and we are happy to help.

Getting Started With Employee Benefits

Thu, 22 Apr 2021 15:00:08 GMT

Whether your business is a startup or well established, starting a benefits plan may seem daunting or out of your current budget. But the great news is that there are alternatives out there, like a health spending account (HSA), that still provide your employees with valuable coverage.

If you’ve never heard of the concept before, an HSA is a specified amount of money that is allotted to each class of employees in your business. The employees are able to use this money for any CRA-approved medical expense.

Here’s an example:

You’re a 10-person startup that wants to offer their employees benefits and have a plan in place to support your growth and attract top talent. Budget-wise, you’re limited as there was no room for benefits in your budget originally.
If you start with an HSA, you may give each employee a set amount (say $500) a year for benefits. As a business you pay-as-you-go, so of the $5,000 of total room given to your 10 employees to spend ($500 x 10), they may spend less than 100% of the money allotted to them.
There is also the ability to set up an HSA to match a traditional plan design for reimbursements. For example, the plan could cover dental claims only at 80% co-insurance or eye exams, but not glasses - the design is up to you! Don’t worry, we can help you design a plan that is best for your business.

Speak to an HMA Advisor today to learn more about adding a Healthcare Spending Account to your business!

Many business owners ask why they would look at traditional benefits after learning about an HSA. Since an HSA can cover health and dental costs for employees, why would you pay for traditional benefits?

There are 2 main factors missing from an HSA that are included in a traditional employee benefits plan: pooled benefits and catastrophic health coverage.

Pooled benefits include life insurance, critical illness insurance, disability insurance among other benefit lines. The rates for these benefits come from your company’s risk level, demographics and an insurance company’s claims experience for each line of business. Since an HSA only covers health and dental, using an HSA on its own will not cover your employees for larger life events such as a disability or illness. As the employee benefit landscape changes, many insurers are moving towards offering an HSA as an added layer on top of their pooled benefits instead of a traditional insured plan.

Catastrophic coverage pertains to covering health expenses beyond a set amount. For example, this will provide coverage for health expenses over $1,000. Think of the first $1,000 spent on health claims as a deductible. By paying a monthly premium, you are able to add this catastrophic coverage to a benefits plan. Your HSA allotment can cover a base amount (say $1,000 per employee per year to match the deductible) and once an employee has spent $1,000 on health claims they can continue having coverage after using up their HSA.

The monthly premium for catastrophic coverage can be significantly less than the premium of a traditional plan, as the biggest part of a traditional plan’s cost is to cover a few health and dental claims from each employee (which an HSA would cover in this case).

Depending on your business's budget, you may want to add an HSA by itself or you may want to include catastrophic health coverage or pooled benefits to further protect your employees.

To learn more about these options, speak to an HMA advisor today. We are happy to help

The Needs Analysis: Determining Your Life Insurance Needs

Thu, 22 Apr 2021 15:00:07 GMT

This article is to help you determine if you need life insurance, how much coverage to get, and how long to get it for. Speak to an HMA Advisor today to learn more!

When it comes to life insurance, there are many carriers and products available. It is easy to get lost in the weeds, get information overload and feel like you are unable to make a decision. This is an unfortunate situation to be in because while in the decision stage, you are not protected.

O ur goal at HMA is to simplify the life insurance process so you don’t feel overwhelmed, and you get coverage quickly, so you have the protection you need as soon as possible.

There are 3 main questions we find ourselves answering to clients in our life insurance conversations:

Do you need life insurance?

Let’s start with a few additional questions:

What are your goals in the coming years?
Do you hope to raise children? If yes, are you planning to help save for their education?
Do you want to support a cause or charity?
If you don’t already, do you want to buy a house?
Do you have debt to pay off?

If you were to pass away, would your family be able to accomplish the above goals?
Would there be enough income to keep paying mortgage payments?
Could one income support the costs of raising children and could you still contribute towards their education?
Will your debt be left to your partner?

These are just a few examples of ways to think about needing life insurance. If you don’t have any obligations, you may not need much insurance. That being said, if you think that there may be obligations in the future, we encourage you to think about getting coverage now. You may be insurable now, but your health could change in the future, so you should think about preparing in advance.

How much coverage do I need?

The easiest way to get an estimate of how much life insurance you should purchase is to break down expenses that you would want to provide for if you were to pass away.

Mortgage
Income Replacement
Funeral Expenses, Legal Fees
Any other debt?
Registered Education Savings Plans
Charitable Giving
Investment for Taxes or Retirement

Reach out to an HMA The Benefits People advisor today and we will walk you through a quick, no-pressure needs analysis to help figure out the right amount of coverage for you.

