The Necessity of Health Benefit Plans
Medicare, Employer Benefits, Private Plans… What Does The Future Hold?
Everyone in this country has access to medically necessary health services. Medicare is one of the most important contributors to living standards and quality of life in Canada, yet it’s being eroded by a lack of political will and mounting cost pressures. Services are being shifted from Medicare and governments are increasingly de-listing services. While public spending on health has more than doubled since 1988, so has private spending, rising from $13 billion to $28 billion over that time.
As more care falls outside the public Medicare plans, more must be paid for privately, by patients directly or through employer-sponsored health benefit plans. The cost pressure from rising health insurance premiums will be hardest on medium and small employers. They are reporting increases from 27% to 66%. Many are shutting down their health plans, leaving workers with reduced benefits or without insurance altogether.
Providing an attractive, differentiated benefits plan is a strategic recruitment and retention tool. However, providing such benefits plans often seriously undermines the ability of organizations to build business wealth and stay competitive. Healthcare inflation is currently running higher than the consumer price index. This means, for most employers, healthcare costs as a percentage of payroll continue to grow unchecked.
The face of healthcare and Medicare is changing and it’s up to employers and the self-employed to tend their accounts and be mindful of possible tax implications, health concerns and bottom-line influences.
Given the current state of healthcare, Canadians now have two options. The first is to pay out-of-pocket for health care that’s not covered by our provincial plan and realize limited tax benefits. The second option is to purchase a private health plan, which may or may not cover 100% of medical or dental costs such as prescription drugs, physiotherapy or orthodontic procedures.
But, according to Barry Block of SABRE HEALTHdirect Inc., there is a third option. “There’s an alternative or a ‘wrap-around’ possibility that covers those expenses that are not included in a traditional benefit plan. The SABRE MEDdirect reimbursement program (Private Health Service Plan) provides a tax-efficient, self-funded benefit plan.” “With SABRE MEDdirect,” adds Block, “we can reimburse eligable medical or dental expenses not normally covered by group benefit plans – such as laser eye surgery or dental implants – directly back to the individual/employee; tax-free.” Properly structured, the SABRE MEDdirect PHSP will permit employers to provide tax-free medical reimbursement benefits to employees, while being able to deduct expenses arising there from.”
For example; consider a self-employed, unincorporated business owner with a family who earns $60,000 income and incurs $2000 in medical expenses.
- * Incorporated businesses can participate at a higher benefit limit as defined in the Income Tax Act.
SABRE HEALTHdirect Inc. is a privately owned, Markham-based company providing access to innovative benefit plan solutions and insurance strategies. For more information contact SABRE HEALTHdirect Inc. at www.sabrehealth.com.
2600 John Street, Unit 207, Markham, ON L3R 3W3 T: 905.475.5222 F: 905.475.6369
