Individual Health Spending Accounts

The Concept

The individual health spending accounts are one of the essential individual products. The company contributes to a Health Spending Trust Account for its employees (which could include an owner who provides employment services). The contribution is tax deductible and is a 100% tax-free benefit to the employee.

How Does It Work

Susan owns a consulting company; she needs $4,000 for laser eye surgery and $6,000 for a tutor for her autistic child. She would need to earn $18,000 from the company to have $10,000 after tax to pay for these two services.

Alternatively, the company could contribute $10,000 plus admin and tax of $11,350 to a health spending account so that the member, Susan, can have $10,000 to be reimbursed for those two services.

In total, Susan’s company would save $6,650 by doing this. Essentially, you are paying pre-tax dollars for these medical expenses.

What is a Medical Expense

The list follows the rules governing the medical expenses defined by CRA and can differ by the province of service. Please verify the list from the CRA website to confirm eligibility.

The Items Eligible Would Be

  • Prescribed Drugs
  • Drug Deductible
  • Prescription Glasses
  • Medically Surgeries
  • Fertility Treatments
  • Orthodontics
  • Dental Implants
  • Provincial Health Plan (I.E., Trillium Plan in Ontario)
  • Care for an elderly parent or special needs child, and more

The HSA can be a stand-alone product to pay for your health care in pre-tax dollars. Catastrophic health insurance can be purchased from the HSA provider, and the health spending account dollars can fund the premium. Depending on the coverage, the deductible, and the carrier selected, the cost could range from $10 – $60 per month for single coverage to $20 – $80 per month for family coverage.

Critical Illness

This form of insurance will benefit you if you are diagnosed with a covered critical illness or condition. The covered conditions can include the following list:

  • Cancer
  • Stroke
  • Heart attack
  • Kidney or another organ failure
  • MS
  • Alzheimer's
  • Blindness
  • Paralysis

Unlike group critical illness, the maximums available are considerably higher but are usually medically underwritten and will exclude pre-existing conditions. Most importantly, unlike a group policy, the plan remains effective even if you leave your employer.

The cost is often age-banded, gender, and smoking status.

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Individual Life Insurance

Insurance pays a lump-sum death benefit to the estate or the named beneficiary at the death of the individual upon whose life the policy is based.

The most basic type of life insurance is term insurance. It can be made available at a lower premium rate because it is not a commitment to cover the person for their entire life. There is no guarantee that it will be paid out. It should be considered when purchased to protect against a home mortgage or dependent children.

Permanent life insurance protects an insured's entire life rather than just for a limited period. The advantage of this type of insurance is there will be a payout. It is commonly purchased to provide a legacy to the beneficiaries or to pay a tax liability such as income or capital gains tax that is only triggered at the time of passing; often, permanent life policies are used for philanthropic and charitable purposes.

The initial cost is the principal disadvantage of the whole life policy versus term insurance. Additional premiums are built early in the policy to fund the mortality in later years.

Universal Life Insurance

In addition, a permanent policy may offer the policy owner the opportunity to accumulate funds in a tax-exempt investment environment.

Please contact us for a complete needs analysis to best choose a disability product to meet your individual needs.

Individual Long-term Disability Insurance (LTD)

LTD insurance pays you money in case of disability. It provides a monthly income stream if you cannot work due to a severe injury or illness. There are many types of policies with different definitions and riders. There are “any occupation” plans and “own occupation” plans. With an “any occupation” plan, you may not receive any benefits if you become disabled but can perform a less demanding job.

Please contact us for a complete needs analysis to best choose a disability product to meet your individual needs.

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Travel Insurance

Most group plans offer out-of-province/country travel insurance. Some include emergency health coverage, trip cancellation, and baggage insurance. Many credit cards offer some protection. It is essential to understand if there is a gap in coverage as an out-of-country medical cost could be tens of thousands of dollars.

Purchasing a single trip or multi-trip plan is essential if you have no coverage.

Long-term Care Insurance

For an estimate of rates, please consider long-term care insurance. This type of care is becoming a significant concern. For example, the need for long-term care could be caused by a car accident or dementia, ranging from minimal to intensive care. The insurance could cover:

  • Care by a nurse at home or within a facility
  • Cost of facility
  • Rehabilitation and therapy
  • Personal care to help with daily activities
  • Supervision by another person
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Immigrants & Visitors to Canada

Emergency medical insurance for new arrivals or visitors to Canada. While living in Canada, provincial health plans might not be available to you right away. Proof of coverage of this type of insurance is often required before coming to Canada.

Expatriates and Student Plans

Emergency medical insurance for students learning abroad and Canadians working abroad for an extended duration.

Check out our travel insurance services details.