Employer contributions to a group sickness or accident insurance plan are a taxable benefit to employees

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As previously reported, employer contributions to a group sickness or accident insurance plan will become a taxable benefit to employees beginning January 1, 2013.  This legislation change was included in Bill C-45: A second Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.  Known by its short title as “Jobs and Growth Act, 2012” it received royal assent on December 14, 2012 and is now law.  

What is affected by this new law?

Contributions paid by employers after March 29, 2012 for 2013 group sickness or accident insurance plan coverage in place on or after January 1, 2013 will be a taxable benefit to employees.  Employer contributions paid towards wage loss replacement plans, such as short-term and long-term disability plans are not impacted by this legislation.   However, employer contributions paid towards 2013 coverage like accidental death & dismemberment and critical illness insurance are affected.   

Sun Life is working with plan sponsors

Sun Life has modified the data we provide to our plan sponsors to reflect the above legislation.  We have contacted the plan sponsors affected and are working with them on the required modifications in support of the new legislation.

Questions?

Please contact your Client Service Administrator at 1-877-786-7227.