Dividends are calculated in accordance with the by-laws of the Beneplan Co-operative, as created by the Board of Directors, comprising of member-owners, also referred to as plan sponsors. All members are entitled to view these and request a recent copy.
The dividend formula over the years has evolved to include feedback from plan sponsors, advisors, board members, and management. It is truly the most transparent and equitable approach to refunding premiums on fully-insured Canadian health & dental plans.
Dividends = Health and dental premiums under the stop loss, minus claims under the stop loss, minus fees and taxes, plus the life insurance refund, plus the provincial tax rebate, plus Reformulary rebate where applicable, minus an amount to reduce deficits, minus IBNR minus mandatory patronage dividend tax withholding.
Groups who end the year in a deficit are not eligible for patronage dividends. The purpose of the co-operative is not to be an opaque subsidy model -- the purpose is to drive down the cost of group benefits, reduce risk, and return excess surplus to plan sponsors promptly.
Feel free to reach out to your benefits advisor if you have any questions.
The Canada Revenue Agency requires that dividend income from co-operatives be subject to a mandatory withholding tax of 15% for amounts above $100. You can report this on your next corporate tax return (T2) on lines 880 and 881, so that you are not double-taxed. You will also receive a T4A statement later this year. Charities or not-for-profit organizations are exempt; if you feel that you have been taxed in error, please email mmiric@beneplan.ca or call 1-800-387-1670 x231. With respect to Partnerships, Beneplan is not able to split the T4 or dividend into multiple amounts; Beneplan is required to pay dividends in line with the master policy holder on file. If you have a Partnership and would like your dividend paid to a different company, such as a management firm or holding company, please contact us to change your master policy holder on file.
‘Deficit Reduction’ is an amount which all member-owners contribute towards deficits incurred by other member-owners. As you have elected to have a fully-insured plan as part of a co-operative, your choice means that there is mutual protection for member-owners who have a deficit as due to unexpected health claims. This is a mutual benefit to all, because if you had been in deficit, you would not have to pay that amount back – the co-operative would absorb that on your behalf. If you object to this deduction, we recommend that you discuss self-insurance, also known as ASO (administration services only) with your advisor.
If your drug plan uses Reformulary, you are eligible for a rebate. Reformulary Group has negotiated volume rebates directly with drug manufacturers. If you would like to participate in this next year, please contact your advisor.
Life Insurance and Disability refunds are added to the calculation, if applicable. Please check with your advisor to see if your carrier subscribes to this.