A health spending account can be super beneficial if you own and operate a small business in Canada. It can make a substantial difference to your finances, as well as your employees’ group insurance plans and well being. Here is how it can help:
What is a Health Spending Account?
Firstly, a Health Spending Account (HSA) is the tax-efficient and cost-effective way for businesses to pay for their employees’ health group insurance. In its most basic level, health and dental expenses that are offered through an HSA can be fully tax-deductible to the business and are 100% tax-free for employees.
An HSA can be applied to your existing group insurance plan to cover for things that weren’t previously covered under your policy. It can also be used as a reimbursement plan to cover your expenses. There are no fees or hidden premiums for HSAs.
However, you can only be suitable for HSA if you:
- Are the owner of a business
- Pay income tax or receive T4 income
- Pay medical bills
How does a Health Spending Account work?
Utilizing a Health Spending Account in Canada varies on the structure and size of your company. But in most cases, the process goes as follows for small businesses:
- An HSA starts when an employee makes a claim.
- From there, the HSA provider will process the receipt of the employee’s claim to fund the reimbursement.
- Once the claim has gone through, your small business will receive an invoice for the service, which is considered a business expense and therefore is considered tax-deductible while the employee gets the reimbursement tax free.
There are also plenty of other benefits that come with getting an HSA for your small business, including:
- As the employer, you get to fund the group insurance plan with a monthly amount that you choose.
- The funds not used by the employee are returned to the employer.
- As you have no hidden fees or premiums, that money is never lost.
- The employee can claim all of their health bills and pick what medical treatments are important to them – keeping them happy and committed to your company.
How Does Your Small Business Save Money With A Health Spending Account?
As a small business owner, you will get 100% of your after tax eligible medical expenses turned into before tax business deductions. You will end up saving thousands of dollars in insurance plans by incorporating an HSA as a supplement or an alternative to your insurance plans.
Depending on which carrier you have your HSA, you won’t be required to pay a float or annual fee. The only fee you will have to pay is an admin fee per claim, which is between 7 to 10%. That full amount (the claim plus the admin fee) will be charged to you and reimbursed to the employee electronically.
If you would like more information in regards to Health Spending Accounts in Canada, Perlinger Group Benefits can help. We have been offering exceptional group benefit plans since 1992. Our goal is to provide the best group health insurance plans to meet your business’ needs, regardless of the size of your business. We make it affordable and easy to get access to comprehensive benefits plans. Contact us today: Direct Line 403-217-5560 | Toll-Free 1-877-217-7829 | Email [email protected]
