Hour Bank
What is an Hour Bank
An Hour Bank Benefits plan supports employees whose working hours can vary significantly throughout the year. It allows them to accumulate hours that can be used to maintain benefit coverage even when they experience reduced or inconsistent work periods. Hour Bank plans can be used on their own or alongside a standard benefits plan for your workforce.
This plan is employer paid. Life Insurance, Dependent Life Insurance, and Accidental Death and Dismemberment premiums are considered taxable benefits to the employee, so a T4A is issued for those benefits.
Maximum Hours and Termination Age
- Employees can bank up to 750 hours, equal to five months of coverage
- All benefits end earlier of retirement or:
- Life Insurance and AD&D at age 75
- Dependent Life Insurance at age 70
- Long Term Disability at age 65
- Extended Health Care, Vision Care and Dental Care at age 85
How Does it Work?
Employees must accumulate 300 hours within a six month period to qualify for benefits. After qualification, they must maintain at least 150 hours in their Hour Bank each month to keep coverage active.
Extra hours worked each month are added to the employee’s hour bank and can be used in months where fewer than 150 hours are accumulated. This creates continuity of coverage during layoffs, seasonal slowdowns, illness or vacation.
Coverage begins on the first day of the month following one month after the employee reaches 300 banked hours.
If the Hour Bank drops below 150 hours, the employee can choose to self pay for up to six additional months. This option does not apply to Long Term Disability benefits.
The employer must submit a monthly remittance form showing hours worked, along with the corresponding payment, by the fifteenth of the following month.
John is a seasonal employee whose hours vary through the year. He needs to bank 300 hours within a six month period to qualify for benefits, then maintain at least 150 hours each month to stay covered.
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September
John works 250 hours. He is building his Hour Bank but has not yet reached the required 300 hours.
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October
John works 325 hours. His total hours within the six month period now exceed 300, so he qualifies for benefits. The next month becomes his waiting period.
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November
John does not have coverage yet. His Hour Bank holds all hours worked so far and nothing is deducted.
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December
John’s coverage starts on the first of the month. 150 hours are deducted for coverage. John works 180 hours, so he ends December with a strong Hour Bank balance.
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January
John works 120 hours, which is less than the required 150. His Hour Bank covers the remaining 30 hours needed to maintain coverage. His benefits stay active.