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Employee benefits for dependent children – what’s covered?

By: Benefits by Design | Tuesday August 20, 2024

No one ever said having dependent children was cheap. In fact, it’s estimated that it costs close to $300,000 to raise a child in Canada today. Employee benefits can offset certain costs and help both parents and children alike. We’ll define what constitutes a dependent child in group insurance, and what specific benefits children can access coverage under.

Definition of dependent children

A dependent is someone who relies on another person, usually a spouse or child, for financial support.

Specifically for group insurance, a dependent child is defined as a biological child, stepchild, legally adopted child, or legal ward of the insured employee who must be:

living with the employee (at least part-time) and depend on them financially;

considered a dependent under the Income Tax Act, meaning the employee must claim them on their income tax as such;

under the age of the definition of dependent according to the benefits schedule (the age may vary from carrier to carrier, but it usually ranges between 18 and 21);

living in Canada to qualify for benefits.

However, children who are temporarily residing outside of Canada because they are attending an accredited academic institution will also be eligible for benefits as long as they are covered under their provincial health care plan.

What benefits do dependent children have access to?

Once the above conditions have been met, dependent children have access to a plethora of employee benefits through their parent’s employee benefits plan. Not all of the following benefits will be offered, but if they are, the child can be added for coverage. As with an employee, it’s important to add any new children (birth, adoption, marriage) within 31 days to avoid them becoming late applicants.

Dependent life insurance

Provides a tax-free lump sum for funeral expenses to the employee in the unfortunate event of the covered child’s death. While this isn’t necessarily for the dependent child, it helps the family.

Dependent Life Insurance – What is it, and Should You Have it?

Health care

Medical services and items purchased for the child are eligible expenses under family health care coverage. This benefit can be extremely important for families with children who have health issues and may be on expensive prescription medications or require other medical supplies. Dependents with sports or other injuries can also take advantage of physiotherapy or massage coverage.

The premium for family coverage is more than the cost for single coverage. Part of this increase is usually passed on to the employees, since many companies utilize cost-sharing. This means the employees pay part of the health and dental premiums.

Dental care

As with health care, this benefit is extremely important. However, since dental care is needed for all children, regardless of their health, this is perhaps the most used benefit by dependent children. “A Harvard study found that 88% of employees listed health and dental as the most important benefit of the company when choosing a job.”

The premium for dental care is the same as health care, meaning family coverage will cost more.

Health care spending account (HCSA)

A health care spending account (HCSA) can be used to cover all medical expenses listed by the CRA. It can be a great top-up if employees already have health and dental care coverage, and they have reached their maximums or require something that is excluded or limited. Some employers only offer a HCSA, in which case having the coverage is even more important. Bear in mind that not all employers offer coverage for dependents. Some only provide coverage for the employee, regardless of their family size or situation.

Wellness spending account

A wellness spending account (WSA) is usually just for employees. However, some plans do offer coverage for dependents as well. Oftentimes, childcare costs will be an eligible expense under the WSA, so even if the account doesn’t allow dependents to use it, it can still indirectly cover dependent children.

Diagnostic and specialist access insurance

Diagnostic and specialist access insurance (DSAI) helps covered persons who are in need of diagnostics, such as medical imaging, or have to see a specialist. If the wait is longer than three weeks, the DSAI benefit initiates, and a sooner appointment can be booked.

EAP

Many employee assistance programs (EAPs) offer their services to dependent children of covered employees. These can include online assessments and self-guided support tools, as well as counselling and internet-based cognitive behavioural therapy (iCBT). These can all help with anxiety, depression, and other life challenges they might be experiencing.

It should be noted that not all services are available to all ages. Especially the counselling and iCBT services, which are age limited (often to 15 years, and at the discretion of the clinician, but different carriers may have different age limitations). Teenagers working through physical and mental changes have access to unbiased and confidential support.

Optional benefits

Optional accidental death and dismemberment (AD&D) insurance and optional critical illness insurance can be purchased through some employer plans. If your company is large enough, the insurers will oftentimes offer an open enrolment window, whereby employees and their dependents are automatically approved with no medical evidence.

Overage dependents

Dependent children who are overage but still meet all other criteria of a dependent and are attending full-time studies at a post-secondary institution are still eligible to remain on their parent’s plan.

The insurance company will require some form of confirmation that they are eligible as overage dependents. Otherwise, they will automatically remove dependent children when they reach the age limit for non-students.

Overage dependents also have an age limit – usually up to 25 or 26. This allows students enrolled in post-secondary education soon or directly after high school to access these benefits.