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Employer Sponsored Pension
Employer pension plan basics
Defined contribution pension plans
Group Registered Retirement Savings Plans (Group RRSPs)
The following list represents a reminder of items that could have a potential impact on your group benefits program. The list is broken down into Four Main Areas:
- Are Life, Accidental Death & Dismemberment, Critical Illness and Dependent life taxable benefits if paid by the employer?
- Is Long Term Disability set up to be employee paid so that the benefit is non-taxable; or is a taxable benefit recorded each month if paid by the employer so that the benefit is tax-free?
- Is cost-plus claims avoided so to avoid potential double taxation (see Spicy Sports – tax court of Canada June 2004)?
Liability and HR Issues
- Is there a documented Corporate Policy outlining benefits for retired employees?
- Is there a documented Corporate Policy outlining entitlement to benefits for disabled employees? For example, “After twenty-four (24) consecutive months of being on the Long Term Disability benefit, all Health and Dental benefits cease. During that time the employee will continue to be responsible for their portion of the premium if employee paid. In the event that the employee does not pay their portion, their coverage will lapse for non-payment of premium.”
- Is there a documented Corporate Policy for the length of time that an inactive employee would be carried on the benefits plan?
- Is there a documented Corporate Policy stating that when Employer’s terminate employment and want to continue benefits for employees for a period of severance or goodwill? All severances/benefits continuation should be presented to the carrier in advance to obtain their approval. In many cases Employer’s indicate that they will continue benefits but they do not differentiate between Extended Health Care/Dental and LTD which of course is an issue. An employee must be active at work to be entitled to participate in the LTD program.
- Is income information for the participant current if pooled benefits are offered such as LTD or life if a function of income (eg. One times earnings)?
- Are employees that are eligible for coverage above the non-evidence maximums aware of how to apply for this additional coverage and have they done so and what are the results and has this been documented?
- If an employee has opted out of Health or Dental due to spousal coverage, did they sign a Waiver and confirm carrier and policy number of current coverage?
- Are all employees enrolled in the mandatory benefits subject to the contracts participation requirements?
- Are all eligible employees (after the probationary period) enrolled within 31 days to avoid the LATE ENROLMENT RISKS? This includes status changes as well (eg. marriage, divorce, birth). Failure to inform the carrier within 31 days will require medical evidence and could result in higher premiums or no coverage available.
- Is there an administrative error rider to the Corporate Liability Insurance program to cover the Employer for things like forgetting to enroll someone who is entitled to benefits that was accidentally not enrolled due to clerical error of the Employer? This is a rider that could be added to your general business liability policy.
- Is the benefit booklet up to date and accurately reflect the terms of the benefits plan and that all changes are effectively communicated to the employees in a timely manner?
- Is there a documented Corporate Policy that deals with the Employer’s Liability when the Company wishes to change a provision or provider of the Insurance Policy?
Privacy and Confidentiality Issues
- The Personal Information Protection and Electronic Documents Act (PPEDA) came into effect on January 1, 2004 and is designed to protect a person’s privacy. This restricts the information that may be reported to the employer
- Claims should be sent directly to the insurer or paid through the direct card. Claims SHOULD NOT BE SUBMITTED TO THE EMPLOYER or maintained in an employee file.
- Are all salary changes and terminations reported promptly?
- Are all premiums up to date under a fully insured plan, and an adequate claim reserve under an ASO plan. Premiums that are in arrears or a negative claim reserve could result in claim reimbursement suspension and make the employer in fact the insurer.
- Are benefits continued during maternity/paternity leave as required by legislation
- Are the original enrolment forms maintained and any changes and termination forms
- Is there a documented Corporate Policy that deals with insuring medical coverage for dependents who attend school outside of Canada?
- Ensure all over age dependents who may still qualify for benefits complete the proper paperwork
- Ensure all participants have a provincial health plan as the first payor.
- Have you reported your advisor/insurer any absences from work as a result of a potential WSIB claim or LTD claim (usually after the first month of being absent from work)
- Given current Global Political concerns, is there a documented Corporate Policy that instructs the employees to review the Insurance Company provider website regarding unappreciated exclusions for out of country medical coverage?
- Some group plans have stability conditions that can leave an employee with no coverage while travelling outside of the country. A reminder should be sent to all staff to call the insurer prior to leaving when in doubt.
This list is all encompassing and is not tailored strictly for your Plan. We would be pleased to discuss these with you in further detail as applicable. This checklist is for reference purposes only and is not intended as legal or tax advice.
CEBS (Certified Employee Benefit Specialist)
The premier designation in benefits and pensions, considered the standard of excellence in the industry. There are only 5,147 CEBS designees in Canada.
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