What is FlexSave Plan?
FlexSave Plan is a Private Health Services Plan. For Incorporated Companies, it facilitates a tax-effective and cost-efficient way to pay for health care and dental expenses. FlexSave Plan allows business owners to deduct money spent on all eligible health care and dental expenses from their business income. Family's expenses are eligible as well. Employees receive a tax-free benefit.
Please click on the List of Eligible Expenses.
There are numerous reasons why a business may consider a FlexSave Plan.
1. Currently paying Health/Dental Expenses personally
Flexsave Plan provides a mechanism to have health care and dental expenses paid from a more tax-efficient place without the company having to qualify or put in place a traditional employee benefit plan.
For example, a dental expense in British Columbia of $1,000 could be paid through Flexsave at $1105 pre-tax dollars (deductible to the business) as opposed to an employee having to earn $1675 (assuming a 40% tax-bracket) to net $1,000 to pay the expense.
2. Using the Medical Expense Tax Credit through personal income taxes
Any individual may deduct medical expenses through their income tax that is determined by a CRA (Canada Revenue Agency) formula*. This formula creates a threshold in which any amount exceeding that can be eligible for tax credit. Currently in 2019, threshold formula is calculated as 15% of eligible medical expenses, paid within any 12-month period ending in the year, that exceeds the lesser of $2,352 for 2019 and 3% of your net income.
The allowable portion for the tax credit is then multiplied by the lowest tax rate percentage for the year.
3. Want to reduce/eliminate potential increases in Health/Dental Insurance Premiums
Since FlexSave Plan is not insurance in the traditional sense, employers are drawn to the concept of “fixing” their health/dental funding. Employers under a FlexSave Plan know that they will not receive rate increases annually based on their employee usage.
These employers use the FlexSave Plan on its own or as a means of complementing their insurance plan. The FlexSave Plan can also be used to run expenses that are not covered under another plan, such as the deductibles, coinsurance amounts, and amounts beyond the maximums.
4. Have investigated Insurance but frustrated with expensive premiums
Many business owners have investigated health/dental coverage but did not pursue it for any of the following reasons:
• Company was too small to have real “purchasing power” with the insurance companies
• Company was too new or in an industry where insurers are not interested in providing benefits
• The majority of their workforce had coverage through spousal plans
• Their workforce wanted control over where they could use funds without being restricted by co-insurance or low maximums in each category (ie. dental, vision care, chiropractic etc)
The FlexSave Plan addresses these issues as it does not restrict where the allotted dollars per employee are utilized and can even be used to run through the deductibles, co-insurance and amounts beyond the maximums in a spouse’s plan.
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Important Questions and Answers about the FlexSave Plan
Q: What is the FlexSave Plan?
A: Flexsave is a Private Health Services Plan that allows corporations to tax-deduct their health care and dental expenses in a tax-effective and cost-efficient manner. Dependants and employees are included. FlexSave Plan can be used in combination with a traditional group insurance plan.
Q: What are the maximum annual deductions allowed?
A: For Corporations, there are no annual limits, within reason.
Q: Does it matter who spends the money from the household maximum?
A: No, it doesn’t matter. Anyone in the family can spend up to the total allowable amount for the entire family. For example, the annual maximum limit can be applied to the children’s orthodontic treatments or your laser eye surgery.
Q: What are the costs for the Trust?
A: There is a one-time set-up fee of $250. The administration fee is 10% on claims. Claims and administration fee are both fully tax deductible.
Q: What happens to the money in the plan?
A: Funds are withdrawn tax-free provided they are used for eligible health care and dental expenses. Any unused deposits are carried forward and remain in the plan for future use.
Q: Can I deduct expenses already paid?
A: Yes, you may be able to back-date your FlexSave Plan to make expenses tax deductible. Please confirm with Lisa.
Q: How do I keep track of all my expenses?
A: As you submit claims, HUB sends statements detailing funds received, claims paid and account balance.
Q: How is FlexSave Plan administered?
A: Claims can be processed in two ways. You pay the health and dental expenses, then complete a claim form with payment from your business account and submit to HUB Financial for reimbursement by cheque or EFT. The second method is to prepay your Plan with monthly or lump sum amounts, then submit your claim for reimbursement.
Q: Who administers FlexSave and why use an administrator?
A: CRA requires a Third Party Trustee and Administrator to adjudicate claims for accuracy and compliance. HUB International (HBG-T) is one of the largest financial service providers in Canada with over one hundred offices. They offer a wide variety of innovative products & services to Insurance Brokers.
Please contact Lisa for a FlexSave Plan Information Package
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