How do I read a group benefits quote?

A group benefits quote is a per-employee monthly rate for each line of coverage, plus the fine print that decides what you pay next year. How to read one line by line, from a Burlington broker who builds them.

Start with the census, not the price

Every quote is priced off a census: the list of employees with their date of birth, sex, salary, job class, province and whether they have dependants. Two quotes built on different censuses are not comparable, and the quickest way to get a low number is to leave someone out.

Before you compare anything, check that every quote used the same people. If one carrier has 14 lives and another has 12, ask why.

The census mistake I see most often is salaries that are out of date. Life and long-term disability are priced on salary, so a raise that never reached the census means the benefit is wrong on the day of a claim, and the quote was wrong from the start.

The lines, and what each rate means

A quote for a five to fifty person Ontario group will show most of these:

• •Life insurance: priced per $1,000 of coverage per month. Coverage is a flat amount or a multiple of salary, so the cost depends on the salaries on the census and the age of the group.
• •Accidental death and dismemberment (AD&D): also per $1,000. Inexpensive, and often bundled with life.
• •Dependant life: a flat amount for a spouse and each child, at a small flat rate per employee with dependants.
• •Short-term disability (STD): priced per $10 of weekly benefit. Not every small plan carries it; many rely on Employment Insurance sickness benefits, which now run 26 weeks.
• •Long-term disability (LTD): priced per $100 of monthly benefit. The contract wording matters more than the rate here.
• •Extended health: single and family rates per employee per month. Drugs, paramedical practitioners, vision, out-of-country, medical devices.
• •Dental: single and family rates. Basic, major and orthodontic, each with its own percentage and annual maximum.
• •Employee assistance program (EAP): a flat rate per employee.
• •Health spending account, if any: a dollar allocation per employee plus an administration fee.

The four things that change the number without changing the rate

1. 1The rate guarantee. Most first-year quotes hold the health and dental rates for 12 months; after that the renewal reprices the group on its own claims. On a new 10 to 30 person group I push for 16 to 24 months. A low first year with a short guarantee is a different offer from a slightly higher first year with a longer one.
2. 2Pooled versus experience-rated lines. Life, AD&D and LTD are usually pooled across many groups, so those renewals move with the pool. Health and dental are rated on your own usage once the group is big enough. Know which lines will move with you and which will not.
3. 3What is included. A deductible, a co-insurance percentage, a dispensing-fee cap, a paramedical limit combined across all practitioners instead of separate per practitioner. Each lowers the rate and shows up later as an employee asking why their massage was not covered.
4. 4Waiting period and eligibility. A three-month waiting period for new hires and an actively-at-work rule are standard. For a seasonal crew, the layoff and recall rules are the lines to read twice.

Read the disability definition before you read the disability rate

Two LTD quotes can be a dollar apart per employee and be different products. Ask how long "own occupation" lasts before it becomes "any occupation" (two years is common, and the difference matters when a tradesperson can no longer do their trade but could, in theory, do something else), what the elimination period is and whether it lines up with STD or with EI sickness benefits, whether the benefit is a percentage of earnings with a cap that fits the salaries on your census, and who pays the premium.

If the employer pays any part of the LTD premium, the benefit is taxable when claimed. A lot of the industry moves the premium to the employee for that reason. I usually do not, at trades wage levels: the employee gives up real money every pay period to avoid tax on a benefit most will never collect. The contract definition is the thing to fight for.

I had a business owner whose disability plan paid two years under an own-occupation definition. He could not go back to doing what he had done, and the contract was about to decide he could do something else. We pushed the own-occupation period out to five years. The premium difference was small. The wording was everything.

What a fair quote comparison looks like

Line up the quotes in a table: one row per line of coverage, one column per carrier, the same census, the same deductible, the same maximums. Where a carrier quoted a different design, say so in the cell rather than comparing the totals. Then look at three numbers only: the monthly total including RST, the rate guarantee, and the LTD definition.

If one quote is more than about 15% below the others for the same design, ask the carrier what they expect the renewal to look like. A number nobody intends to keep is not a saving.

What group benefits cost per employee in Ontario, with the calculator

Where AEC Benefits fits

I build the quote from the interview, not the other way around. The census goes to multiple insurers with the same design, the quotes come back in one table, and we read them together. If you already have quotes from someone else, send them; a second read costs nothing and usually finds one of the four things above.

What setting up a plan looks like, step by step