Employee Benefits 101

For most SMB owners, benefits feels like a topic that belongs to bigger companies, too expensive, too complicated, too HR-coded. That instinct is costing them people. Benefits aren't a perk; they're a retention strategy and a recruiting filter, and the cost-to-value math is more favourable than most owners realize.

Our Jan 9 Community Connect was a deep-dive on benefits design with guest expert Stacey Aarssen, founder of Benefits Redesigned, who's spent two decades helping Canadian SMBs build benefits programs that actually work for both the team and the P&L.

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Good employees don't leave for an extra dollar an hour. They leave when nobody's looking after them.

This session worked through the practical framework for designing a benefits package that fits an SMB's budget, supports retention of the people you actually want to keep, and doesn't accidentally hand you a plan you can't afford in year three.

Almost every SMB benefits package can be described by four building blocks. You don't have to do all of them at once, but knowing the menu helps you sequence the rollout.

• Extended health and dental. The most commonly expected tier. Prescription drug coverage, paramedical (physio, massage, mental health), vision, dental cleanings & basic restorative.
• Life and disability insurance. Group life (often 1–2× salary) and long-term disability. Inexpensive at the SMB end, hugely meaningful when someone needs it.
• Retirement contributions. Group RRSP match (typically 3–5% of salary), or for slightly larger employers a defined contribution pension. Strong signal that you're investing in long-term staff.
• Flex / wellness / HSA. Health Spending Accounts and lifestyle accounts give employees control over how the dollars get spent. Often cheaper than a fully traditional plan and a stronger fit for diverse teams.

The choice that trips up most first-time benefits buyers:

• Traditional group plan, predictable monthly premium, defined coverage tables, insurance-company-administered. Costs are largely fixed regardless of usage. Best when your team is large enough to spread risk (typically 5+ employees).
• Health Spending Account (HSA), a tax-free wallet per employee that they spend on any CRA-eligible medical/dental expense. You set the annual amount. Cost = what gets used (plus admin fee).
• Hybrid, a smaller traditional plan covering core categories, topped up by an HSA for flexibility. Often the best of both for SMBs once they're past 8–10 employees.

For under 5 people, an HSA-only plan is usually the right starting point. Predictable, simple, and your money goes directly to your team.

Survey data is interesting, but real claims data tells a different story. The high-use categories across SMB plans:

• Dental, by far the most-used line on most plans
• Paramedical, physio, massage, mental health (growing fast)
• Prescription drugs, heavy use among older employees
• Vision, modest, predictable

If you have to make tradeoffs, fund the lines people use. A plan with rich life insurance but skinny dental will feel hollow.

Rough SMB ranges to set expectations (Canadian, varies by province, age mix, and plan design):

• Basic traditional plan (health + dental, modest life/LTD): ~$100–$160 per employee per month
• Mid-tier plan (richer paramedical, vision, better drugs): ~$160–$260 per employee per month
• HSA-only: whatever annual amount you set per employee (commonly $500–$2,500 per year), plus 5–10% admin
• RRSP match: budget your match percentage × salaries (3% of payroll is the most common starting point)

For a healthy SMB, a respectable benefits package typically lands at 4–8% of payroll. Compare to the cost of recruiting and onboarding a replacement when a key person leaves, usually 30–50% of their annual salary, and the math gets clear quickly.

• Buying without input. Asking employees what matters to them before designing the plan changes adoption and gratitude. It's a 30-minute conversation.
• Overselling at launch, underdelivering later. Don't launch with a rich plan you can't sustain. Renewal increases hurt more than they help.
• Quiet benefits. If employees don't understand what they have, they don't value it. Total compensation statements (annual one-pager: salary + employer benefits + RRSP match + paid time off) reframe perception.
• Working with a generalist broker. Find one who specializes in small employers. The plan design will be tighter and the renewal advocacy stronger.

Benefits are about signal as much as substance. A well-designed package tells your team: I'm in this with you for the long run. That message lands.