A Statistics Canada study that was conducted in 2008 revealed that the average Canadian household is spending more than $2,000 per year on various healthcare services such as prescription medications, dental products and services and eye-related products such as glasses and contact lenses.
Regardless of whether they are sole proprietors or they are part of a larger incorporated business, many people are surprised to find out that that have the ability to make the majority of their healthcare expenses fully deductible. This is an exciting prospect for them because it can provide many significant tax savings for the business, offer excellent tax-free benefits to business owners, dependents and employees – all of which will help you control your medical costs and save money.
Group Insurance Plans versus Private Plan Options
A large number of business owners have taken out group insurance for themselves, their families and their workers. Although group insurance plans can be very good options, they simply aren’t suitable for everyone, and bad claims can increase costs substantially. When sick employees overuse or even out rightlyabuse insurance plans, everyone else involved becomes subject to higher premiums as a result thereof. However, a private health savings plan (PHSP) can provide an excellent way to control costs like these. In fact, many businesses even combine an insured plan with a PHSP.
How Does a PHSP Work?
In cases where an employee requires major dental work such as crowns or root canals, they could find themselves being faced with more than $1,000 worth of out-of-pocket expenses. For many of these employees, this price tag is even more horrifying than having the actual work performed. Once you have paid your dentist up front, you take your receipt, fill out a claim form and send it off to the PHSP service provider to be processed.
The service provider will then invoice your business for the dental work that was done, along with a 10% handling fee and any taxes that may apply. Your business will then send a cheque to the service provider, who then sends you a cheque for $1,000 after deducting all of its fees. The company then writes off the dental bill and associated fees as a legitimate business expense and as a result, you are able to walk away with your $1,000 in your pocket as a tax-free benefit from the company.
How am I Able to Take Advantage of a PHSP?
It is a relatively easy process to set up your Health Spending Account (HSA). This process will involve a once-off fee that ranges between $250 and $300, along with a 10% fee per claim plus any applicable taxes. However, all of these fees are fully tax deductible. If you would like to take a look at an HAS form or you are interested in learning more about the array of employee health benefits that can be enjoyed with a private savings plan, visit the Benecaid website today.