Flexible Benefits, Increased Savings

Stacey Aarssen
April 27, 2009
Written by Stacey Aarssen

In the eye of the business owner, wellness, for a company, can mean several things. Business owners – whether the business is large or small – have similar ideas in that they all want their businesses to succeed. Employees can have a huge effect on the success of any business, and a happy employee is one that will be the most beneficial to your business.

Good health-care coverage is one way to keep employees satisfied.

With the economy the way it has been in the last few months, it is imperative to keep your business competitive. Employees value an employee benefit plan that offers choice and flexibility. The cost of providing an employee benefit plan has risen dramatically, in recent years, but a health and welfare trust, or health spending account, can provide employers with the cost certainty and flexibility they need to move forward.

Health Care is Now Tax-Deductible
A solution for businesses, through new Canada Revenue Agency legislation, has allowed business owners to deduct fully 100 per cent of their health-care costs as a business expense. Anyone who owns a business – whether self-employed or incorporated – of any size, as well as their employees and dependants, can qualify.

A health and welfare trust, or health spending account, is designed to meet all the medical and dental needs of employees. Items that are covered under traditional employee benefits are all covered under a health and welfare trust, or health spending
account, at 100 per cent reimbursement.

Other non-traditional expenses are also covered such as laser eye surgery, nursing home care, homeopathy, speech therapy, MRI scans, cosmetic surgery, hair transplant, naturopathy, fertility drugs, insulin treatment, dental implants and Viagra.

Why Choose This Option?
There are numerous reasons a business may want to consider a health and welfare trust, or health spending account, in lieu of, or in addition to, traditional health/dental alternatives.

1. Currently paying health/dental expenses personally
Many self-employed individuals/businesses do not currently have any program in place for employee health and dental expenses. A health and welfare trust, or health spending account, can provide a mechanism to have these health-care expenses paid from a far more tax-efficient place without the company having to qualify, or put in place a traditional employee benefit plan.

2. Have investigated insurance but feel frustrated with the premium required versus benefits
Many self-employed individuals/businesses have investigated health/dental coverage but did not pursue it for any of the following reasons:
  • The company was too small to have real “purchasing power” with the insurance companies.
  • The company was too new or in an industry where insurers are not interested in providing benefits.
  • The majority of the company’s workforce had coverage through spousal plans.
  • The company’s workforce wanted control over where they could use funds without being restricted by co-insurance or low maximums in each category (i.e., dental, vision care, chiropractic, etc.).
The health and welfare trust, or health spending account, program can address many of these issues as it does not restrict where the allotted dollars per employee are utilized and can even be used to run through the deductibles, co-insurance and amounts beyond the maximums in a spouse’s plan.

3. Want to reduce/eliminate potential increases in health/dental insurance premiums
Since a health and welfare trust, or health spending account, is not insurance in the traditional sense, some employers are drawn to the concept of “fixing” their health/dental funding. Employers under a these programs know that they will not receive rate reviews/increases annually based on their employee usage.

Often these employers will use the program on its own, or perhaps as a means of complementing a component of their plan – dental, health, etc. – that may be seeing heavy usage and rate pressure. The program can also be used to run through amounts that were not covered under another plan, such as the deductibles, co-insurance amounts, and amounts beyond the maximums.

Businesses today always need to be aware of what’s out there and how they can save money. It is important to look at alternative solutions that may cut costs, while improving the employee morale. Investing in a health and welfare trust, or health spending account, may, be the solution.

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