If you spend money on yours and your family’s medical needs and are not covered under an extended health plan or group benefit plan, it would be smart to set up a Health & Welfare Trust, also known as a Personal Health Services Plan or Health Spending Account.
The best thing about the Health Trust is that CRA's rules are quite broad in terms of what is accepted as a medical expense and covers items such as fertility drugs, laser eye treatment, private MRI and even vitamins. Of course it also covers all traditional expenses such as prescription drugs, massage therapy and most paramedical services, dental work including braces and orthodontics. Essentially anything under the health and dental umbrella that is medical required.
A Health Trust is a special type of ‘bank’ account established under the CRA which allows Canadians to deposit a portion of their gross (before tax) income into an account to be used exclusively for their family’s health care needs.
For incorporated business owners you can choose to contribute monthly to the Trust account in order to build up a pool of money available to cover expenses as they come up OR you can choose not to fund the account.
The cost is a one time fee of $250 along with a 10% administration charge per claim.
For employees, a Health Spending Account can be set up by your employer to allow you to pay for your medical expenses with PRE-tax dollars.
(This is a great option for employers that want to cover a portion of their employees’ health expenses but do not want the cost of an extended health plan. Employers can set up employee classes and allocate a certain dollar amount to their employees for their health care needs).
If you have a Chambers Plan, the Chambers Plan has an embedded Health Trust program called Cost Plus. The reason it is called Cost Plus, is because the cost to the business is the Cost of the expense - Plus the administration fee. With the Chambers Plan the admin fee is only 5% and there is a maximum of $125 per claim form.
Business owner pays $1000 for a private MRI
He submits the Cost ($1000) PLUS admin fee (5%) via company cheque to the Chambers Plan = $1050
The Chambers Plan keeps the 5% = $50
Business owner is personally reimbursed $1000
Corporation gets a $1050 business deduction
So he was able to get $1000 out of his company and his company gets a $1050 deduction.
This very smart financial and tax planning.
Call Desiree for more information 778 245 2262