Many entrepreneurs think traditional group health insurance is their only option to pay for medical expenses not covered by provincial plans, and are not aware of other option such as a Health Spending Account (HSA).

Health Spending Accounts (HSAs) are rising in popularity with small businesses due to their flexibility and tax-efficiencies.

Why HSAs work for small businesses:
– Eligible small business owners can deduct their eligible medical and dental expenses from their gross business income, instead of making them a personal expense
– HSA deposits are tax-free for employees
– Unused HSA funds roll over to the following plan year
– No renewal increase or inflation impacts
– Third-party Administrators ensure employee’s privacy is maintained

How does it work?
1. Decide how much to deposit per employee or employee class
2. Add optional insurance protection such as travel coverage or emergency medical coverage
3. Employees can choose from a wide range of CRA approved eligible expenses and claims can be easily submitted online through a smartphone or tablet. Please visit the CRA website for more information: www.cra-arc.gc.ca/medical.

See the savings of using an HSA vs the Medical Tax Credit:
In order to best illustrate the savings of using an HSA see our example below which compares the cost of out-of-pocket medical services using pre-tax income vs. after-tax income.

Assume a business owner with a personal income of $95,000 and annual out-of-pocket medical expenses of $5,200.

Given their marginal tax bracket and their eligible medical tax credit, they would need to earn $7,990.03 in order to have $5,200 after-tax. In comparison, an HSA uses pre-tax dollars and would cost $5,998.90. With this example the business owner would see a savings of $1,992.03/year.

Insist on insurance industry standards for your client’s Health Spending Account provider, like Benecaid:
– Confidence:  15+ years of HSA administration
– Compliance: Independent audits

To find out more about how an HSA can help your clients save money, contact your Benecaid Benefits Consultant or email us at advisors@benecaid.com.

For Benecaid’s Health Spending Account terms and conditions please click here.