New world of health coverage opening up for small and micro-businesses

Ashley Proctor, a Toronto-based artist and entrepreneur, calls it her "passion project." A decade in the making, her vision of a national extended health benefits plan covering self-employed workers, artists, entrepreneurs and small businesses is scheduled to roll out this April.

As founder of the Creative Blueprint and Foundery co-working sites in Toronto (where freelancers, sole operators and small startup teams share space and swap ideas), Ms. Proctor knew that members of these collaborative business communities loved the non-traditional work style. A downside was the prohibitively high cost of buying personal health and dental insurance for themselves and their families.

Ms. Proctor also knew, firsthand, the devastating consequences of having no extended health coverage. Injuries from a serious bicycle accident in 2002 forced her to withdraw from the Ontario College of Art and Design. She lost her student health benefits "just when I needed them most," then lost her job, lost her apartment and lost her car.

"I just thought it wasn't really fair for it to be so precarious," Ms. Proctor said in an interview. She has also heard time and again from employees of large organizations who wish they could strike out on their own, but cannot afford to walk away from their generous benefit packages.

"So I started researching options." In August, 2013, Canada's first Coworking Health Insurance Plan (COHIP) was introduced for people who work out of co-working hubs in Ontario.

"Rather than each worker or each co-working space acting independently, we were able to leverage the power of our collective to secure extremely competitive rates and accessible [group] benefits packages for all of our members in Ontario." Plan members pick and choose the benefits they want – and can afford, said Ms. Proctor, who herself opted for full dental coverage, travel insurance and an extended health plan that includes acupuncture and massage.

When the plan goes national in early April, it will be extended to uninsured workers beyond the co-working sphere.

"I think we are going to be pretty overwhelmed. We are opening COHIP to all collaborative spaces, so the business centre is welcome to join, the artists' studio – which is not typical co-working – is welcome to join," said Ms. Proctor, who spearheaded the initiative on a volunteer basis.

While COHIP aims to cover the micro-business market, human resources consulting firm Aon PLC introduced, on March 21, a flexible benefits plan for small and mid-sized employers with between 50 and 500 employees – a sector that collectively accounts for the bulk of employment in Canada.

"The small to mid-market, from my perspective, has been really underserved. … There's not a lot of choice out there," said Brian Rennie, an Edmonton-based senior vice-president with Aon.

Small organizations do not, on their own, have the buying power to get the competitive rates provided to large employers and have not – until now – had much flexibility in allowing employees to choose the benefits they want or the level of coverage that's right for them, said Aon, which has launched a new program called Aon Choice. Acting as a broker between employers and insurers, Aon says it can use its size to negotiate more affordable rates and a wider menu of benefits for small to mid-sized employers.

"Limited benefit options mean many smaller companies struggle to attract and retain engaged employees," said Christine Lithgow, chief executive officer of Aon Risk Solutions Canada. In addition to greater choice in health and retirement plans, small to mid-sized employers could also offer group rates for home and auto insurance, pet and travel insurance and legal expense insurance, Aon said.

While health and dental plans might not be the most riveting topic to come up in job interviews, small employers that offer those benefits do have a definite recruitment advantage over their competitors – especially in the restaurant industry, where benefit plans are still relatively rare, said Ivan Gedz, co-owner of Ottawa eatery Union 613.

"We are a small shop, 20 to 25 employees, and we offer a joint benefits plan – we pay half and the staff pays half," Mr. Gedz said in an interview. The plan covers dental and prescription drug costs, as well as some coverage for massages and orthotics because his employees "are on their feet all day."

When employees sign on, they tend to stay, he said. "Our turnover is ridiculously low."