Entrepreneurship & Small Business

Health Insurance for self emplyed

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  • Oct 27th, 2016 12:46 pm
Newbie
May 17, 2003
23 posts
dooner wrote:
Jul 29th, 2011 9:42 am
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.

Not according to http://www.brockhealth.ca/faq.html
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User avatar
Nov 19, 2004
8587 posts
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Cambridge, ON
tgp wrote:
Jul 29th, 2011 10:12 am
Not according to http://www.brockhealth.ca/faq.html

I saw that also at brockhealth. How do you carry forward the expense? You are able to submit part of the claim in one one year, and then the rest in following years?
Deal Addict
Aug 28, 2007
1857 posts
254 upvotes
Calgary
It is based on when you submit the claim. Submit it this year it goes on this year's taxes; submit it next year and it goes on next year's taxes.

It is similar to charitable donations on your personal taxes. You can save them up and submit every other year to qualify for the next tax bracket and get more value out of the ones applying to the higher marginal rate. You can use your PHSP to manage your tax level; only submit when you need the deduction and can afford it. If you don't need the deduction this year or can't afford it, then just save the receipt for next year.

PHSP's can be used by incorporated people too and all the sole proprietor restrictions disappear. It is one little additioanl factor in deciding if it is worth incorporating your self-employed business.

HWT's are a lot more complex and require legal assistance. With a trust, you are giving funds to a trustee for them to manage your benefit plan. In a PHSP you're just purchasing a service that is a tax deduction like your phone or courier company.
Member
User avatar
Apr 16, 2011
345 posts
22 upvotes
Toronto
to clarify there are two different types of plans and you can have both:
A health spending account (PHSP), and dental/medical insurance.

The dental/med insurance will pay a portion of those expenses not covered by ohip, including dental and prescriptions. Plans vary and to get reimbursed a higher percentage you will obviously pay a higher premium. Most insurance companies offer them and even CAA has one.

A Health Spending account is merely a plan that is administered through a third party, like Puhl Insurance or Wellknit, that administers the reimbursement through your corporation or business if self employed. It allows you to deduct 100% of the medical expenses as a business expense and the payment is a tax free benefit to the "employee". Using this your dental/medical expenses are not limited by cra threshold's on one's personal tax return.

You can have a dental/med ins plan that covers 75% of your expenses and use your HSP to write off the balance.

The fees to administer the HSP can vary, they usually charge a 1 time enrollment fee or an annual amount plus a % on every claim, so if your expenses are low, the fees can reduce the tax saving benefit for the planholder.

links:
www.wellknit.ca
http://www.puhlemployeebenefits.com/emp ... nefits.asp

just google phsp or health insurance to shop around....
Deal Addict
Aug 28, 2007
1857 posts
254 upvotes
Calgary
ahmahndoode wrote:
Aug 2nd, 2011 11:21 am
to clarify there are two different types of plans and you can have both:
A health spending account (PHSP), and dental/medical insurance.

The dental/med insurance will pay a portion of those expenses not covered by ohip, including dental and prescriptions. Plans vary and to get reimbursed a higher percentage you will obviously pay a higher premium. Most insurance companies offer them and even CAA has one.

A Health Spending account is merely a plan that is administered through a third party, like Puhl Insurance or Wellknit, that administers the reimbursement through your corporation or business if self employed. It allows you to deduct 100% of the medical expenses as a business expense and the payment is a tax free benefit to the "employee". Using this your dental/medical expenses are not limited by cra threshold's on one's personal tax return.

You can have a dental/med ins plan that covers 75% of your expenses and use your HSP to write off the balance.

The fees to administer the HSP can vary, they usually charge a 1 time enrollment fee or an annual amount plus a % on every claim, so if your expenses are low, the fees can reduce the tax saving benefit for the planholder.

links:
www.wellknit.ca
http://www.puhlemployeebenefits.com/emp ... nefits.asp

just google phsp or health insurance to shop around....

That is correct. Insured plans are true insurance and cover you from all the nasty things that might happen. That is why they charge a monthly premium. The method an insurance company uses to make money is to reduce as much as possible what you can claim so they preserve their capital for payouts on those big nasty things. In fact, the only way for Blue Cross, Manulife tec. to make a profit is to pay out less in claims than what they charge in monthly premiums. There is value in having a plan like that but remember in reducing payout they will exclude a lot of things (chiropractic, othrodontics, massage, naturopaths, obscure drugs etc.) A PHSP on the other hand includes just about everything because your business is funding the whole thing.

So as small businesses the insured plans never save us money it just protects our employees from the nasty things. We must pay more in premiums than our employees claim in benefits. For one person or family businesses, a PHSP can actually save money in taxes.

BTW: the term Health Spending Account (HSA) is a colloquial advertising term used by the insurers who offer a PHSP as an add-on to their insured plans. The employer deposits money in advance on account with the insurer and employees claim against that amount. It is used to specifically set the expectations that money will be held on account. A PHSP (private health services plan) on the other hand is the legal term used in the income tax act to describe all of these plans in general. The providers who offer PHSP's are smaller companies and most do not take money in advance but only get paid when you make a claim. Before you sign up, you should ask if they charge an annual fee becuase that isn't necessary to operate a PHSP. As ahmahndoode says, just google PHSP and shop around.
Newbie
May 5, 2008
6 posts
1 upvote
I'm a little confused about this. So let's say I'm self-employed and incorporated.

