5 Mistakes Employers Make Choosing Foreign Worker Health Plans
What’s the real cost of choosing the wrong health insurance coverage for your foreign workers?
For many Canadian companies, it could be far more than higher monthly premiums. The wrong coverage could end up costing employers up to $100,000 per violation and banned access to future foreign workers.
Even worse, your company could incur devastating reputational damage that can destroy years of business growth – all for making the wrong choice in health coverage.
To help your company prepare for the next year, let’s look at five of the top mistakes that employers make when they select foreign worker health coverage.
1. Focusing on Cost Instead of Coverage
The most dangerous mistake employers make?
Shopping for the lowest monthly premium without fully understanding what they’re investing in.
While that budget plan might save your company around $50 per worker monthly, a single uninsured medical emergency can cost $3,000 per day in hospitalization. Throw in prescription medications or medical repatriation, and you may end up with bills that dwarf any premium savings.
Those costs add up quickly. In 2023 alone, Canadian firms paid $4.1 million in fines for inadequate foreign worker insurance.
Beyond penalties, consider the hidden costs that poor coverage can rack up – many of which aren’t quantifiable: workers delaying treatment for minor issues that become major problems, reduced productivity from untreated conditions.
Smart employers treat comprehensive coverage as risk management, not an expense. Quality plans that include coverages for dental, vision, mental health support, and prescription coverage typically cost 20-30% more – but can potentially prevent 80% of the situations that lead to worker turnover and compliance violations.
2. Ignoring LMIA and Legal Compliance Requirements
The reality is that private health insurance isn't optional for LMIA-based temporary foreign workers.
Coverage is mandatory from day one of arrival, and the regulations are specific: coverage must include emergency medical care, hospitalization, and medically necessary repatriation.
Compliance officers are on the hunt – looking for proof of continuous coverage and evidence that plans meet minimum standards. Should they find any violations, they could trigger penalties up to $100,000 per infraction.
Worst case scenarios can lead to placement on public non-compliance lists and multi-year bans from hiring foreign workers – a single move that can effectively shut down operations for agriculture and manufacturing businesses dependent on the foreign workforce.
3. Overlooking Provincial Waiting Period Gaps
While coverage is required, provincial healthcare isn't immediate. Ontario and British Columbia impose a 3-month waiting period before foreign workers can qualify for basic coverage.
It’s during this gap that employers can become liable for all medical costs plus face compliance penalties.
There's also the patchwork of provincial rules to contend with. Alberta provides immediate coverage, while Quebec has different requirements based on country of origin.
But it’s key to remember that these choices aren’t simply about compliance. They’re also about worker safety. Agricultural workers arriving for harvest season can't wait three months for coverage when working with heavy machinery. The right private insurance can bridge these gaps and ensure workers are protected their first day on the job.
4. Selecting Generic or Inadequate Plans
Generic group insurance products – many of which are designed for typical Canadian employees – may fail to meet foreign workers' needs. For instance, these plans often exclude crucial services like translation support or international money transfers for medical emergencies. They may not provide the necessary documentation required for LMIA compliance audits.
Foreign workers often arrive and immediately face unfamiliar environments – including healthcare systems. Language barriers and a fear of job loss if they seek treatment only add to the complexity that a quality foreign worker plan can address immediately.
For industries such as manufacturing – where employees can benefit significantly from mental health support – choosing generic plans means missing coverage that reduces absenteeism and boosts productivity and employer loyalty.
5. Failing to Anticipate Long-Term Business Impacts
Many Canadian companies view health insurance as a compliance checkbox. But once you know what proper coverage helps prevent – as well as what you stand to protect – you’ll see it as the strategic investment it is.
Poor coverage damages your reputation within foreign worker communities, many of whom will share their experience with others in their community.
Clients are also watching – many are looking for proof of ethical labor practices, including proper insurance coverage. Even most modern government contracts often require clean compliance records.
Companies who adopt specialized foreign worker plans demonstrate that they care for workers' families, and wellness programs that prevent issues before they require treatment.
Don't Repeat Past Mistakes: Find the Best Employee Coverage Now
It’s never been more important to avoid the mistakes that risk non-compliance and reputational damage. That means partnering with specialists who know foreign worker insurance challenges.
At People Corporation, our experts offer companies guidance on protecting foreign workers and your business. Our specialized consultants understand compliance requirements, provincial variations, and industry-specific needs.
Contact us now to learn more – and take the right step to ensure that your foreign worker health insurance truly protects everyone.
Looking to provide your foreign workers with the necessary healthcare coverage?
Click through the video below to learn about the FWCHP.