How long do I need coverage for?

There are two main categories of life insurance that you’re able to purchase, with multiple options within each category.

Term insurance, the first category we will look at, is kind of like renting a house. You have coverage for the length of your term, but after the term expires, you no longer have coverage. The trade off for this limited coverage is that term insurance is significantly less expensive than permanent coverage.

Some examples of time frames are Term 10, Term 15, Term 20, Term 25, and Term 30. These numbers stand for how many years the initial rate for your insurance coverage is guaranteed. For example, if you had $500k of Term 20 coverage, you may pay $52/month for your coverage (rates based on age, gender, smoking status and term length), which is guaranteed to stay the same for 20 years. At the end of 20 years, your policy may renew at a higher rate and you will want to re-evaluate your needs as they will have changed in that term. Rates are based on age, gender, smoking status and term length.

On the other hand, permanent insurance is more like owning a house. When you purchase the coverage, you can choose to pay for the coverage for a set number of years or your entire life, but you own the policy forever. The policy may also have a built-in option for the coverage amounts to grow over its lifetime.

If you are unsure if you can afford permanent insurance as part of your plan today, but you have an interest in getting permanent coverage in the future, rest assured that there are many convertible term policies available. You can convert all of your policy or just a small piece that fits within your budget and needs.

Let an HMA advisor walk you through a needs analysis today and provide a quote from the top insurance carriers in Canada so you have the protection your fam ily nee ds.

Using A DPSP As Part Of Your Employee Compensation Package

Mon, 19 Apr 2021 22:11:05 GMT

Whether you are thinking about adding a retirement plan as part of your employee compensation package or you are looking to move away from the logistics and costs within a pension plan, a Deferred Profit Sharing Plan (DPSP) may be a good fit for your company.

Like a Group RRSP (GRSP), a DPSP helps your employees save for their retirement. Unlike a GRSP, only the employer can contribute to a DPSP. Since only employers can contribute to a DPSP, many firms use a combination of both a GRSP and a DPSP when an employer wishes to match employee contributions.

For example: An employer may wish to match your employees’ contributions to their GRSP up to 3% of salary, but instead of putting 3% into the employees’ GRSP, they will put it into a DPSP account.

A common misconception of DPSP’s is the expectation that employers only contribute in years with high-profits. While you are able to set up a DPSP this way, we find the most common setup involves a deposit to the DPSP when running payroll. This can function either as a match to an employee contribution or as an additional benefit tool without requiring employees to deposit into a GRSP.

There are multiple advantages to using a DPSP account, such as:

1. Avoiding extra payroll expenses:

When an employer contributes to a GRSP account, CRA views the contribution as additional pay. Both the employee and employer have to pay their share towards EI & CPP. In a DPSP, neither the employee or the employer will have to pay additional payroll expenses for contributions to the account.

2. Building in a vesting requirement:

Having a retirement plan is important for employee retention along with owner’s caring about the well-being of an employee’s future. With a DPSP, the employer has the right to include a vesting period of up to two years. If an employee chooses to leave your company before that period expires, all DPSP contributions are returned to the employer.

In the case of the GRSP, once an employer contributes to an employee’s account, that contribution is automatically vested, therefore staying with the employee if they choose to leave your company

3. Tax deferral for the employee:

Like in an RRSP, employees don’t have to pay tax on the money that they have within a DPSP account until they choose to withdraw it.

4. Contributions are tax-deductible for the employer:

Employers have 120 days after the end of their fiscal year to remit tax-deductible contributions to the DPSP.

Ready to take a look at how a DPSP could fit into your compensation package? Let's talk!

How a DPSP works:

With the above information on why a DPSP may be a good fit for your business to implement, we should also dig into some of the specifics on how it works.

To start a DPSP, an employer would contact their HMA The Benefits People advisor who will help the employer with designing their plan (or redesigning a current plan in place). The employer will choose how they wish to contribute to the plan, either with a matching percentage or the ability to put in flat amounts.

Once setup, an employee will join the plan and fill out a survey online to determine the risk level of their investor profile. The employee will get online guidance, directing them to the funds that match their investor profile.

Once the employer makes a contribution, or sets up a recurring payment in line with their payroll, the employee will be able to view their online portal (or app) and watch their investment start to grow.

DPSP Considerations:

A DPSP is a good solution for many businesses, but there are a few things to consider before implementation:

All contributions reduce the employee’s RRSP contribution room, so if they have a personal account open, they will need to be aware of the rules so they do not over-contribute.
Stakeholders with 10%+ ownership of the company cannot participate in the plan, as the focus of a DPSP is on tax deferral for employees rather than owners.
A DPSP is an employer only contribution, so an employee cannot have a spousal plan to split contributions like they can in a RRSP.

