Health & Welfare Trusts
DID YOU KNOW . . . HEALTH AND DENTAL COVERAGE CAN INCREASE AND COST LOWERED INSIDE A HEALTH AND WELFARE TRUST?
If you are a sole proprietor, professional or small business owner, you have three ways to fund your health and dental costs.
- Pay from your own pocket using after-tax dollars and receive little or no tax break.
- Purchase individual group coverage, pay more in contributions than you ever spend in claims, and watch your premiums increase every year.
- Establish a Health & Welfare Trust to minimize cost and optimise coverage.
A Health & Welfare Trust (HWT) is sanctioned by Canada Revenue Agency (CRA). It is a tax-deductible account that lets you write off predictable health and dental expenses. By using before-tax dollars to pay for health care, your money goes further. What’s more, you only pay for the services you actually use.
These employee ‘bank accounts’ are 100% tax deductible to the corporation and not considered a taxable benefit to the employee. They are used exclusively to finance the health and dental expenses of the business owner, employees and their family members.
Any funds deposited into the Trust by a business are 100% tax deductible for the year in which they are contributed. If the money is not spent that year, excess funds roll over indefinitely and can be used for a broad range of health services – unlike traditional plans or group insurance.
If you have full-time employees, the rules are more complex. The rules vary depending on whether you are incorporated or not. Contact us for more information.
In addition, a stop-loss insurance option (mandatory for sole proprietors and unincorporated businesses) limits the amount you’ll pay on a large unexpected health claim.
For sole proprietors and unincorporated businesses, a Health & Welfare Trust is a legitimate way to write off health and dental expenses, letting you deduct 100% of qualified healthcare expenses from your taxable business income.
Enhanced Benefits for Executives
Under traditional group plans, all employees are given the same health and dental benefits. Because these benefits are not linked to salary, your shareholders, managers and executives are short-changed.
Reward the people you most value by creating an ‘executive carve out’. We’ll set up a customized plan for your executives, taking account of their needs and special status.
This health and wellness bonus is an effective way to attract and retain key employees. It can be used for a variety of services, access to private practitioners for critical care, preventative health and fitness specialists, and specialized medical services globally. This can be set up in tandem with your traditional group plan or on its own.