December 23, 2020
From Chapter 5 of Heal Thy Wealth: How Doctors Are Misdiagnosing Their Own Financial Health And What They Can Do About It. HARDCOVER NOW ON AMAZON. Click here: https://amzn.to/3mkXAu6
Turning Personal Costs Into Corporate Tax Deductions
Why pay for healthcare costs out of your own pocket when you can have your corporation pay these expenses?
A doctor running an MPC is like any other small business owner who is challenged with how to pay for drug, dental, and extended healthcare costs. If you do not have access to a group plan through your spouse, you will have to pay for these expenses out of your pocket using after-tax income. This is where a Health Spending Account (HSA) is of great value to you and your family. You will no longer have to pay for these expenses personally; all you need to do is to set up an HSA, and any contributions by your MPC are 100% tax deductible to the MPC while all eligible medical expenses are reimbursed to you and your family tax-free.
HSAs are less expensive than group insurance policies. With group insurance, the costs are based on the previous “experience” in terms of claims filed, plus the insurance company’s fees and profits.
What Is A Health Spending Account?
An HSA is a self-insured Private Health Services Plan (PHSP) setup by the employer (doctor) as a benefit for their employees. Expenses that are covered include both health and dental care expenses. Below is a sub-list of some of the other expenses that are covered:
• Acupuncture
• Dentures
• Naturopath
• Orthopedic Shoes
• Psychotherapy
• Ambulance
• Dermatologist
• Nursing
• Orthopedist
• Radium Therapy
• Artificial Limbs
• Drugs
• Neurologist
• Osteopath
• Massage Therapy
• Blood Tests
• Eyeglasses
• Obstetrician
• Oxygen
• Sterilization
• Braces
• Fertility Treatments
• O.R. costs
• Pediatrician
• Vaccines
• Chiropractor
• Guide Dog
• Ophthalmologist
• Physician
• Vasectomy
• Contact Lenses
• Hearing Aid & Bat.
• Optician
• Physiotherapist
• Viagra
• Crowns
• Hospital Bills
• Oral Surgery
• Psychiatrist
• Vitamins
• Crutches
• Insulin Treatments
• Organ Transplant
• Psychoanalyst
• Wheelchair
• Dental Treatments
• Laser Eye Surgery
• Orthodontics
• Psychologist
• X-Rays, etc.
For a more detailed list, you can visit the Canada Revenue Agency (CRA) website: www.cra-arc.gc.ca
How Does A Health Spending Account Work?
From a visual perspective, picture a health spending account like a type of piggy bank for your drug, dental and extended healthcare needs. Money deposited by your MPC can be used to cover all CRA-approved eligible personal medical expenses. All contributions are 100% tax deductible to the corporation and they are 100% tax free to the employees.
An employee pays for the health or dental service up front and then submits the expense to an automated claim process using my website at www.moaklerwealthmanagement.com. First, they click on the button labelled “Client Login” and then they proceed to click on “My Health Spending Account.” Once the expenses have been submitted and verified, the money is then deposited into your personal bank account on file approximately three business days later. You do not need to mail any paperwork, but the plan does call for you to keep your receipts in case of an audit by CRA.
An HSA can be set up for a one-person business or multi-employee MPC as a cost-effective alternative to an insured drug and dental plan.
From Chapter 5 of Heal Thy Wealth: How Doctors Are Misdiagnosing Their Own Financial Health And What They Can Do About It. HARDCOVER NOW ON AMAZON. Click here: https://amzn.to/3mkXAu6
By John Moakler, BMath, CFP, CLU
President and Senior Executive Financial Planner
Moakler Wealth Management
info@moaklerwealthmanagement.com
1 416 840 8544