Group benefits — also called employee benefits or group insurance — are insurance and benefit programs provided by employers (or associations) to employees as part of their compensation package. For many Canadians, group benefits represent significant financial protection, but few people fully understand what they have or its limitations.
Common Components of a Canadian Group Benefits Plan
1. Extended Health Care
Supplements provincial health coverage (which covers physician and hospital services) by reimbursing prescription drugs, paramedical services, and medical equipment:
- Prescription drugs (typically 80–100% after deductible)
- Paramedical services: physiotherapy, psychology, massage therapy, chiropractic, vision care
- Medical equipment: crutches, wheelchairs, orthotics
- Out-of-country emergency medical travel insurance (often limited to 90–180 days)
2. Dental Coverage
Covers basic and sometimes major dental work:
- Basic care: cleanings, fillings, extractions (usually 80% coverage)
- Major restorative: crowns, bridges, dentures (usually 50% coverage)
- Orthodontics: braces (50% up to a lifetime maximum, often only with comprehensive plans)
3. Group Life Insurance
Provides a death benefit, typically calculated as a multiple of salary (e.g., 1x or 2x your annual earnings). Group life is convenient and requires no medical underwriting, but:
- Coverage is lost when you leave the employer
- Typically 1–2x salary — far less than most families need
- Conversion privilege allows converting to individual coverage on termination (without medical underwriting), but at much higher rates
4. Short-Term Disability (STD)
Replaces income if you're unable to work for a short period due to illness or injury. Typically:
- Waiting period: 0–14 days
- Benefit: 60–85% of gross salary
- Maximum benefit period: 17–26 weeks
5. Long-Term Disability (LTD)
Kicks in when STD ends. Typically:
- Benefit: 60–70% of pre-disability earnings
- Definition of disability: "own occupation" for first 2 years, then "any occupation" in most group plans
- Benefit period: to age 65 in better plans; 2 years or 5 years in basic plans
Tax treatment of LTD benefits: If your employer pays the LTD premiums, benefits are taxable income. If you pay premiums with after-tax dollars, benefits are received tax-free. This matters significantly when evaluating whether your coverage amount is adequate.
6. Employee Assistance Program (EAP)
Provides confidential counselling and referral services for personal and work-related issues. Most EAPs offer a limited number of free sessions with psychologists, social workers, and financial counsellors.
Group Benefits: Key Limitations to Understand
| Benefit | Common Limitation | How to Fill the Gap |
|---|
| Group life insurance | 1–2x salary; not portable | Buy individual term life to supplement |
| Group LTD | Any-occ after 2 years; taxable if employer-paid | Individual disability policy |
| Extended health | Annual limits on paramedical; drug formulary | Review formulary; supplement if needed |
| Travel insurance | Often only 90 days; age limits | Buy standalone travel insurance for longer trips or older travellers |
What Happens to Group Benefits When You Leave a Job?
Most group benefits are lost immediately upon termination, with some exceptions:
- COBRA-style extension: Some provinces require continuation options for a limited period
- Conversion privilege: Group life and some disability plans allow conversion to individual coverage without medical underwriting within a specified window (typically 31 days)
- Severance period: Benefits often continue through the severance notice period
Group Benefits Providers in Canada
The major group benefits insurers in Canada:
- Manulife Financial
- Sun Life Financial
- Canada Life (Great-West Life)
- Desjardins Insurance
- iA Financial (Industrial Alliance)
- Blue Cross (provincial plans)
Build Your Financial Safety Net — Start with Free Banking
While you shop for insurance, make sure your banking isn't eating your budget. KOHO gives Canadians a no-fee account with cash back on everyday purchases. Use code 45ET55JSYA for a bonus.
Get KOHO Free — Use Code 45ET55JSYA