Health & Dental for Sole Proprietors

[quasilife]

Continuing my onslaught of Qs.. :razz:

Do you guys go with those new PHSPs for health and dental coverage? I've been trying to compare them to regular private plans - the one I was considering specifically was AMEX's (http://www10.americanexpress.com/sif/cda/page/0,1641,19720,00.asp).
Extended plan covers drugs at 90%/$1000 first year, 100%/3500 thereafter (no dispensing fees either), dental 80%/$800 yr1, $1200 yr2, $1500 yr3, fairly extensive coverage, etc... for about $128/mo (or $107 at lower med. limit) seemed like a decent deal. But then I'd be all this out of my pocket...

Then PHSPs provide a way of doing this as a fully tax-deductible operation and run as flexibly as needed. But for a single person there's a $1500 limit. Then most health trustees charge $200-300 as start-up costs + 10% fee on each transaction. But this is all apparently deductible.

So which is "better", as un-precisely and subjectively as that sounds? What does everyone use? Any particular PHSPs / private Health/Dental packages you'd recommend? It *seems* to me that PHSPs should be a better choice for us, small business owners, provided that the limit isn't an issue. But then I remember how one year a few years ago I'd be out about $3500 for antibiotics and $2000 for dental if not for my wonderful insurance at work, and that makes me wonder. My regular expenses are usually way under $1500, but 'what if...'

On an amusing, slightly off-topic note, while browsing AMEX's packages, I noticed one of them offers a $5000/$10000 fracture insurance. This means I lost about $60000 in free equity through skiing accidents.... grrrr. :|

Thanks,
QuasiLife

[zzricezz]

You know yourself better than anyone, ask yourself if you think you going to spend more than $128x12 in claims for the coming year.

I personally went with PHSP because I only need to pay for what I need and my company expense it. And because it was the only way for me to pay for my laser eye surgery :)..

The best place i found was

http://www.costplus.ca/
$150 register fee
8% admin fee (drop to 5% if you refer someone)

But again it really depend on your health.. if you need those expensive drug that going to cost you $5000 a year, then those drug plan is better.

[quasilife]

Hmmm,

Yeah, that makes sense. Greenshield also offers a decent plan for about $89/mo, which makes it even more appealing, but the PHSP you quoted sounds like it'd be the best thing, provided that the limit wouldn't be that much of an issue. Well, will look around a bit more and decide in a month. Thanks!

[YLSF]

I am also interested in getting info on this.

Can a corporation pay for an employee's health benefits (i.e. prescriptions,etc) directly and have it deducted? Or does it have to go through one of these other plans? We are with Greatwest life and they have a "medical recovery payment" plan thing. They charge a 10% admin fee.

We have basic coverage but thinking I might get laser eye surgery done..

[quasilife]

Hey... as far as I know this too, would be best done through a PHSP. A corporation can do what you're asking for, and more, since the PHSP regulations are far less restricted for corps. A) No spending limit and B) no need for an out-of-province plan. You'll still be hit with the 10% fee - after all trustees must make money and there is no way of bypassing a trustee since CRA requires an arm's-length relationship between the agency and the client - i.e. the PHSP and the corp in this case. But that 10% is also deductible. I think that for a SMB corp, a PHSP is a no brainer.

[YLSF]

Hmm.. What is the best way to figure out if we should cancel our existing healthcare coverage and use a PHSP strictly??

[quasilife]

Hmm.... math :)
Seriously... if your skills are strong enough, you can probably work it out in about 20-30 minutes in Excel. Like for a PHSP I'd imagine it'd be something like... total cost = start fee + net% x total spent on plan, where (since that 10% is not recoverable but deductible) net% = gross% - marginal tax rate x gross %. But this is basic, doesn't assume dividends or multiple people, and well, you'd still have to work it out for the actual plan...

If not, give your accountant a call and ask her to work it out.

[YLSF]

Well, it is all about "risk" too right. Because if the expenses are "expected" to be a certain amount but end up being double or triple that, it will totally change the picture. Looks like one employee is maxing out the drug benefits on the plan. Will have to do some calculating to see how much premium we are paying vs. benefits we are getting and how likely it will be that employees on the plan will use more "benefits" in the future.

[quasilife]

Well, that's an interesting point. I was under the impression that it didn't work like that (but I could be wrong on this point). My impression was that you couldn't abuse a plan that way; that each employee would have to contribute whatever amount he'd need to be covered by. The unbalanced maxing out of funding is only possible in a family situation under the proprietorship provisions where technically one family member could use the entire amount allocated to the family (so if employee is covered for 1500, same for wife, and 750 for the child, one person could use the 3750 to say, pay for braces).

But does this apply to corps? If so, yeah, your risk management scenario applies. If not, nothing to worry about. Yet another question for an accountant. Well, it's gotta be on CIRA's website, too, but corp documentation is such a headache (which is why I won't incorporate until it will start to make sense financially).

[Just Confused]

Check out Brock Health Administration. They claim to be the cheapest PHSP in Canada. They only charge $100 set up fee and 5% commission on claims.

www.brockhealth.ca

[meow730]

hi,

i'm looking for someone who recently joined/or will be joining CostPlus to refer me (please PM me for referral info). if you are interested in joining CostPlus i can answer the basic questions.

thanks in advance for help me out.

[Casper]

Question...can you combine lets say a BlueCross basic policy, and a PHSP? I'm with manulife right now, insanely expensive, and haven't used hardly anything in the past 7 years (enough in premiums to buy a nice car).
I'd like the basics covered (semi-private etc), but don't mind paying for prescriptions etc through a PHSP.
Thoughts?

[Just Confused]

Yes, if you or your spouse use an insurance company plan, you can put all those annoying amounts that they don't pay through your PHSP. Just send the reconciliation provided by Manulife to your PHSP provider. It's as good as the original receipts. Talk to Manulife to see if you can get coverage for big ticket items only for a reduced premium, then put all the routine stuff through the PHSP.

I don't even carry health insurance anymore(except overseas travel). I figure if I'm hit by a bus I'll sit in the waiting line at emergency and let Alberta Health pick up the tab. In the meantime my 5% PHSP has saved me enough for that nice car!

[Bwadd]

We get our benefits through Manulife Cover ME....

Very good product, well priced in our opinion and very fast with reimbursement...

They have 3 combo plans that have everything you need in one plan, drugs, dental, travel, eye wear etc..

The enhanced plan (top of the line) covers 90% on dental toa 1500 max yearly, pay for dispensing fee only on drugs, $500 eye wear every 3 years.

I know this is not a PHSP but for individual benefits and self-employed individuals it works great!

[Just Confused]

That's the point a PHSP has none of those restrictions.

A PHSP allows you to claim 100% of dental, covers the dispensing fee on drugs and you can claim glasses every year ( and physio, chiro, massage, naturopaths, acupuncture... the list goes on forever) and you don't pay any premiums. You just pay what that health service is worth. The 5% fee to the PHSP provider just makes all those costs tax deductible. Most people's marginal tax rates are heading up to 30%+ so your saving at least 25% of the medical expenses in taxes.

If you add up the premiums and all the little things that the insurance didn't cover it's not worth it for the small stuff. The only thing your protecting yourself against with health insurance is the catastrophe stuff.

Why not get the 100% tax deduction for all the small routine stuff and only buy catastrophic coverage from the the insurance company? If your spouse is getting health benefit free as part of an employee role, then that's a different story. But if all your family income comes from your business consider a PHSP as the routine carrier and Manulife for catastrophe only.