Health and Welfare Planning

CRA Federal legislation allows business owners to fully tax-deduct 100% of their healthcare costs as a business expense. The Health and Welfare Plan provides expanded medical and dental coverage to professionals, business owners, their families and certain employees (defined in ITR-85R2). Anyone who owns a business of any size qualifies. There are no health questionnaires, underwriting requirements or age limits.

Here is a list of features that the Health and Welfare Plan includes:

  • Company contributions made to the Health and Welfare Plan for eligible expenses are tax-deductible to the company
  • Out-of-pocket medical costs are turned into tax-deductible corporate expenses
  • Drug, health and dental expenses paid through a Health and Welfare Plan are not taxable benefits to the employee
  • Flexibility in providing additional drug, health and dental benefits for employees with a preset limit
  • 100% of virtually all dental and medical expenses, including acupuncture, cosmetic surgery, dental implants, hair transplant, laser eye surgery, MRI, special needs schools, Viagra, and much more
  • Potential for no outside administration costs if the Plan is administered internally
  • Has the potential to allow critical illness (CI) and long term care (LTC) insurance premiums to be deductible to the company and benefits paid to employee tax free at claim time

Set-Up Options

  • Can set up for an initial fee of $200 and an annual administrative fee of 8% of total claims plus applicable taxes (cannot set up critical illness or long-term care contracts)
  • Pay one time fee of $1,500 with no outside administrative costs as the plan is administered internally by the organization setting up the plan (can include critical illness and long-term care contracts).

Other Key Factors

  • Multiple people, Incorporated Company — The Health and Welfare Plan must be set up for two or more employees. If you have a company that employs yourself, your wife or an adult child, then your wife or adult child may qualify as second employee.
  • Single person, incorporated company — The Health and Welfare Plan can be setup for a sole employee, provided the benefits will be available to future employees.
  • Limits for Non-Incorporated sole proprietors — Non-incorporated sole proprietorships can set up a Health and Welfare Plan. However, the benefit for the sole proprietor and his/her immediate family is limited to $1500 per year per family member (over 18). For children under 18 the limit is 750.

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