In a Statistics Canada study conducted in 2008, it was found that the average Canadian household spends over $2,000 each year on health care expenses including dental services, prescription drugs, and eye glasses. Many people, whether they are sole proprietors or part of an incorporated business, are surprised to learn that they can make the majority of their health expenses completely deductible. This is an exciting prospect for many people, as it can result in real tax savings for the business, offering tax-free benefits to owners, dependents, and employees to help you control costs and save money!
Private versus group insurance plans
Many business owners have group insurance for themselves, their families, and their employees. Group plans can be a very prudent choice, but they are not for everyone, and bad claims can quickly drive up costs. As sick employees overuse insurance plans, everyone becomes subject to higher premiums. A private health savings plan, or PHSP, is a great way to control these kinds of costs. Many businesses combine an insured plan and a PHSP.
How does a PHSP work?
If an employee requires major dental work such as a root canal and crown, they may be facing over $1,000 in out-of-pocket expenses. For many people, this price tag is even more daunting than the procedure itself. After paying your dentist, you take your receipt, complete the claim form, and send it to the PHSP service provider for processing. The service provider then invoices your business for the dental treatment, plus a 10% handling fee, and applicable taxes. Your business then sends a cheque to the service provider, who sends you a cheque for $1,000 after deducting its fees. The company writes off the dental bill and fees as a business expense, and you walk away with your $1,000 in-pocket as a tax-free benefit from the company!
How do I take advantage of a PHSP?
You can set up your Health Spending Account (HSA) quite easily. This process involves a one-time fee ranging between $250-300 and a 10% fee per claim plus applicable taxes, though all of these fees are tax deductible. To view an HSA form and learn more about the amazing benefits of a private health savings plan, visit the Benecaid website today!