Fewer than many owners think. Some insurers offer plans for two or three employees. Eligibility rules vary by insurer, so the answer depends on your team and the insurer.
Small Business Group Benefits
Small Business Group Benefits for Teams of 2 to 10
A group plan can work for a very small team, but the rules differ from those at a large employer. Here is what a typical plan includes, how insurers underwrite small groups, and what to decide first.
Who Can Get a Plan
Can a business with two to ten employees get group benefits?
Yes, in many cases. Some insurers offer group plans starting at two or three employees, although eligibility rules vary by insurer.
A group plan is one contract between the employer and an insurer. It covers your employees, and usually their eligible dependants, on the terms you choose. You pick the benefits, set who is eligible and decide how the cost is shared. We start with what matters to your team and your budget, then quote a few designs side by side.
For the wider picture, see our group benefits overview. If price is your first question, start with what drives the cost of group benefits.
At a glance
- Starting sizeSome insurers start at two or three employees
- ParticipationOften mandatory on very small plans
- Enrolment windowCommonly 31 days from becoming eligible
- Health and dentalEmployer-paid coverage is generally not a taxable benefit
- Group lifeEmployer-paid premiums are generally a taxable benefit
What a Plan Includes
What does a typical small-group plan include?
Most plans combine health and dental coverage with group life and disability insurance. You choose the levels, and a health spending account can add flexibility.
| Benefit | What it pays for | What you decide | Tax note if the employer pays |
|---|---|---|---|
| Health | Prescription drugs, paramedical services such as physiotherapy and massage therapy, and vision care | Co-pays and maximums | Generally not a taxable benefit |
| Dental | Dental care, up to the plan's maximums | What's covered and the yearly limits | Generally not a taxable benefit |
| Group life | A lump sum to beneficiaries if an employee dies | A flat amount or a multiple of salary | Premiums are generally a taxable benefit |
| Disability | Part of an employee's income during illness or injury | Short term, long term or both, and who pays | Premiums generally aren't a taxable benefit, but monthly benefits then generally are |
| Health spending account | Eligible health and dental expenses, up to a yearly amount | The amount per person | Generally not taxable if it qualifies under CRA's rules |
Underwriting
How does underwriting work for a small group?
Insurers assess the group as a whole, so employees generally don't answer medical questions for standard amounts. Very small groups have little claims history of their own, so pricing generally leans on demographics such as age, sex and occupation, and on the insurer's standard rates.
No-evidence limit
Life and disability amounts are generally issued without medical evidence up to a set limit. Amounts above it need evidence of insurability.
Waiting period
You can set a waiting period for new hires. It can range from none to several months and may vary by benefit.
Enrolment window
Employees commonly have 31 days from becoming eligible to enrol. After that they can be treated as late applicants, who may need medical evidence and may have limited coverage.
Actively at work
Plans commonly look at whether an employee is actively at work when coverage starts. Tell the insurer up front about anyone on leave.
Participation
Do all employees have to join?
Often, yes. Participation is commonly mandatory on very small plans, which helps insurers avoid a plan where only the people expecting to claim sign up.
- Where the employer pays the full premium, participation is usually mandatory.
- Where employees share the premium, some plans allow opt-outs, as long as enough eligible employees enrol.
- An employee with comparable health and dental coverage elsewhere, usually through a spouse, can generally waive those two benefits.
- Your contract sets a minimum participation level. If too few employees enrol, the plan may be terminated.
Before You Get Quotes
What should owners decide first?
Four decisions shape every quote, so settle them early. Retirement savings can come later: a group RRSP or DPSP can sit alongside your benefits.
Your budget
Decide what the business can carry every month, in a slow year as well as a good one.
Who is eligible
Define who qualifies, such as permanent full-time staff, and whether there's a waiting period.
Who pays what
Choose how premiums are split. Who pays for disability coverage also affects how benefits are taxed.
What matters most
Ask your team. Drug and dental coverage, income protection and a spending account do different jobs.
Is It Right for You
Who does a small-group plan fit?
A group plan is an ongoing commitment. Premiums recur every month and can change at each renewal.
Often a good fit
- Businesses with two to ten permanent staff and a steady payroll
- Owners competing with larger employers to hire and keep people
- Family businesses that also employ people outside the family
- Teams that want cover for larger claims, not only routine care
When it may not fit
- Mostly part-time, seasonal or short-term staff, who may not meet eligibility rules
- A budget with no room for renewal increases
- An owner with no employees. See CRA's limits on one-person corporations
- A team that can't meet participation rules. A spending account may suit better, though it only pays up to its yearly amount
Common Questions
Questions about small business group benefits
On very small plans, usually yes. The common exception is an employee with comparable health and dental coverage elsewhere, such as through a spouse, who can generally waive those two benefits. Rules vary by insurer and contract.
Often, if you work in the business and the insurer's eligibility rules allow it. CRA generally presumes that a shareholder who can influence business policy receives a benefit as a shareholder unless the facts show otherwise, so keep your coverage in line with what comparable employees receive. Your accountant confirms the treatment.
Premiums are generally a deductible business expense. Employer-paid health and dental coverage is generally not a taxable benefit to employees in Ontario, while employer-paid group life premiums generally are. Your accountant confirms the treatment for your business.
Your number of employees, their ages and roles, and whether they need single or family coverage. A budget range helps too. We'll then quote a few plan designs side by side.
Then the question is usually whether to renew, adjust or move. Our guide to switching group benefits providers explains how to decide, and we can review your plan before renewal.
We work with clients across Burlington, Oakville, Milton, Mississauga and Hamilton. Many first conversations start with a call to 289.339.8100.
Related Guides
Guides that often go together
Health Spending Accounts
How HSAs work, what CRA requires, and the limits for one-person corporations.
Read the guideGroup Benefits Cost
What drives premiums and renewals, and how to control them.
Read the guideGroup RRSP and DPSP
Group RRSP, DPSP and defined contribution pension compared.
Read the guideThis information is general in nature and is not tax, legal, accounting, insurance or investment advice. It is based on current Canadian tax legislation, which can change. Any strategy should be designed and reviewed with your accountant and legal advisors based on your circumstances. Eligibility, participation rules, coverage levels and rates vary by insurer and contract; the group contract governs.
Small business group benefits in Burlington, Oakville, Milton, Mississauga and Hamilton
Discuss Your Plan
Set up a first plan for your team
A short conversation is the easiest way to see whether a group plan fits your team and budget.
Prefer to talk? Call 289.339.8100
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