- The way I understand it, by using one of these services, I save ~35% (I basically write off the cost I incurred)

- The alternative would be to pay for health insurance for my employee, and write the entire thing off (which is basically what the above plan does). On top of that, I also get the added benefits of having health insurance


To me it seems like a no-brainer to go with the second option. What am I missing?
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Nov 19, 2004
8587 posts
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Cambridge, ON
vasken wrote:
Aug 15th, 2011 11:14 pm
I'm a little confused about this. So let's say I'm self-employed and incorporated.

- The way I understand it, by using one of these services, I save ~35% (I basically write off the cost I incurred)

- The alternative would be to pay for health insurance for my employee, and write the entire thing off (which is basically what the above plan does). On top of that, I also get the added benefits of having health insurance


To me it seems like a no-brainer to go with the second option. What am I missing?

If you can afford and want to pay for a health care plan then the second option is fine. You get to write off the premiums and then you have coverage. You also pay hundreds per month for the premiums.

These services are for people who don't purchase additional health coverage and pay for their medical expenses themselves. It is just a way of making those medical expenses tax deductible as a business expense rather than a medical expense.
Deal Addict
Aug 28, 2007
1857 posts
254 upvotes
Calgary
vasken wrote:
Aug 15th, 2011 11:14 pm
I'm a little confused about this. So let's say I'm self-employed and incorporated.

- The way I understand it, by using one of these services, I save ~35% (I basically write off the cost I incurred)

- The alternative would be to pay for health insurance for my employee, and write the entire thing off (which is basically what the above plan does). On top of that, I also get the added benefits of having health insurance


To me it seems like a no-brainer to go with the second option. What am I missing?
There is one little difference in the wording of your description. In case 1 (PHSP) you deduct the "entire" amount. In case 2 you can only deduct the "premium paid". Here is an example.

Suppose your kid goes into braces for $5K.

In a PHSP you'd claim a $5250 business deduction ($5000 for the braces and $250 for Brock's fee).

Under an insured plan you would claim a $2400 business deduction (assuming your premiums are $200 a month). The amount you would get back from the insurer would depend on the plan... it most cases orthodontics is $0 or 50% but it will be some number between $0 and $5000. The higher you pay in monthly premiums (i.e better plan) the higher your reimbursement. But the insurer can not pay you more than they collect in premiums (statistically speaking) of they go broke.
Deal Addict
Feb 5, 2009
2809 posts
922 upvotes
Newmarket
Did any of you here actually signed up with Brock? If so is the whole process really as smooth as they claim it to be?

Thank you.
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Nov 19, 2004
8587 posts
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Cambridge, ON
Homerhomer wrote:
Aug 16th, 2011 11:08 am
Did any of you here actually signed up with Brock? If so is the whole process really as smooth as they claim it to be?

Thank you.

I signed up a few weeks back and it was very smooth. My mom does tax planning and accounting so she asked about the referral thing and she referred me so I didn't need to pay the $100 startup which was nice. I sent some receipts from earlier this year in last week and got the email to say they have been processed and will be direct deposited within 10 banking days so just waiting for that.

I also emailed a few questions to them before signing up and they were very quick in responding (same day).
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Feb 5, 2009
2809 posts
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Newmarket
don242 wrote:
Aug 16th, 2011 11:29 am
I signed up a few weeks back and it was very smooth. My mom does tax planning and accounting so she asked about the referral thing and she referred me so I didn't need to pay the $100 startup which was nice. I sent some receipts from earlier this year in last week and got the email to say they have been processed and will be direct deposited within 10 banking days so just waiting for that.

I also emailed a few questions to them before signing up and they were very quick in responding (same day).
Thanks Don, good to know.
Deal Fanatic
May 23, 2003
9409 posts
969 upvotes
GTA
I am with Cost Efficient http://www.costplus.ca/ and I have found the service to be excellent. They are very personable and easy to reach someone if you have any questions. I think it might be a husband/wife who run it. The admin fee is higher than Brock but if you refer someone they drop it down to 5% for life. I found out about Brock after the fact but I wouldn't hesitate to recommend Cost Efficient.

Note that the payment to the employee isn't considered a "benefit" to the employee and it is fully tax deductible by the company.
Deal Fanatic
Dec 19, 2005
7148 posts
636 upvotes
Waterloo
stupid question but could i add some part time employees on this phsp my sister has no coverage with anyone but she works about 10-15 hours a week for my business
Deal Addict
User avatar
Jan 19, 2005
1521 posts
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a not so obvious question (or answer required) - why would I pay Brock, for example (or anyone else mentioned here) an extra 5%-8% to process my medical bills, when I can pay for any of my medical expenses out of my own pocket and then at the end of the year write those off as medical expenses, without any extra fees attached?

I don't get it...

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