5 Employer Myths About Foreign Worker Insurance — Busted
When hiring temporary workers in Canada, you may have heard conflicting information about insurance requirements for foreign employees.
Some employers assume provincial health coverage handles everything. Others believe they can pass costs to workers or rely on their existing group plan.
Don’t be caught off guard by what may seem like small differences. These misconceptions can actually lead to serious compliance violations and financial penalties. In severe cases, you could even receive a ban on hiring foreign workers.
Let's clear up the confusion by addressing five persistent myths about foreign worker insurance that put Canadian employers at risk.
Myth #1: "Provincial Health Coverage Starts Immediately – No Need for Private Insurance"
Reality: In most provinces, public health coverage for temporary foreign workers doesn't begin until after a waiting period – typically three months from their arrival date.
During this gap, your workers have zero coverage unless you provide it.
This isn't optional. Federal regulations require employers to purchase private medical insurance covering emergency care from the moment workers arrive in Canada.
For instance, if a worker gets injured or seriously ill during those first three months without coverage, you're facing both a health crisis and compliance violations.
The eligibility rules and waiting periods also vary by province and work permit type, so you can't make assumptions. Some workers may never qualify for provincial coverage depending on their permit conditions.
Your obligation is to ensure continuous coverage – not to hope the provincial system catches them eventually.
Myth #2: "I Can Deduct Insurance Premiums from My Employee's Pay"
Reality: This is explicitly illegal, and violations are taken very seriously.
Canadian law prohibits employers from recovering, deducting, or charging temporary foreign workers for any mandatory health insurance premiums. The cost must be 100% employer-paid, period.
You cannot reduce wages, charge "administrative fees," or create any financial mechanism that passes these costs back to workers. Employment and Social Development Canada conducts compliance inspections.
If they discover you've recovered insurance costs from workers (even indirectly), you face major sanctions, including monetary penalties up to $100,000 per violation and potential bans from the Temporary Foreign Worker Program.
The rationale is straightforward: workers already left their home countries based on your job offer and the wages you promised – so make sure you deliver legally.
Myth #3: "All Group/Employer Insurance Plans Automatically Cover Foreign Workers"
Reality: Don't assume your existing group benefits plan covers temporary foreign workers.
Most standard employer health plans weren't designed with foreign workers in mind and may have significant gaps.
Some common issues include:
Waiting periods before coverage begins (remember, you need coverage from day one),
Eligibility requirements that foreign workers don't meet
Restrictions based on work permit type
Coverage that only applies to employees who already have provincial health cards
Some plans explicitly exclude workers who aren't yet enrolled in provincial programs.
You must verify coverage with your benefits advisor before workers arrive. Ask specific questions:
Does this plan cover temporary foreign workers immediately upon arrival?
Does it provide emergency medical coverage during the provincial waiting period?
Are there any exclusions or limitations that affect foreign workers differently from Canadian employees?
If your group plan doesn't cover foreign workers adequately, you'll need supplemental private insurance to fill the gaps.
Remember, this is your responsibility to confirm – not your workers' problem to discover when they need care.
Myth #4: "Only Emergency Medical Care Is Required"
Reality: While federal regulations mandate emergency medical coverage as a baseline, some provinces (such as Quebec for specific worker categories) require employers to provide insurance equivalent to provincial health plans.
Coverage equivalent to provincial plans typically includes hospitalization, physician services, diagnostic testing, prescription medications (in some cases), and other services that standard emergency-only policies don't cover.
The specific requirements depend on your province, the position's wage level (high-wage vs. low-wage), and the type of work permit.
Low-wage positions in particular often carry enhanced coverage requirements. Employers who assume a basic emergency policy satisfies their obligations may find themselves non-compliant.
The rules continue to change, so staying current with provincial and federal requirements should be on your annual checklist.
Myth #5: "Once Public Coverage Kicks In, I'm Done with Insurance Compliance"
Reality: Your compliance obligations don't end when workers qualify for provincial health coverage.
You must maintain documentation proving continuous coverage for the entire duration of employment, and retain the records for 6 years after employment begins.
During compliance inspections, which can occur randomly or in response to complaints, auditors will review your complete insurance documentation trail.
They'll verify that coverage started immediately upon arrival, continued without gaps during the provincial waiting period, and transitioned properly to public coverage when eligible. Missing documentation for any period can result in findings of non-compliance.
Another thing to remember: if workers travel outside Canada temporarily or if their provincial coverage lapses for any reason, you need to ensure they maintain adequate protection.
The FWCHP Helps You Protect Your Business and Your Workers
Insurance compliance for temporary foreign workers is complicated, but the consequences of getting it wrong are serious. Beyond the legal penalties, you're also putting workers at real medical and financial risk.
That's exactly why the Foreign Workers Canada Health Plan exists. We've designed our comprehensive insurance solutions specifically for temporary foreign workers and the Canadian employers who hire them.
Don't risk compliance violations or leave your workers unprotected. Book a call with us today. We'll help you understand the specific requirements and find the right coverage solution for your business and your workers.
Looking to provide your foreign workers with the necessary healthcare coverage?
Click through the video below to learn about the FWCHP.
