Bill’s Blog | June 15, 2022
If you are an incorporated business owner, how are you paying for your health and dental expenses and your team? You have several options. One, you can pay out of your after-tax dollars and receive a medical tax credit for personal expenses. However, doing it this way is the least tax-efficient way to cover your medical and dental expenses. Second, you can pay med/dental expenses through the Corp. using a group plan or not and receive a 100% tax write-off for the corp. Group plans can be a good option; however, they seldom cover 100% of expenses and come with monthly premiums whether the plan is used or not. Third, you can add a health spending account (HSA) to your group plan and receive 100% coverage (in most cases) and the maximum tax benefit. Finally, you can do an independent HSA, ideal for those who do not want monthly premiums and optimal control of costs. The owner chooses how much benefit goes to each team member (can vary with team members) and can have up to 20% annual benefit for the business owner and family based on salary.
So, let’s drive into HSA and see its multiple benefits and features.
- The owner pays a one-time fee of $295 CA plus a 10% administration fee when a claim is submitted.
- There are no annual fees or unexpected premium increases.
- The owner controls the cost benefits for the team.
- The online process is simple to set up and has instant approval.
- The claims process is quick and online, and the reimbursements come in 3 to 4 business days.
- The company receives a 100% tax write-off, and the team receives a tax-free benefit.
- Each team member decides what to use the HSA benefits (Health or Dental) for themselves or their family up to their limit each year.
- The plan covers an extensive range of approved medical services, pharmaceutical, dental, health care options, vision, etc.
- The owners can customize the HSA plan and add: Group life and disability insurance (two options); Travel and major medical insurance; Guaranteed Critical Illness (CI) insurance (covers 18 conditions); and Diagnostic & Specialist Access Insurance (DSAI). It covers 10 of the most requested specialist and guarantees to get you in within 21 business days. The average time in Canada to see a specialist is 34 weeks!
Here is an excellent example of how the HSA can help a business owner with a significant medical procedure dental/braces expense. As mentioned, a group plan often only covers a part of the expense. So, one of your kids needs braces ($15,000 later!), and your plan only covers $3000 of the cost. You can potentially run the 12K (based on your approved limit) through the HSA and now have 100% coverage of the expense and a 100% tax write-off through the corporation. Brilliant!
Please feel free to contact me if you have questions, and I can send you a simple brochure providing further information on the HSA. firstname.lastname@example.org
To sign up, please click on the link (anywhere in Canada, but there are different rules in Quebec, so best to clarify with the admin team): https://offers.benefitsmyway.ca/fivefold-financial
The sign-up process is quick and straightforward, and if you need any help setting up, “Benefits My Way” has a friendly admin team to assist with a toll-free number.
Finally, we are ALL facing severe inflation and providing an HSA is a great way to support your team or, if you are solo and incorporated, an excellent way to minimize TAX!
PS Next week, I will provide a mid-year market update and what to expect in the year’s second half. You won’t want to miss it!
All the best,
Bill Westmacott, Owner
For financial education and sound solutions.