What Should a Business Owner Really Consider?

For many small business owners, employee benefits become a serious conversation at a familiar point in the growth of the company.

You have built a good team. People are taking on more responsibility. Then an employee asks about dental coverage. Another candidate wants to know what benefits are included. Someone needs physiotherapy or prescription medication and mentions that their previous employer had a plan.

Suddenly, employee benefits are no longer just an HR topic.

They become a business decision.

The question is not simply, “Should I offer benefits?”

A better question is:

“What kind of benefits make sense for my employees, my budget and the stage my business is at?”

That distinction matters.

Workplace benefits are already part of the Canadian employment landscape

In 2024, 66.8% of employees in Canada reported having medical or dental benefits through their main job, according to Statistics Canada. Coverage was more common among full-time and permanent employees.

For a small business competing for experienced employees, that creates an interesting challenge.

Salary will always matter. But when two employment opportunities are reasonably close, employees may also look at what happens beyond the paycheque.

Will my prescriptions be covered?

Can my children get dental care?

What happens financially if I am unable to work because of an illness or injury?

Is there support available if I am struggling with stress or mental health?

These are very practical questions for an employee and their family.

A group benefits plan gives an employer another way to address some of them.

What can an employee benefits plan include?

There is no single employee benefits package that every company needs.

Depending on the insurer, size of the business, plan design and budget, a group plan may include:

• Extended health coverage, including eligible prescription drugs and certain paramedical services
• Dental care
• Life insurance
• Short-term or long-term disability coverage
• Critical illness or accident-related benefits
• Vision care
• Employee and Family Assistance Programs
• Mental health support
• Health Spending Accounts or other flexible benefit options

The important part is not trying to include everything.

It is deciding which benefits employees are most likely to value and which risks the business wants the plan to address.

For example, a five-person technology company with relatively young employees may have different priorities from a construction company, professional services firm or business with an older workforce.

Why I would not look at benefits simply as an employee “perk”

Free lunches are perks.

A benefits plan is different.

Consider disability coverage. If an employee becomes seriously ill and is unable to work for several months, the issue is not whether they can get a discount somewhere. Their employment income may have stopped while their mortgage, rent, groceries and other household expenses continue.

Or consider prescription drugs, dental treatment, physiotherapy or mental health counselling. These are expenses employees and their families may genuinely encounter.

That is why I think benefits are better viewed as part of an employer’s overall compensation and risk-management strategy rather than simply another employee perk.

There is also a broader workplace issue.

Manulife’s 2025 Wellness Report, based on responses from 4,700 employees across 159 Canadian organizations, found that surveyed employees reported an average of 46 days of lost productivity annually. Four out of five reported at least one work-related mental-health risk factor, while 57% said they experienced burnout some or much of the time.

A benefits plan cannot solve every workplace problem. Culture, workload, management and working conditions matter enormously.

But appropriate health, disability and mental-health resources can form part of the support system.

What does Manulife offer for businesses?

For businesses where I am helping arrange group benefits, Manulife is one of the group-benefits providers I work with.

Manulife identifies its small-business group benefit solutions as being designed for companies with 2 to 50 employees. For organizations with more than 50 plan members, it offers customizable group benefit plans.

Depending on the plan selected, businesses can look at combinations of health, dental, insurance and other employee-support benefits.

One area that has become increasingly relevant is mental-health support.

For example, Manulife’s Employee and Family Assistance Program, where included in the plan, can provide eligible members and family members with confidential short-term counselling and other support relating to health, family, work, financial and legal concerns. Manulife states that its EFAP provides access to support 24 hours a day, 365 days a year.

Again, the availability, limits, exclusions and cost of individual benefits will depend on the specific plan.

That is why I would not start by asking, “What is Manulife’s best package?”

I would start with the business.

Start with the business before designing the benefits

Suppose a business owner tells me:

“I have eight employees and I want to provide benefits.”

That is only the beginning of the conversation.

