Why do benefit plans have a waiting period?

It's helpful to understand that any claims used under a benefit plan are billed back to the plan sponsor during their annual policy renewal. Therefore, benefits companies help curate and enforce rules that employers (plan sponsors) set in order to be prudent with their dollars.

For example, an employer may want to wait until granting access to a perk or benefit, to see if the employee passes their probation period.

While probation periods are regulated by law in Canada, benefit plan waiting periods are not. Employers are able to set any waiting period that applies to joining their benefit plan.

For example, their jurisdiction may require a 3 month probation period as the maximum, but a benefit plan may have a waiting period of 1 month, 6 months, 12 months, and so on.

An employer can choose their waiting period, as long as they are consistent with applying it. For example, an employer cannot discriminate between different employees where one person waits 12 months and everyone else waits 2 months. However, employers can selectively decide to waive the entire waiting period if it has been negotiated as part of the employment contract of a new hire.

Here are the conditions upon which Beneplan will allow a waiting period to be waived:

This is important because over-use or abuse of waiting the waiting period -- or any sort of breaking the rules -- will lead to higher claims and therefore higher premiums.

Why isn't it possible to pick an arbitrary waiting period for just one person?

This is not allowed, both for discrimination prevention purposes, and also to prevent anti-selection. Anti-selection is the practice of trying to not buy insurance until it's absolutely needed...and this repetitive behaviour has the ability to collapse an insurance company.

That said, here are the ways to waive the waiting period: