With proposed tax changes on the horizon for small business owners, now is the time to explore alternative means of maximizing pre-tax dollars. Fortunately, Private Health Spending Plans appear to be untouched by the currently proposed amendments.
Private Health Services Plans (PHSPs) are Canada Revenue Agency (CRA) approved plans which date back to the early 1990’s. These simple-to-setup, flexible plans are a great alternative to group insurance, as it is the business owner (and not the large insurance companies) who decides how the plan will be administered. PHSPs allow medical expenses of employees to become a deductible business expenses for the employer. This translates into affordable medical coverage for self-employed and small business owners alike.
Once a PHSP is set up, personal healthcare, dental and vision costs paid with after-tax dollars are a non-taxable medical benefit to the employee. Couple this with the fact that related expenses are fully tax deductible by the company and PHSP’s are a no-brainer.
Another significant component of PHSPs is that they can be used to augment current benefit plans by covering medical costs which are exempt from many traditional group packages. Even the co-pay/deductible amount from group insurance packages can be claimed through a PHSP. Many navancorp clients have so fully embraced PHSPs that they have actually cancelled their existing group insurance plans, enjoying the freedom and flexibility that PHSPs offer.
If you are an incorporated entity, you should consider a PHSP now. Smart professional corporations, electrical and plumbing contractors, independent consultants, accountants and other small business owners are taking advantage of these tax-efficient and compelling plans – shouldn’t you?