Entrepreneurship & Small Business

Health Insurance for self emplyed

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  • Oct 27th, 2016 12:46 pm
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Deal Addict
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Oct 4, 2006
2466 posts
125 upvotes
Burlington
dazz wrote:
May 13th, 2011 2:10 am
I don't understand...Blue Cross Dental + Health is like 180 bucks and they cover like 75%.
$100 Enrollment and they pretty much cover 95%?? No monthly payments?? How can they afford that?

:S every time I looked at Blue Cross the full Dental and Health thing was like $180.00 monthly.
Deal Fanatic
Aug 21, 2007
5158 posts
302 upvotes
Markham
^Clerically it probably isnt that much work to adjucate the claims...i imagine its a fairly automated/repetitive process

I think I read they have 1000 customers across Canada...depends on avg customer spend...some companies are probably spending 10k per annum, while others are 2 or 3k...its a prety good business idea when you think about it lol
Member
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Jul 4, 2005
264 posts
5 upvotes
Markham
dazz wrote:
May 13th, 2011 2:10 am
I don't understand...Blue Cross Dental + Health is like 180 bucks and they cover like 75%.
$100 Enrollment and they pretty much cover 95%?? No monthly payments?? How can they afford that?

It's a ripoff but there is the very odd chance that you are very unhealthly and highly medicated and spend $400 a month on medications so BlueCross loses money from their $180 fee. For costplus/brock, they make 5% profit. Spend zero a month, no money but you didn't bother them with any mail/billings. Spend $400 they get $20. No automated co-pay and stuff at the pharmacy for them to setup or deal with. When you spend money submit your claim and I'll take 5% and most people also save up the receipts for the end of the year and make one claim.
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Dec 10, 2004
5144 posts
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Thornhill
jrnight wrote:
May 16th, 2011 2:55 pm
It's a ripoff but there is the very odd chance that you are very unhealthly and highly medicated and spend $400 a month on medications so BlueCross loses money from their $180 fee. For costplus/brock, they make 5% profit. Spend zero a month, no money but you didn't bother them with any mail/billings. Spend $400 they get $20. No automated co-pay and stuff at the pharmacy for them to setup or deal with. When you spend money submit your claim and I'll take 5% and most people also save up the receipts for the end of the year and make one claim.

Hmmm. I still don't understand. So they get %5 as they are pretty much just a broker,right? So who pays the rest 95% of the total medical bill amount??

Currently me and my girl have no medical insurance. We both self employed. We looked at Blue Cross a few months back and there are so many restrictions and monthly pp cost would be about $180(claim or not) Plus it doesn't cover that much. All of us pretty healthy,but I'd like to be covered for teeth, a few times per year and few prescription drugs once or twice a year. 3 years ago I needed some work done on my teeth and it was cheaper to go to Europe for a vacation and have it done there.

Now, it does seem like a a great plan. I just want to understand better...as now it almost feels like scam! "pay 5% and get 95% back".
Deal Fanatic
Aug 21, 2007
5158 posts
302 upvotes
Markham
The way it works is basically as follows:

-The business (self-employed, partnership or corp) enrols in this plan
- Individuals are covered under such plan - all employees plus immediate family - if you are an employee, which you are definitely in the case of self-employed, but MAY be for a partnership or corporation (since their are limited partners, directors and shareholders who may not take active roles in the business) - you are covered
- Someone eligible under the plan incurs an expense. Say $100 for prescription drugs.
- The employee gives the business the receipt and completes the claim form.
- The business submits the claim form, the receipt, and a cheque.
- The cheque is in the amount of the expense incurred, plus a 5% administration fee (plus HST on the admin fee only). So in this case, would submit 105.65.
- The employee who incurred the expense is sent a cheque (or has direct deposited) the amount of expense they incurred - $100 in this example.
- The company gets a deduction for $105.65 to throw onto their tax return.
Member
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Jul 4, 2005
264 posts
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Markham
dazz wrote:
May 23rd, 2011 8:16 pm
Hmmm. I still don't understand. So they get %5 as they are pretty much just a broker,right? So who pays the rest 95% of the total medical bill amount??

Currently me and my girl have no medical insurance. We both self employed. We looked at Blue Cross a few months back and there are so many restrictions and monthly pp cost would be about $180(claim or not) Plus it doesn't cover that much. All of us pretty healthy,but I'd like to be covered for teeth, a few times per year and few prescription drugs once or twice a year. 3 years ago I needed some work done on my teeth and it was cheaper to go to Europe for a vacation and have it done there.

Now, it does seem like a a great plan. I just want to understand better...as now it almost feels like scam! "pay 5% and get 95% back".

Adeel explains it pretty good. PHSP is mainly for self-employed. It's not pay 5% get 95% back scam, it's more of pay 205% and get back 100% and tax deduction of 105% (which is your marginal tax rate 30-45%).

You pay for the medication. 100%
Your company sends a cheque 100% + 5% admin fee. Your company=you so you're out 205% now for the medications.
You get back your original 100% from the PHSP company and get a tax receipt for your company of the 105%. When you do your taxes for your company you save tax which could be only 17% if a corporation and more if you're a high earning self-employed individual.

