Important Questions and Answers about the Flexsave Plan
Q: What is the Flexsave Plan?
A: Flexsave is a Private Health and Welfare Trust. It is a plan that allows sole proprietors with employees and corporations to tax-deduct their health care and dental expenses in a tax-effective and cost-efficient manner. Dependants and employees are included. Flexsave Plan can be used in combination with a traditional group insurance plan.
Q: What are the maximum annual deductions allowed?
A: For Corporations, there are no annual limits, within reason. For unincorporated individuals with employees, the annual limit is $1,500 per adult and $750 per child. For example, two adults & two children would be entitled to a maximum of $4,500 per year. Note: No limits apply where the number of arms length employees receiving coverage represents at least one-half the number of employees in the business.
Q: Does it matter who spends the money from the household maximum?
A: No, it doesn’t matter. Anyone in the family can spend up to the total allowable amount for the entire family. For example, the entire $4,500 from the previous example can be applied to the children’s orthodontic treatments or your laser eye surgery.
Q: What are the costs for the Trust?
A: There is a one-time set-up fee of $250. The administration fee is 10% on claims. Claims and administration fee are both fully tax deductible.
Q: What is the In-Province Emergency and Travel Insurance?
A: For unincorporated individuals, CRA requires an insurance component. In-Province Emergency Medical covers four areas of service for injuries and sickness: prescription drugs, ambulance, private nursing, semiprivate hospital room and the services of licensed practitioners. Travel Medical covers emergency treatments outside of your own province, up to a maximum of $1,000,000. For Corporations, this Insurance is optional.
Q: What happens to the money in the plan?
A: Funds are withdrawn tax-free provided they are used for eligible health care and dental expenses. Any unused deposits are carried forward and remain in the plan for future use.
Q: Can I deduct expenses already paid?
A: Yes, we may be able to back-date your Trust to make expenses tax deductible. Please confirm with Lisa.
Q: How do I keep track of all my expenses?
A: As you submit claims, HUB sends statements detailing funds received, claims paid and account balance.
Q: How is Flexsave Plan administered?
A: Claims can be processed in two ways. You pay the health and dental expenses, then complete a claim form with payment from your business account and submit to HUB Financial for reimbursement by cheque or EFT. The second method is to prepay your Plan with monthly or lump sum amounts, then submit your claim for reimbursement.
Q: Who administers Flexsave and why use an administrator?
A: HUB International (HBG-T) is one of the largest financial service providers in Canada with over one hundred offices. They offer a wide variety of innovative products & services to Insurance Brokers. CRA requires a third Party Trustee and Administrator to adjudicate claims for accuracy and compliance.
Please contact Lisa for a Flexsave Plan Information Package