Insurance companies are one of the top 3 richest businesses in North America. There is a reason for that. All you need to do is ask somebody who's paid hundreds of dollars a month for a health care plan what their experience was like and you'll understand why it is that insurance companies make so much money. They'll tell you how so many of their prescription costs were not covered, only certain brand medications were claimable and others were not. Or how they're only allowed 60 or 70% of the cost for some paramedical service and 80% of the user fee for others. Or, Sorry you have reached your limit. Are you confused yet? How about the common phrase, "Sorry, that's not covered." Yes that is the story of trying to claim medical and dental costs through an insurance provider.
So what's the alternative? Business owners do have an alternative in Canada. Under our income tax act a Private Health Insurance Plan is an option for Canadian business owners. This is an opportunity for a company to own and administer their own health plan. Home Based Businesses in Canada can really leverage this option.
How does this create an affordable health plan?
When you own and administer your own health plan you get to set the limits. Through the plan contract you decide the level of healthcare benefits for yourself and for your employees. Because there is no middleman there are no premiums to pay. In a Corporation you can set tears or levels of benefits. Upper management has a much higher pay level and much more responsibility, which allows you to also give them higher benefit levels. Proprietorship can create a plan and have it administered through a company like Gumboot Business Services. They also get to set their limits.
How does a private health insurance plan work?
Your medical and dental expenses become a business expense. You bring in your receipts and reimburse yourself through your company. When your employees bring in a medical expense receipts you simply reimburse them. If there are no expense receipts submitted, there are no costs. And because you set the limit in the health care plan you set exactly what each employee can expense and what your budget is going to be for the year.
A simple tracking system will allow you to keep track of exactly what each member of your family and employee has spent. This ensures that nobody goes over their limit, and keeps your numbers accurate for your year and income tax filing.
The other wonderful bonus with a private health insurance plan is medical and dental expenses paid for by a company to its employees are tax-free to the employee. No CPP, no EI for either of you and no income tax for the employee.
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