In the end you forked out 205% and recouped back maybe 140%. Effectively you saved 40% on your prescription meds which is better than Zero for most Self-employed individuals. It's also better than buying a monthly plan and possibly paid $1500-$2000/year and not ever got sick and never bought 1 medication.
Newbie
Jan 5, 2010
18 posts
sk
I have also heard of Health Welfare Trust Account for small businesses. Does anyone know how it is different from PHSP?

There is also a term Health Care Spending Account (HCSA) - which seems same to me as PHSP. Is it same? Is there any difference in these two? Will HCSA cover costs like gym memberships etc.? That's what it was used to cover when I was an employee of some big corporation. From what i have read around, it seems like PHSP will not cover gym membership but only eligible medical expenses, Is there anyway gym memberships can be written off as business expense? I guess, company can reimburse it to the employee but it will be considered as taxable benefit. Is that right?

I am also planning to set up something for myself as i am sole employee of my Inc. company.

Thanks all for your input and advice.
Deal Addict
Aug 28, 2007
1857 posts
253 upvotes
Calgary
dazz wrote:
May 23rd, 2011 8:16 pm
Hmmm. I still don't understand. So they get %5 as they are pretty much just a broker,right? So who pays the rest 95% of the total medical bill amount??

Now, it does seem like a a great plan. I just want to understand better...as now it almost feels like scam! "pay 5% and get 95% back".
You are paying for everything right now. And individuals are not allowed to deduct health care costs... except for the trivial amount allowed under the Medical Expense Tax Credit.

All a PHSP does is... move the responsibility of paying it to your business. Businesses are allowed to deduct 100% of health benefits costs. So now your business pays for everything including the 5% fee. Think of it as doing the same thing you do right now except using "before tax" dollars to pay for it. You save the tax on what your health care costs you. There is no "free coverage" here... that's why there is no premium.
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Dec 10, 2004
5144 posts
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Thornhill
Oh, now I get it...I thought it works differently and perhaps government just pays you the money...(in Europe, government gives you(to keep) a lot of money to start a business,so I thought perhaps here our government pays for some health care costs...)
With that, 35% savings that I'd get from it doesn't look THAT great.
Deal Addict
Aug 28, 2007
1857 posts
253 upvotes
Calgary
dazz wrote:
May 29th, 2011 12:33 pm
...I thought it works differently and perhaps government just pays you the money...
The government is us... getting "free" money from yourself isn't a sustainable business strategy. Just like Harper cutting the GST from 7% to 5% and moving the annual $12 billion revenue drop to our collective credit card (our half trillion national debt) for future generations to pay. The people are so easily fooled they believe that trick has "reduced" their taxes and the "government" has saved us with their superior money management skills.
dazz wrote:
May 29th, 2011 12:33 pm
With that, 35% savings that I'd get from it doesn't look THAT great.
I don't know about you but 35% is a pretty good looking number on my corporate financial statements
Newbie
Jan 5, 2010
18 posts
sk
fordeals wrote:
May 25th, 2011 6:55 am
I have also heard of Health Welfare Trust Account for small businesses. Does anyone know how it is different from PHSP?

There is also a term Health Care Spending Account (HCSA) - which seems same to me as PHSP. Is it same? Is there any difference in these two? Will HCSA cover costs like gym memberships etc.? That's what it was used to cover when I was an employee of some big corporation. From what i have read around, it seems like PHSP will not cover gym membership but only eligible medical expenses, Is there anyway gym memberships can be written off as business expense? I guess, company can reimburse it to the employee but it will be considered as taxable benefit. Is that right?

I am also planning to set up something for myself as i am sole employee of my Inc. company.

Thanks all for your input and advice.

+1.

Anyone knows which is better? Health Welfare Trust Account (or) setting PHSP with company like http://www.brockhealth.ca?

thanks
Member
Feb 27, 2007
232 posts
9 upvotes
Montreal
Would it be accurate to say that if I have my own company and go through Brock... I will be paying my own health expenses 100%, paying Brock a 5% fee so that I would then be able to deduct my medical expenses at 105%? In other words, It really wouldn't cover anything upfront, but the savings are found when I deduct the expenses from my taxes?
Deal Fanatic
Aug 21, 2007
5158 posts
302 upvotes
Markham
squinty wrote:
Jun 23rd, 2011 11:17 pm
Would it be accurate to say that if I have my own company and go through Brock... I will be paying my own health expenses 100%, paying Brock a 5% fee so that I would then be able to deduct my medical expenses at 105%? In other words, It really wouldn't cover anything upfront, but the savings are found when I deduct the expenses from my taxes?

I think thats a fair assessment...
Jr. Member
Jan 11, 2008
147 posts
34 upvotes
Setting up a PHSP or HWT will typically depend on if you are incorporated. Also Self-Employed Unincorporated individuals will usually be required to carry a Stop Loss/Travel Medical coverage of some sort to satisfy the 'nature of insurance' to keep CRA happy.

(From Benecaid website)
Health and Welfare Trust (HWT)
Available to incorporated businesses
No annual maximum contributions
Funds roll over from year to year

Private Health Services Plan (PHSP)
Available to non-incorporated businesses/sole proprietors
Annual maximums based on family size
$1,500 / sole proprietor
$1,500 / dependent over 18 years old
$ 750 / dependent under 18 years old
Forfeiture of remaining funds two years from date of deposit
Claims must be submitted within the same calendar year the service was received. eg. expenses incurred in December cannot be claimed in January. Claim must be submitted before year-end.

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