As a business owners working with business owners, I have discovered that successful business owners are very concerned about:
- Exploring new and innovative tax strategies
- Protecting their business and families
- Managing business costs effectively
We are also all looking for a way of paying our medical expenses that is affordable and easy. Which brings me to what I refer to as one of “CRA’S Best Kept Tax Secrets”, the “Health Spending Account”. A Health Spending Account is an effective way for a small business to convert most health, medical, and dental expenses into a fully tax-deductible company expense.
A small business owner has 3 options to pay for medical expenses:
The first option is to use a traditional “group” insurance plan, which can be expensive, restrictive and complex.
The second option is to self-insure by paying health expenses personal, with after tax dollars, not the most tax effective choice.
The third option, a Health Spending Account, offers the business owner the benefit of converting medical expenses into a tax deductible business expense, flexibility, ease of understanding, with no premium commitments or restriction. This can result in very significant personal and corporate tax savings for the small business owner, as well as a tax free benefit for the employees to use for their healthcare expenses.
Who Qualifies For A Health Spending Account?
If you own your own business, have medical expenses, and pay income tax, you qualify. Most medical expenses such as prescription drugs, dental, optical including laser surgery, and an abundance of other health related costs including travel insurance are eligible expenses under a Health Spending Account.
In summary, a Health Spending Account is a vehicle the small business owner can use as an alternative to a traditional group insurance plan. The business owner converts personal medical expenses into a tax savings by paying those expenses with personal dollars. A business owner manages costs effectively, reduces employee turnover, while protecting their family and business.