Maternity/Parental Leave & Group Benefits

Aug 05, 2014

Many plan sponsors don’t know how to handle group benefits when an employee goes on maternity leave or parental leave. Canadian Labour Standards and Practices outline that an employee on this type of leave should be treated the same as any other regular, active employee. Therefore, the employer is obligated to maintain all benefits that an active employee would be offered. This includes all standard group benefits, such as life, health, dental, and long term disability (LTD) or other disability benefits.

It is important to have LTD coverage because the employee is eligible for LTD benefits in the event that a complication occurs during the pregnancy, or if the individual develops an illness or has an accident while on leave. In fact, evidence shows that a person on maternity leave is actually more likely to claim than an active employee. If the LTD is 100% employee paid, it is crucial that the individual continues to pay the premium for this benefit in order to maintain the non-taxable status of this benefit, should a claim arise. Typically, the employer would obtain premium payments from the employee through a series of postdated cheques.

Regardless if it is the employer or the employee paying for the LTD premium, the employee cannot and should not opt out of this coverage. The only option to avoid premium payment, which is not recommended, is for the employee to request to be removed from the benefits plan. The employee would agree to be taken off the group plan entirely, i.e. for all benefits. TRG Group Benefits strongly recommends against this because it leaves the employee highly exposed, should there be any unforeseen medical situation. However, if the employee insists on being removed from the benefits plan, a signed benefits waiver must be obtained to acknowledge acceptance of any liability.

Should you have any further questions on this subject, contact your TRG Group Benefits Consultant.

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