When it comes to health care on an individual basis, choice is an important factor in selecting both elective and medically necessary services. But while Canadians have the advantage of a public healthcare system, they are also fairly limited in their choice for how some services are paid for. Group benefits for small business employees can do plenty in terms of covering costs for certain medical services, but they aren’t always the cheapest health insurance plan for employers and employees.
However, there is a way for small business owners and their workers to save money on their health care costs — and reduce their end-of-the-year tax bill with the Canada Revenue Agency. CRA health spending accounts are individualized accounts that employees can put their own money into, so they can spend on health care for themselves and their family members any way they see fit. These plans also give employees the opportunity to pay for services that may not see coverage under public or private health insurance plans. Here are three reasons why health spending accounts may be just right for your company:
It’s tax-advantaged.
With a health spending account approved by the Canada Revenue Agency, you and your employees will have the best way to save on health care costs and taxes at the end of the year. CRA health spending accounts allow employees to place 100% pretaxed dollars into their own private accounts. They would then receive a reimbursement from you every time they make a claim — and this is covered by their own deposited funds. This process helps to ensure that employees can pay for up to 100% of their out-of-pocket health care costs when they need to, and they don’t pay extra taxes while doing so.
It’s easy for business owners.
For just a couple hundred dollars, small business owners can begin administering this type of health care plan to their employees. On average, health spending accounts cost far less than small business health insurance plans that use group benefits. Further, most employees appreciate the choice they’re given with regard to their health spending, which can boost morale at work. It’s also a lot easier to understand and answer employee questions over than a complex group benefits package that only covers percentages of certain health services.
It’s great for employees.
By giving employees the option to spend their money how they want to, they get the supplemental health care services they need without all the hassle. They also save money on their tax bills at the end of the year — and so do their employers. This can give workers peace of mind because they will always know exactly how they and their family members are covered (and how much coverage they have).
Do you have questions about administering CRA health spending accounts for your employees? Be sure to contact a trusted benefits provider to find out more information. You can also leave a comment below with questions or suggestions on this topic.
