An employee opting out of coverage needn’t be a cause of worry because, in most cases, a benefits plan is too good to pass up and employees will prefer to have access to it if they can.
In general, health benefit plans that are sponsored by employers are an excellent incentive because they draw responsible, quality employees to your company and are used to retain staff. Plus, with health spending accounts (HSA), flexible spending accounts (FSA) and allowance accounts as options available for groups, employees can now use only the benefits they need plus added bonuses, so there’s less reason to opt out.
Though Canada offers medical coverage to help keep its citizens healthy, as much as 30% of health costs remain uncovered by what the government offers. These uncovered expenses include dental care, prescription drugs, vision care, paramedical, mental health support, and special needs services, to name a few.
That is why an employer who offers a benefits program to bridge the gap can be such an attractive prospect to work for. The key is to understand why an employee would choose to opt out because then employers can select better plans that work for both them and their employees.
Two reasons why employees may decide to cancel or opt out of coverage
In Canada, the insurance guidelines require employees to participate in the health benefits offered by their employer. Though employees are allowed to purchase their own private health coverage to supplement what they have, and to utilize their government coverage as it applies, they must still participate in the company plan if it is offered. In fact, there are only two instances where insurance rules allow employees to opt out:
- Disability or maternity leave– If an employee cannot be physically present at work due to a leave of absence, they can opt out of their coverage during that time. Of course, in the event that they return to work, they must resume their coverage and contributions accordingly.
- Spousal or common-law coverage – Employees who are married, whether it be by common-law, to a person of the same sex, or to a person of the opposite sex, may have a spouse who is employed with a company that also offers employer-sponsored health benefits. If this employee’s spouse pays less money and has a better coverage, then they may opt out of their own company’s plan in favor of the benefits offered by their spouse’s employer.
While these options are available to employees, and desirable in some cases, most employees will not want to opt out of their employer sponsored coverage if it offers benefits that provide additional coverage.
Benefits offered by employers put employees at an advantage
Health coverage offered by the Provinces do offer significant help, but the coverage is still limited and may have significant deductibles based on household income. This means that employees who don’t have coverage from their employers are at a disadvantage. Though they may receive a higher salary, they are losing out on extended healthcare. Reimbursements for health and dental claims are a non-taxable benefit when received by the employee.
The average household in Canada spends $2,000 on health care costs, and $4,000 on private insurance premiums. Employer sponsored plans are more affordable than plans you can pay for on the retail market, and they cover current medical conditions. Plans purchased personally will exclude conditions the individual usually has and will require a medical exam to determine basic eligibility.
Employees are covered for not only themselves, but also their spouses and dependents, too. Overall, employer sponsored health coverage is the way to go, and while some employees will have the option to opt out, most will prefer to keep their coverage, especially with flexible plans that offer them choice.