I would want to understand how many employees are eligible, whether they are full-time or part-time, whether dependants should be covered, what employees currently have, what the employer can reasonably spend and which types of coverage matter most.

Then we can look at plan options.

This approach also helps avoid a common problem: putting together an impressive benefits package in year one and discovering later that the cost is difficult to maintain.

A benefits plan should ideally be useful to employees and sustainable for the business.

Don’t ignore the tax treatment

There can also be tax advantages associated with certain employee benefits, although the treatment is not identical for every type of coverage.

For example, the Canada Revenue Agency states that when an employer contributes to a qualifying Private Health Services Plan, such as eligible medical or dental coverage, those contributions generally do not create a taxable benefit for the employee.

Other benefits can receive different tax treatment.

Group life insurance, disability arrangements, critical illness coverage and other benefits need to be considered individually. The way a disability plan is funded can also affect the taxation and payroll treatment of benefits.

This is an area where employers should coordinate the plan design with their accountant or tax professional rather than assuming every benefit receives the same treatment.

A bigger benefits package is not automatically a better one

This is where I would challenge the usual benefits conversation.

More coverage sounds better.

But more coverage also costs more.

An employer could spend heavily on benefits employees rarely use while providing inadequate coverage in areas employees actually need.

Mental-health coverage is one example.

A plan may technically say that psychological or counselling services are covered, but the annual maximum matters. Manulife has previously noted that relatively small annual mental-health maximums may pay for only a limited number of therapy sessions.

The same thinking applies to dental maximums, prescription drug coverage, paramedical services, disability definitions, waiting periods and employee eligibility.

The details matter more than the brochure.

What about the cost?

There is no meaningful universal answer such as “employee benefits cost $X per employee.”

The cost can vary based on several factors including the number of employees, employee demographics, benefit levels, deductibles, maximums, employer versus employee contribution structure, previous claims experience where applicable and the type of coverage selected.

That is actually why comparing plans only by monthly premium can be misleading.

A cheaper plan could have lower limits or cover fewer services.

A more expensive plan could include coverage the workforce does not particularly value.

The objective should be finding an appropriate balance between coverage, employee needs and long-term affordability.

Existing benefit plans should also be reviewed

Businesses that already have benefits sometimes assume the work is finished.

It isn’t.

The workforce changes.

Healthcare costs change.

Employee demographics change.

Claims patterns change.

The business itself changes.

A plan that made sense when a company had six employees may not be the right plan when it has fifteen or twenty-five.

That is why an existing benefits plan deserves periodic review just like other significant business expenses.

The review does not have to start with replacing anything.

It can simply ask:

What are we paying for? What are employees actually receiving? What has changed, and does the current plan still make sense?

Sometimes the answer will be that the existing plan is perfectly appropriate.

That is still a useful outcome.

Is a group benefits plan right for every small business?

Not necessarily.

A very new business with unpredictable cash flow may decide that committing to additional recurring expenses is premature.

A company consisting primarily of contractors may have a completely different situation.

Other businesses may want to start with a more modest plan and expand coverage as the company grows.

Employee benefits should therefore fit into the financial realities of the business rather than being added simply because other employers offer them.

But once a company has a stable workforce and is competing to attract and retain good people, it is worth understanding the options.

If you are wondering whether employee benefits make sense for your company, a good place to start is simply understanding the options and the numbers.

This article is for general educational purposes and is not tax, legal or accounting advice. Group benefits are subject to eligibility requirements, plan provisions, exclusions, limitations and insurer approval. Product features and availability can change. Business owners should obtain advice appropriate to their individual circumstances.

Sources

Statistics Canada, Medical or dental benefits coverage, 2024. Statistics Canada source

Manulife, Group benefit plans for small and large businesses. Manulife Group Benefits plans

Manulife, The Wellness Report 2025. Manulife Wellness Report 2025

Manulife, Employee and Family Assistance Programs. Manulife EFAP information

Canada Revenue Agency, Premiums and contributions to insurance plans. CRA insurance-plan tax information