Health spending accounts are a smart way to fund health and dental expenses
Health spending accounts are an affordable replacement or a valuable add on to a traditional insured health and dental plans for self employed individuals, business owners and corporations. Health spending accounts (HSAs) provide a pre-determined/fixed but flexible amount of pre tax money to individuals at the beginning of each year to pay for coverage of their medical and dental expenses. That's why HSAs are particularly ideal for small businesses who want an option when providing health and dental insurance to employees but wish to avoid annual price increases. Health spending accounts can be used to pay for any medical expenses that qualify under the income tax act, many of which may not generally be included in a traditional group health and dental plan. There are no deductibles, co-payments or annual limits outside of the overall fund limit to worry about. With traditional group plans there is always the question of what's covered and what is not. That's why employees generally prefer the choice provided with a health spending account and generally spend their money more wisely.
Health spending accounts turn out of pocket medical expenses into business deductions
Both incorporated and unincorporated businesses (self employed proprietors and partnerships) can establish health spending accounts. Corporations with as few as one employee can be eligible under the rules for HSAs. A health spending account for small business owners provides a way to deduct eligible medical and dental expenses from their gross business income instead of paying them from after tax personal income. A tax deduction beats a tax credit with Canada Revenue Agency (!) Here are 10 more reasons/benefits to look at establishing health spending accounts for ongoing health and dental expenses:
10 BIG benefits of health spending accounts
- Health spending accounts are fully deductible as a business expense
- Those with a health spending account determine which health expenses to fund; not the claims department of an insurer.
- Reimbursements from a health spending account are non taxable to the employee
- Employers determine how much they want to spend so costs are controlled and budget surprises are eliminated
- The definition of expenses is much broader with a health spending accounts as opposed to conventional employee benefit plans. Examples would include unlimited paramedical expenses like massage, physiotherapy or naturopath services, medical appliances and wellness products, major dental like dental implants/orthodontics, laser eye surgery, vaccines, addiction or chronic pain rehabilitation, tutors for children with learning disabilities etc.
- Health spending accounts that are not spent can be rolled over into the following year to a maximum of 2 years. If health spending accounts are unspent after year two, they would be refunded to the employer and not kept by the insurer.
- Health spending accounts generally provide more satisfaction for employees than traditional group health/dental plans because they provide choice
- Increasing health spending allowances is often a better way to reward performance and retain key employees
- Most employees will generally spend their he
- Health spending accounts can be easily integrated or blended with traditional coverage for disability, life insurance, critical illness and out of Canada emergency medical coverage along with "stop loss insurance coverage" to cover major health events that would be considered to be "catastrophic"
Health spending accounts need to be set up through a third-party administrators/trustees or insurers that specialize in the administration of such plans. I work with Blendable in Waterloo to do this. Please reach out and connect with me for more information...whether you are looking for a health and spending account or a more traditional plan with or without a health spending add on. Let's chat
