Why More Small Business Employers and Employees Are Using CRA-Approved Health Spending Accounts
In Canada, most citizens rely on the public health care system for their basic health needs. The services covered by the government will take care of physician and hospital visits in most cases. However, there are plenty of Canadians who need to see a specialist and find themselves paying out of pocket for everything from mental health spending to lap band surgery costs. Because these services may not even be paid for by traditional small business health plans, Canadians will often pay the costs for these and other visits themselves.
However, there is another option that Canadians can use for their health care, and it is completely approved by the Canada Revenue Agency: health spending accounts. A health spending account CRA-approved will give small business employers a simple way to administer health benefits to employees. These funds are 100% pre-taxed and go into the employee’s individual account to be used when they need it.
Not only are health spending accounts easy for employees to use, but they’re also simple for employers to set up. In general, they cost under $200 to administer and are a great alternative to more costly group benefits plans. They also don’t require any set premiums for employees, either. This allows employees to set any amount they like to be taken from their regular pay.
Health spending account CRA advantages mostly include those that have to do with taxes. The funds for these out of pocket services are placed into the accounts before taxes are taken out of the paycheque. This helps lower Canadians’ tax bills and is advantageous for employers, too. The low costs benefit small businesses, especially. With approximately 72% of small business owners concerned about the cost of health care per employee, this low cost option can help assuage some of those fears.
Have more questions about health spending account CRA advantages and administration? Leave a comment below.