A guide to Understanding Your Employee Benefits

Starting a new job comes with plenty of excitement—and often a lot of paperwork. One of the most important (and sometimes overwhelming) steps is navigating your employee benefits. From health coverage to wellness perks to retirement savings plans, the options can feel like a foreign language, especially if you’re new to the workforce. 

But don’t worry: Understanding your benefits package is easier than it seems, and taking full advantage of what’s offered can set you up for long-term physical, mental and financial wellness!

Support beyond your salary

Employee benefits in Canada include a range of health, financial and wellness-related programs designed to support you beyond your take-home pay. While benefits vary widely depending on your employer, your industry and your job, there are common benefits most Canadian employees will encounter. Take a look:

Health and dental benefits 

Health benefits will cover a range of health-related costs, such as prescription drugs, vision care, massage therapy, physiotherapy and other health services. While your provincial health plan will partially cover some of these costs, your employee benefits plan will extend your coverage, so you pay less out of your own pocket.

Dental benefits cover regular checkups and standard procedures such as fillings and cleanings. Some plans may also cover orthodontic expenses—just be sure to check on the maximum coverage, as many plans cover a percentage of orthodontic costs and/or up to a maximum benefit per covered person.

Wellness benefits, included in many packages, are designed to encourage employees to take charge of their health. These benefits may include coverage for gym memberships, smoking cessation programs, sports leagues and even the purchase of a bicycle to promote a healthy way to get to work. Some employers offer a wellness spending account, which lets you choose from a variety of options up to a limit.

Life and disability insurance

Life and disability insurance are common benefits. Life insurance provides a lump sum payment to your family (or other beneficiaries) in the event of your death, while disability insurance covers your income in the event you’re too sick or injured to work.

Group term life insurance policies tend to be set up in one of two ways. They either provide a set amount of coverage for employees (for example, $10,000) or are based on how much an employee earns (for example, one, two or three times the annual salary). You can typically opt for more life insurance coverage if you wish, which you would pay for via a monthly premium.

Employee health benefits packages typically offer two types of disability coverage: short-term and long-term. 

Short-term disability (STD) coverage is intended to replace your income should you become temporarily unable to work due to illness or injury, typically up to six months. The length of STD coverage will vary depending on your specific plan. 

Long-term disability coverage (LTD) provides you with a percentage of your income if you are ill or injured and unable to work for an extended period. As with short-term coverage, the amount of time you receive LTD benefits varies depending on the plan you have. LTD policies typically offer financial support for at least two years, but some policies offer compensation for much longer periods, such as up to 10 years or until you reach the age of 65.

Retirement and pension plans

Many employers offer some kind of retirement or pension plan beyond standard Canada Pension Plan (CPP) contributions. (CPP contributions are compulsory for all working Canadians ages 18 to 70. You and your employer automatically pay into this joint federal and provincial retirement program through paycheque contributions.)

With these group retirement or pension plans, your employer—or you and your employer—regularly contributes money to the plan. When you retire, you’ll receive an income from the plan. 

In Canada, there are two kinds of plans: defined contribution and defined benefit. While one isn’t necessarily more beneficial than the other, the defined contribution plan requires more active participation by you to secure a retirement income from your company.

• With a defined contribution plan, you and your employer both pay into the plan, and the money is invested into financial products on your behalf. When you retire, you have a few options on how to manage the money from your plan. The defined contribution plan is far more prevalent than the defined benefit plan.

• With a defined benefit plan, your employer promises to pay you a regular income after you retire.   

Retirement and pension plans offered by your company provide excellent opportunities to save for your future. Companies often provide matching programs—they match a certain amount or percentage of your contribution—which helps your savings grow faster. And, because your own contributions come right off your paycheque, saving is effortless; many employees don’t even notice the contribution.

Time off 

Time off is, of course, another important element of your employee benefits package! While vacation time in Canada is at least 10 days per year, every employer can offer more vacation time than this. The amount of time often increases with seniority and/or length of employment. Your amount of vacation time may even be a point of negotiation before you sign your employment contract.

Time off also encompasses statutory holidays, which are days you are entitled to take off with regular pay. These holidays vary by province, but all employees have a set number of paid statutory holidays per year. 

Parental benefits

While Canadian employers are not required by law to provide financial support during maternity or parental leave, many companies choose to offer top-up benefits to supplement Employment Insurance (EI) benefits. In some cases, the top-up brings the employee’s income up to 100% of their salary—but it’s important to note that the amount and duration of top-up benefits can vary widely. For instance, some employers may provide top-up benefits for a portion of the leave, such as the first 12 weeks, while others may offer it for the entire leave period.

Child care, discounts and more 

Depending on how robust your company benefits package is, you may be able to take advantage of other, less standard (but increasingly common) benefits, including child care assistance, professional development top-ups, and discounts on certain products and services. It’s worth reading your full benefits package to see where you may be able to save money on either life’s essentials or hard-earned luxuries.

When your partner has coverage elsewhere

Does your spouse or partner also have employee benefits through their company? If so, it may not make sense to pay for double coverage. If opting out of one plan can save you money—while you remain sufficiently covered—it’s worth looking into. 

Keep in mind, sometimes employees are allowed to combine coverage across two separate plans, but it’s not always the case. And if one plan covers 80% of a physiotherapy appointment, for instance, the second plan wouldn’t pay more than the remaining 20%. So, as you look at both plans, compare the cost of your contributions to the benefits you’re ultimately receiving.

Your employee benefits package is an important part of your total compensation. Take the time to review it carefully so you can maximize its value and understand your options. For example, check whether you can pay a premium for higher coverage, consider any tax implications and be aware of coverage limits. By taking these steps, you can make informed decisions that support your health, your finances and your career