Business owner

* Are you a business owner and fed up with increasing benefit premiums?
* Do you feel that you pay a lot in premiums, and your employees are not claiming?
* Are you incurring expenses that are not covered on your health plan?
* Do you want to give your employees benefits but are skeptical of the cost?

A Health Spending Account (HSA aka Private Health Services Plan) could be the perfect solution for you. If you have yet to learn about HSA’s, this article will provide you with a basic explanation of what it is and how it could be of value to you.

HSA’s were introduced by CRA (Canada Revenue Agency) to assist businesses and their employees with their ongoing medical expenses in a tax efficient manner. If your business is like most businesses in Canada, it likely has health benefits in place for you and your employees. Needless to say, this is a valuable element of compensation and remains a competitive advantage as employers recruit and retain their employees. Employers that provide health benefits are likely attracting quality employees and keep them happy.

Traditional health benefit plans range in their offerings, the amount covered per year and the overall cost (depending on the insurance company and the level of coverage). This works well in most situations, however it can be disadvantageous.

Two scenarios at renewal time:

*The first is that your employees have not claimed much – This means that you have essentially paid much more premium than was actually paid out. The surplus of premium does not revert back to the employer. Rather, it is kept with the insurance company.

*The second scenario is when your employees claim a sufficient amount in a given year and as a result, the company has come close to or exceeded the “Target Loss Ratio”. If this is the case, 99% of the time when considering the yearly renewal, an increase in premiums will result. This increase can vary and especially if you do not have sufficient history, the increase can be quite large.

In both situations, an HSA can be the best solution to take control of your health benefit costs. Just like its name “health spending account”, this benefit works as an account that employees can use for their medical expenses. When implementing an HSA as an employer, it is important to specify the benefit amount for employees. As the employer you have the ability to set up class levels and establish benefit amounts for each class. The benefit for the employee remains that they can use the funds for anything covered and outlined by the CRA. Unlike traditional coverage they are not limited to category maximums. The employee receives the reimbursement as a tax-free benefit and the company recognizes the full cost as a tax deduction.

With an HSA, you do not have to worry about renewals and you can adjust the plan and/or the benefit amounts on an annual basis. This kind of plan can be used in conjunction with an existing plan or can be used as a stand-alone.

To find out more about HSA’s and group benefits, please contact Harry Perler