Employee Benefits for Canadian Nannies, Housekeepers & Caregivers
By: Yafa Sakkejha
Tags: Employee Benefits, Caregivers, Moms, Dads, Taxes

I’ve had a few friends ask me about this, so thought I’d consolidate my thoughts in a single post.

A number of our clients at Beneplan have revealed to us that they’ve added the boss’s caregiver to their payroll and now wonder about adding them to their benefit plan.

There are a number of pros to providing a caregiver with Canadian employee benefits:

In a labour market where it seems like “we need them more than they need us,” it’s a great way to distinguish yourself as an employer of choice.

as an employer of choice. You will eventually observe them in their physical job and empathize for their sore feet, lack of a dentist, or medicine needed. Your heart will tell you to help subsidize these costs.

for their sore feet, lack of a dentist, or medicine needed. Your heart will tell you to help subsidize these costs. Instead of giving them cash from your hard earned after-tax dollars, you can deduct a Private Health Services Plan as a business expense from a Canadian sole proprietorship. Further, the dollars the employee receives are tax-free to them, therefore allowing them to bypass unnecessary income taxes if the money is going straight to medical expenses.

from a Canadian sole proprietorship. Further, the dollars the employee receives are tax-free to them, therefore allowing them to bypass unnecessary income taxes if the money is going straight to medical expenses. Benefits through a third party are a clean way of letting someone else be the bad cop with your budget (otherwise, where do you draw the line?) without getting into the detail of their private medical details.

with your budget (otherwise, where do you draw the line?) without getting into the detail of their private medical details. The perceived value of benefits is usually greater than the discrete costs.

The simplest and most cost effective way to provide a starter benefit plan is to add a singular health spending account with the amount you’re comfortable budgeting.

Here’s how you’d go about it:

It’s best to set up a separate plan or division from your firm’s benefit plan. This is because your firm may be designed for a different type of worker and the coverage may not be a fit for the caregiver.

Find a provider of Canadian health spending accounts or benefit plans.

Provide your budget and desired start date.

and desired start date. Consider giving benefits only after the probation period is over, for example, three months after the hire date.

is over, for example, three months after the hire date. Provide the enrolment form to the caregiver and have them submit it to you. Always keep a copy on file for your records.

for your records. If you have multiple caregivers , it’s best practice to allow them the same opportunity to have benefits. It’s understandable if you want to provide different tiers/classes of benefits, but make sure it’s only based on non-discriminatory factors such as tenure or occupation — not based on gender, age, perceived disability, family status, or other protected parts of the Canadian Charter of Rights and Freedoms or provincial human rights codes.

, it’s best practice to allow them the same opportunity to have benefits. It’s understandable if you want to provide different tiers/classes of benefits, but make sure it’s only based on non-discriminatory factors such as tenure or occupation — not based on gender, age, perceived disability, family status, or other protected parts of the Canadian Charter of Rights and Freedoms or provincial human rights codes. It’s best practice to cover the entire premium. I don’t recommend that you ask the caregiver to contribute a portion of their pay to the plan. It may leave a bad taste in their mouth, the caregiver can’t deduct the full amount from their taxes, and you won’t be saving a significant amount. Either provide the plan or don’t.

Termination of Benefits

Based on Canadian employment standards, here are the Do’s and Don’ts of terminating a benefit plan:

DO

DO remember to terminate the benefit plan if your caregiver quits. The plan should end on their last day at work.

DO terminate the plan if you have let them go. The plan should end at the end of their notice period. Ex) If you give them two weeks’ working notice, the benefits should end on their last date worked. If you give them two weeks’ paid notice, end benefits on their last day being paid.

DON’T

DON’T terminate their plan arbitrarily without giving them prior written warning. Just like you wouldn’t let them show up to work with the door locked without any notice, don’t let them show up to the pharmacy with a prescription they can’t fill.

DON’T terminate their plan if they go on vacation, sick leave, parental leave, or any other protected leaves under Canadian employment standards (like Ontario’s ESA). This is deemed discriminatory.

DON’T terminate their plan if they leave the country but are still your employee.

ABSOLUTELY DO NOT

ABSOLUTELY DO NOT ask them or the benefits provider what they claimed.

DO NOT ask to see their receipts.

DO NOT prevent them from adding their legal dependants to the plan. It’s none of your business who in their family is sick or healthy.

Individuals have a right to the privacy of their personal health information.

That’s the basic nuts & bolts — feel free to reach out if you have any questions — yafa@beneplan.ca.