Question

Your organization, located in Manitoba, will be enhancing the group benefits plan offered to employees in two months by adding accidental death and dismemberment (AD&D) coverage and vision care coverage. The organization will pay 50% of the cost of the AD&D premiums and 50% of the cost of the vision care premiums, with the employees paying the other 50% of each premium. The Manager of Human Resources, Sophie Martin, has requested that you, as the Payroll Supervisor, prepare a communication for the employees, explaining how these new benefits will impact their net pay.

Answer 1

It is with great pleasure and happiness that we would like to communicate to al of you that our organization has decided to include accidental death and dismemberment (AD&D) coverage and vision care coverage as part of the benefits package associated with employment. The coverage for accidental death and dismemberment (AD&D) stands at $10 million and the vision care coverage is for a sum of $1 million. The annual premium for both of the coverage comes out to be $5500 per annum for each employee. As a way of expressing the organization's gratitude towards the wonderful work done by each employee, the organization has decided to contribute a sum of $2750 per employee towards the premium and thus bear 50% of the expense associated with the policy.

It is requested that the employees contribute 50% of the premium from their salary and on providing a written mandate, the same would be deducted from their salary on a monthly pro-rata basis. This would decrease the net take-home pay every month to the extent of annual premium due divided by twelve but will greatly help in reducing the risk to the families of the employee from the loss of financial security in case of accidental death or accident leading to loss of primary income.