Impact of Minimum Wage on Employee Benefit Plans
Recent changes to Ontario’s minimum wage may have an effect on the coverage amounts provided to plan members under group benefit programs and the premiums that are due to the provider.
Benefit plans providing coverage based on a plan member’s earnings (such as Life, Accidental Death & Dismemberment, Short and Long Term Disability), very often result in an adjustment in coverage as a result of an increase in earnings.
Now is the time to update employee salaries
Any adjustments to income based coverage will also require an adjustment to the premiums due. Please ensure that up-to-date salaries and wages are reported to insurance providers and/or ASSOCIUM (where applicable), as soon as possible to avoid inaccurate plan member coverage levels and retroactive premium adjustments. With respect to income based benefits, if an employee goes on a disability leave or passes away, the employee (or beneficiary) will be expecting a claim to be paid based upon the wage the employee was earning prior to the date of the claim. Any increase in wage not reported to the insurer (or ASSOCIUM) could cause a claim to be paid based on an outdated wage rate and shortfalls in paid claim amounts could be the responsibility of the employer.
ASSOCIUM Benefits is a very unique employee group benefits provider, focused on supporting benefits advisors and their employer clients. We provide Advisor and Plan Sponsors with a range of solutions from traditional group benefits to more customized, cost and tax effective employee compensation. Let’s connect to find out how we can help.