Speak to an HMA The Benefits People Advisor today to see if a DPSP is the right solution for your business.

Life Insurance As A Savings Tool

Mon, 19 Apr 2021 22:11:04 GMT

Did you know you can use life insurance as a pocket to pull from in retirement?

While your focus may currently be set on maxing out your RRSP (or GRSP/Pension at work), you may want to examine filling another pocket to complement those accounts while also helping with estate planning.

Let’s take a high-level look at the concept:

You can buy a permanent life insurance policy and pay for it over 10 years, 20 years, until you retire, or for your entire life (you decide how long you want to pay for)
Permanent life insurance policies can generate yearly dividends which can automatically buy paid-up additional insurance
Both the original policy and the additional insurance will have a cash value associated with them
You can use the cash value of a policy as collateral for a loan at a financial institution
The death benefit from the policy can pay off that loan and leave extra for your estate

In summary, permanent insurance can have a cash value that you can use as collateral on a loan that the death benefit from your life insurance will pay off - aka retirement income.

Speak to an HMA Advisor today to find out if this planning tool is right for you!

If the concept above makes sense at a high level, the next step is understanding why you would use insurance for part of your retirement income.

1.You will need insurance anyway

When you start a family or buy a home, investing in life insurance is a great way to provide peace of mind knowing that your family and your assets are taken care of in the event of an early passing. The funds of a life insurance policy could be used to pay off your mortgage or provide future income to ease some of your family’s worries.

F or example: if you have a $500,000 mortgage and income replacement needs of $200,000, you may want to cover most of that with term insurance (think of it as renting insurance) to keep costs low. To cover your mortgage and income replacement needs, you could buy $700,000 of term insurance. You could also buy $600,000 of term and $100,000 of permanent. While the permanent insurance is going to be more of a financial investment than the term insurance, you are covering your family’s current needs while also preparing yourself for retirement.

2. Preparing while you are young and healthy

The younger that you are, the easier it is to get life insurance since you are less likely to have health issues than someone who is more mature in age. Because of this assumption, an underwriter sees less risk for a younger and healthier person making it easier to obtain a policy.

Why pursue life insurance while you’re young? Even if you have no health problems now, you could become less healthy in the future which would make you more of a risk in an underwriter’s eyes. While you may not know if you will need extra income in retirement now, you can still get coverage and have the option to use the policy for income down the road and if you don’t, your estate/beneficiary has more money to work with.

3. The investment does not go down in a market downturn

Every year that your policy receives a dividend, it will buy additional paid-up insurance. Once you own that new insurance, the policy can’t go back down in cash value. So fast-forwarding to retirement, let’s say we have a year where the stock market is down, either by crashing, or just having a low year, and your RRSP or other investments are negatively impacted: this could be the year you choose to take a loan for income using your life insurance policy as collateral (with no need to pay back the loan as the life insurance will do that in the future). While the rest of your investments have gone down, your life insurance cash value is still worth the same amount. Currently the projected policy dividend rate ranges from 5-6% a year depending on which insurance company you place your policy with.

Permanent insurance may fit into your plan and it is worth starting the discussion. Connect with an advisor at HMA The Benefits People and we would be happy to walk you through the details and see if this will fit within your financial plan. We are happy to help and there is no pressure on you to commit.

Let’s start the discussion today!

GRSP: The Next Step In Employee Retention

Mon, 19 Apr 2021 22:11:03 GMT

Want to have a direct impact on your employee’s future? Want to incentivize employee retention? It’s time to take the next step to get your employees excited about growing their career within your company.

In a competitive employment market, the total compensation package you provide for your employees may include vacation time, wellness perks, a benefits plan, and company events all on top of an employee’s salary. Do these perks make an employee want to stay with your business, or could they get the same perks from another employer?

One way to gain a competitive edge, especially as a smaller business competing against larger institutions, is to add a Group Retirement Savings Plan (GRSP) into your firm. Similar to a Defined Contribution Pension Plan that you may find at a large institution, a GRSP uses an employer match to employee contributions to help employees build a fund towards retirement.

What is a Group Retirement Savings Plan (GRSP)?

A GRSP is put in place by an employer to help encourage employees to save for retirement. Employees who choose to contribute to the GRSP will have a percentage of their income deducted from each pay cheque and put directly into the plan design that they choose. As the employer, you get to decide the percentage of salary that you match towards contributions.

For example:

• A common employer match is 3%.

