One of the first questions small business owners ask when considering employee benefits is simple: How much is this going to cost my business?

For many Alberta employers, offering health and dental benefits can seem like an expensive undertaking, especially when operating with a small team. However, group benefits may be more affordable than many business owners expect, even for companies with just two employees.

The cost of an employee benefits plan depends on several factors, including the number of employees, their ages, family coverage requirements, the level of coverage selected, and the insurance structure.

The good news? Small businesses don’t necessarily need a large workforce or an enormous budget to provide meaningful benefits.

Let’s break down what Alberta employers should know about the cost of employee benefits.

1. What Is the Average Cost of Employee Benefits for a Small Business?

There is no single price for a small business employee benefits plan. Every business has different employees, coverage requirements and budgets.

A basic health and dental plan will generally cost less than a comprehensive plan that includes enhanced prescription drug coverage, higher dental maximums, paramedical services, life insurance and disability protection.

For small businesses, monthly premiums are typically calculated based on:

• Employee age: The ages of covered employees can influence insurance premiums.
• Family status: Single, couple and family coverage can have different costs.
• Number of employees: The size of the group and the insurer’s rating structure can influence pricing.
• Coverage levels: Higher reimbursement percentages, maximums and annual limits generally increase premiums.
• Additional benefits: Life insurance, accidental death and dismemberment, short-term disability and long-term disability can add to the overall cost.
• Plan design: The combination of coverage options selected determines the final premium.

Rather than relying on an industry average, the best way to determine what your business will pay is to request a quote based on your actual employee census and desired coverage.

2. Can a Small Business With Just 2 Employees Afford Group Benefits?

Absolutely. You don’t need 20, 50 or 100 employees to explore group benefits.

Many small business owners assume that employee benefits are reserved for larger companies. However, group insurance options are available to qualifying small businesses with as few as two employees.

This makes it possible for smaller Alberta employers to compete for talent and offer benefits that employees increasingly value.

For a business with two to ten employees, the key is choosing a plan that balances meaningful coverage with a manageable monthly expense.

A smaller business might start with:

• Prescription drug coverage
• Basic dental coverage
• Vision care
• Paramedical services
• Emergency travel coverage

Additional benefits can also be considered depending on the company’s budget and priorities.

The goal isn’t necessarily to purchase the most expensive plan. It’s to find coverage that makes sense for both the employer and employees.

3. What Types of Employee Benefits Affect the Cost?

Not all group benefits plans are created equally. Employers can often customize their coverage depending on the insurer, available products and eligibility requirements.

Here are some of the most common benefits that influence the overall premium.

Health Insurance

Health coverage helps employees pay for eligible medical expenses that aren’t fully covered by provincial healthcare.

Depending on the plan, this may include:

• Prescription medications
• Paramedical practitioners such as massage therapists, chiropractors and physiotherapists
• Medical equipment and supplies
• Vision care and prescription eyewear
• Hospital accommodation
• Emergency out-of-country medical coverage

The reimbursement percentage, annual maximums and individual coverage limits all influence the cost.

Dental Insurance

Dental coverage is another major component of most employee benefits plans.

Common coverage includes:

• Routine examinations and cleanings
• Basic dental procedures such as fillings
• Major restorative services such as crowns and bridges
• Orthodontics, where included

Employers can select different coverage levels depending on the plan available. Higher annual maximums and more comprehensive coverage generally result in higher premiums.

Life Insurance

Group life insurance provides a financial benefit to an employee’s designated beneficiary if the employee passes away while insured.

Employers can select coverage amounts based on the available plan options. Additional dependent life insurance may also be available.

Short-Term and Long-Term Disability

Disability insurance helps protect employees if they become unable to work due to an illness or injury.

Short-term disability can provide income replacement during shorter periods away from work, while long-term disability is designed to provide financial protection when an employee cannot return to work for an extended period.

These benefits can increase the overall plan cost but provide important financial protection for employees and their families.

4. Who Pays for Employee Benefits?

One of the biggest decisions employers make is determining how much of the monthly premium they will contribute.

There are generally three approaches:

Employer-paid benefits: The business pays 100% of the monthly premium. This provides employees with a valuable benefit at no direct premium cost to them.

Shared-cost benefits: The employer and employees split the monthly premium. For example, an employer might contribute 50%, 75% or another agreed-upon percentage.

