What is Flexsave Plan?
Flexsave is a Health and Welfare Trust, approved by Revenue Canada. It facilitates self-employed individuals, partners and incorporated companies through paying their health care and dental expenses in a tax-effective and cost-efficient manner.
Flexsave Plan allows business owners to deduct money spent on all eligible health care and dental expenses from their business income. Family's expenses are eligible as well. Employees receive a tax-free benefit.
Please click on the List of Eligible Expenses.
There are numerous reasons why a business may consider a Flexsave Plan.
1. Currently paying Health/Dental Expenses personally
Flexsave Plan provides a mechanism to have health care and dental expenses paid from a more tax-efficient place without the company having to qualify or put in place a traditional employee benefit plan.
For example, a dental expense in British Columbia of $1,000 could be paid through Flexsave at $1105 pre-tax dollars (deductible to the business) as opposed to an employee having to earn $1675 (assuming a 40% tax-bracket) to net $1,000 to pay the expense.
2. Have investigated Insurance but frustrated with expensive premiums
Many self-employed individuals/businesses have investigated health/dental coverage but did not pursue it for any of the following reasons:
• Company was too small to have real “purchasing power” with the insurance companies
• Company was too new or in an industry where insurers are not interested in providing benefits
• The majority of their workforce had coverage through spousal plans
• Their workforce wanted control over where they could use funds without being restricted by co-insurance or low maximums in each category (ie. dental, vision care, chiropractic etc)
The Flexsave program can address many of these issues as it does not restrict where the allotted dollars per employee are utilized and can even be used to run through the deductibles, co-insurance and amounts beyond the maximums in a spouse’s plan.
3. Want to reduce/eliminate potential increases in Health/Dental Insurance Premiums
Since Flexsave is not insurance in the traditional sense, some employers are drawn to the concept of “fixing” their health/dental funding. Employers under a Flexsave program know that they will not receive rate increases annually based on their employee usage.
Often these employers will use the Flexsave program on its own or perhaps as a means of complementing their plan (dental, health) that may be seeing heavy usage and rate pressure. The Flexsave program can also be used to run through amounts that were not covered under another plan, such as the deductibles, coinsurance amounts, and amounts beyond the maximums.
4. Using the Medical Expense Tax Credit through personal income taxes
Any individual may deduct medical expenses through their income tax that is determined by a CRA (Canada Revenue Agency) formula*. This formula creates a threshold in which any amount exceeding that can be eligible for deduction. Currently the threshold formula is calculated by taking the lesser or 3% of an individual’s net income or $1926 (for 2007). The allowable portion is then multiplied by the lowest tax rate percentage for the year.
Need to make a Claim? Download the Flexsave Plan Claim Form - 591K - PDF