• The employee makes $48,000/year paid Semi-Monthly ($2,000 per pay period)

• Each pay, the employee contributes $60 as a payroll deduction into their GRSP (pre-tax)

• Each pay, the employer also contributes $60 into the employees GRSP

How does a GRSP contribution work?

At a high level, a GRSP contribution (either from an employee or an employer) works similarly to an RRSP contribution, as all contributions count towards the total contribution limit outlined in the employee's most recent Notice of Assessment. The contribution limit increases each year by 18% of a person’s previous year’s salary (up to a maximum of $27,230 in 2020).

When following the example above, the employee and employer contribution will add to 6% of salary, so an employee should have around 12% that they can still contribute (slightly less if the employee gets a raise). The employer is making a significant investment that is noticeable towards an employee’s future.

Why is a GRSP valuable?

For the Employer:

Employee Retention & Financial Wellness

Shows the employee that the employer cares about their future through a financial top-up. Both benefit plans and GRSP’s can be expensive, but a GRSP’s financial contribution is directly noticed by an employee.
The employee feels like they are growing with their company as their account continues to grow the longer they stay with your firm
Employers can add vesting options (through a DPSP/GRSP model) where employer contributions are returned to the employer if the employee leaves before a certain length of employment (ie. 2 years).
This can help if your company has a high turnover

For Employee:

Pre-tax income used for the contribution = more getting contributed
The employee doesn’t have to wait until their tax return to get savings for their contributions
Employer match means that employees have help in reaching their retirement goals
They only need to save 15% of salary instead of 18% to max out their RRSP contribution limit
The employee can use GRSP funds the same way as an RRSP for either the HBP (Home Buyer’s Plan) or LLP (Lifelong Learning Plan) as well as retirement

Have any questions or want to learn more? Contact us today!

Rethinking Your Benefits Plan

Mon, 12 Apr 2021 14:08:34 GMT

It's important to review your current benefits plan design to make sure it brings the most value possible to your employees while staying within your budget.

When your benefits-related costs increase, your employee’s perception of the value of those benefits doesn’t necessarily increase with them. What if we told you there are ways that you can increase the perceived value of your benefits plan while remaining conscious of your bottom line? Here are three tips to give your benefits plan a boost:

1. Introduce a Healthcare Spending Account (HSA)

A great way to manage the costs of your benefits plan while still providing value to your employees is through the allocation of your benefits. This means taking a benefit from your traditional plan that doesn't need to be an 'insured benefit' and transferring it into an HSA.

For example, let’s take a look at vision coverage. A common benefits plan will have $150-400 every 24 months to cover vision costs that extend beyond eye exams. If you’re already paying for vision coverage within your benefits, the cost per claim ends up being around 30% on top of the claim itself depending on your firm’s target loss ratio. We won’t dig into the math too much in this article to keep things light, but feel free to ask your HMA advisor to go through it with you.

By transferring vision coverage to your HSA, you're not only managing costs but providing more value and flexibility for your employees. If an employee gets $200 for vision and doesn’t wear glasses, they won’t see value in that portion of their benefits. If instead, an employee gets $200 in an HSA that they can spend on any CRA approved medical expense, they will find value in their plan without having to wear glasses.

Vision coverage is just one example to replace with an HSA. Contact our team of advisors to learn about more value of using a healthcare spending account with your plan.

2. Add an EAP (Employee Assistance Program)

Adding an EAP is only a few dollars/month per employee and it can help reduce absenteeism and provide support for personal and work issues so they are more present at work.

At a high level, an EAP helps your employees with counselling help for things like:

Mental Health Counselling
Financial Wellness Counselling
Legal Counselling
Other Counselling and Help Services (Ask your HMA advisor for more information!)

Depending on which carrier you use there may be a set number of hours your employees can use per year (around 8 - 12) or a predetermined number of sessions. The EAP provider will either help fix the issue at hand or provide a connection for long term support from a professional in a related area.

3. Go ASO (Administrative Services Only)

If you have over 25 employees and you are on a fully insured plan, it may be time to look into an ASO plan instead. In an ASO plan, you pay a premium to cover risk on the pooled lines (ie. life insurance, long-term disability insurance etc.), but you only pay for the actual claims with fees on your extended healthcare and dental benefits.

You can keep your current plan design the same, so there will be no impact on your employees by making the change. From the employer side, you are taking on some of the risk that the insurance company would take on in a fully insured plan. This can allow for significant savings on years with low claims. However, if you do have high health claims come up, there is stop-loss protection built into your plan fees which limits the risk to you as an employer.

If you want to learn more about ASO and if it’s a fit for your company, contact an HMA advisor today and we will be happy to help.