Many small businesses choose a shared-cost arrangement to make benefits more affordable while still providing a meaningful contribution toward employee coverage.

The right approach depends on your budget, company culture and recruitment goals.

5. Are Employee Benefits Tax Deductible for Alberta Businesses?

For many employers, the cost of providing employee benefits can also offer tax advantages.

Employer-paid premiums for qualifying employee health and dental benefit plans are generally deductible business expenses when incurred to earn business income and subject to applicable tax rules.

In addition, employer-paid premiums for qualifying group sickness or accident insurance plans may have different tax treatment depending on the coverage.

It’s important to understand that not every benefit is treated the same way for tax purposes. Life insurance premiums, disability premiums and other coverage types can have different tax implications.

Employers should consult their accountant or tax professional to confirm how their specific benefit plan contributions should be treated.

6. Pooled vs. Experience-Rated Plans: Does It Affect the Cost?

Another important consideration for small businesses is how their benefits plan is priced and renewed.

Two common approaches are pooled and experience-rated insurance plans.

Pooled Benefits Plans

With a pooled plan, claims risk is shared across a larger group of insured members rather than being based solely on the claims experience of an individual small business.

This can provide more predictable renewal pricing because one company’s claims experience is less likely to directly determine its renewal increase.

For small businesses, this can make budgeting easier.

Experience-Rated Benefits Plans

With an experience-rated plan, the group’s own claims experience plays a greater role in determining renewal pricing.

These plans can sometimes offer lower initial premiums, but employers should understand that higher claims experience may contribute to larger renewal increases.

This means a business could enjoy a competitive starting rate but face more significant cost fluctuations over time.

Neither structure is automatically better for every employer. The best choice depends on the company’s priorities, tolerance for renewal fluctuations and overall budget.

7. How Can a Small Business Keep Employee Benefits Affordable?

Providing employee benefits doesn’t mean choosing the most comprehensive plan available.

There are several ways employers can manage costs while still offering valuable coverage.

Start with essential coverage.

Consider prescription drugs, dental, vision and paramedical coverage before adding more expensive optional benefits.

Choose appropriate reimbursement levels.

A plan with 80% reimbursement may provide meaningful coverage without the cost of a plan offering 100% reimbursement.

Review annual maximums.

Higher annual dental and paramedical maximums generally increase premiums. Select limits that make sense for your workforce.

Consider pooled pricing.

Predictable renewals may be important for businesses that need to maintain consistent operating expenses.

Determine an affordable employer contribution.

You don’t necessarily have to pay 100% of the premiums to offer a valuable benefits package.

Review your plan regularly.

As your business grows, your employee demographics and coverage requirements may change. Reviewing your plan helps ensure it continues to meet your needs.

8. Why Employee Benefits Can Be Worth the Investment

It’s easy to look at employee benefits as another monthly business expense. However, there is more to consider than the premium itself.

A competitive benefits package can help small businesses:

• Attract qualified employees.
• Retain experienced staff.
• Improve employee satisfaction and morale.
• Provide financial protection during illness or injury.
• Demonstrate that the business values its employees.
• Compete with larger employers when recruiting.

For a small business, retaining a valued employee can be significantly more beneficial than constantly recruiting and training replacements.

Employee benefits are not simply an expense. They can be an investment in the long-term success of your business.

9. How Do You Get an Employee Benefits Quote in Alberta?

Getting started is often easier than business owners expect.

To prepare a group benefits quote, insurers generally require information about the employees who would be eligible for coverage.

This commonly includes:

• Number of eligible employees
• Employee ages
• Gender, where required for rating
• Family status (single, couple or family)

You can then explore different coverage levels and determine which options fit your company’s budget.

For qualifying small businesses, a quote can help you understand the actual monthly cost before making any commitment.

Looking for Affordable Employee Benefits for Your Alberta Business?

Whether you have two employees or ten, there may be an employee benefits solution that fits your business.

At Alberta Blue Cross®, small businesses can explore group benefit options designed to provide health and dental coverage while balancing affordability and flexibility.

You don’t need to guess what employee benefits will cost. Get a quote based on your actual workforce and see what options are available.

Have two or more employees?

Let’s explore what employee benefits could look like for your business.

Feel free to reach out to request a free, no-obligation employee benefits quote and discover how affordable coverage could be for your team.

Serving small businesses throughout Red Deer and Central Alberta.