Individual Health Spending Accounts
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 and she needs $4,000 for laser eye surgery for herself and $6,000 for a tutor for her autistic child. She would need to earn $18,000 from the company to be able to have $10,000 after tax to pay for these two services.
Alternatively, the company could contribute $10,000 plus admin and tax for a grand total 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.
In essence, you are paying pre-tax dollars to pay for these medical expenses.
What Is A Medical Expense
The list is in accordance with the rules governing the medical expenses as defined by CRA and can differ by province of service. Please verify the list from the CRA website to confirm eligibility.
The items could include services provided by the following licensed medical practitioners:
- Traditional Chinese medicine practitioner
- Chiropodist, podiatrist
- Dental hygienist, technician, dentist
- Licensed dietician
- Registered nurse
- Occupational therapist
- Optician, optometrist
- Pharmacist – therefore prescription drugs, dispensing fees
- Physician, surgeon (including outside of Canada) – excluding purely cosmetic surgery
- Psychologist, social work, speech pathologist
- Registered massage therapist
As such, the items eligible would be prescription drugs, Provincial Health Plan (i.e. Trillium plan in Ontario) drug deductible, prescription glasses, medically surgeries, fertility treatments, orthodontics, dental implants, care for an elderly parent or special needs child and more.
The H S A can be a stand alone product to pay for your health care in pre-tax dollars. A Catastrophic health insurance within and outside Canada can be purchased from the H S A provider. The premium for this insurance component can be funded by the health spending account dollars. 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.
This form of insurance will provide a benefit if you are diagnosed with a covered critical illness or condition. The covered conditions can include the following list:
- Heart attack
- Kidney or other organ failure
- And more
Unlike group critical illness the maximums available are considerably higher but are usually medically underwritten and will exclude pre-existing conditions. Most importantly, the plan remains in effect even if you leave your employer, unlike a group policy.
The cost is often age banded, gender and smoking status.
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 comparatively lower premium rate because a term plan is not a commitment by the insurer to cover the person for their entire life. There is no guarantee that it will be paid out. It should be considered when it is purchased to protect against a normally shorter term liabilities such as a home mortgage or dependent children.
Permanent life insurance is to provide protection for the entire life of an insured rather than just for a limited time 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 are only triggered at time of passing often permanent life policies are used for philanthropic and charitable purposes. The major disadvantage of the whole life policy versus term insurance is the initial cost. There are additional premiums built in early in the policy years to fund the mortality in later years.
Universal life insurance
In addition a permanent policy, may offers the policy owner the opportunity to accumulate funds in a tax-exempt investment environment.
Please contact us for a full needs analysis in order to best choose a life insurance 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 are unable to work due to a serious 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, if you become disabled, but you could perform a less demanding job, you may not receive any benefits.
Please contact us for a full needs analysis in order to best choose a disability product to meet your individual needs.
Most group plans offer out of province/ country travel insurance. Some include emergency health coverage, as well as trip cancellation and baggage insurance. In addition, many credit cards offer some protection. It is important to understand if there is any gap in coverage as an out of country medical cost could be tens of thousands of dollars.
If you have no coverage, it is important to purchase either a single trip or multi trip plan.
For an estimate of rates, please consider:
Long-Term Care Insurance
This type of care is becoming a major concern. For example, the need for long-term care could be caused by a car accident or be the result of dementia. It can range 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
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. Often proof of coverage of this type of insurance is required before coming to Canada.
Expatriates and Student plans
Emergency medical insurance for students learning abroad and for Canadians working abroad for an extended duration.