Are You Concerned with the Cost of Your Small Business Health Benefits?

Written by Business magazine. Posted in Health saving account, Small business health insurance plan, Tax tips canada

Health care spending account

Under Canadian law, all citizens are entitled to government run insurance programs, often referred to as public insurance plans, that help Canadians pay for their medical bills. However, as will be seen, governmental insurance plans are often not enough for Canada’s citizens, especially if they are on the lower end of the earning spectrum.

How Provincial Healthcare Works

In almost the entirety of Canada, healthcare costs are paid for by income taxes. These taxes cover everyone. Of course, this leads to the poorest receiving healthcare but also reduces the amount of coverage granted to others. Consider, pharmaceutical costs for the elderly and impoverished are subsidized by these public tax funds.

Subsequently, you have a public healthcare system that requires 30% of Canadian health expenditures come from private sources, meaning supplementary insurance and out-of-pocket payments. According to the Washington Post, when dental care comes into play that number increase to 35%.

How Small Business Health Benefits Can Fill in the Gaps

Employers offering high quality small business health plans
can help to lessen the burden that is placed on their employees from excess out-of-pocket health costs in two crucial ways.

  • Flexible Health Spending Accounts

  • By offering their employees flexible health spending accounts
    , Canadian employers give their workers the opportunity to set aside a portion of tax-exempt income into a debit-like account. When they want to pay for their subscriptions or other means of healthcare, they can use these cards to effectively receive cheaper, tax-free health coverage. In short, offering a flexible health spending account gives employees the ability to fill in the holes in their coverage for themselves while being shielded from taxes.

  • Fill in the Gaps
  • According to the Canadian Foundation for Healthcare Improvement, provincial healthcare provides coverage that is ridden with holes. Many policies do not offer Canadians comprehensive dental insurance, for example, leaving citizens with as much as 60% of their dental care bills to be paid out of pocket. Businesses who provide their employees with health benefits for small businesses help fill in these gaps, directly leading to improved lives for their employees.

Are the Costs Worth It?

Arguably, the biggest challenge for Canadian small business owners is the annual increase in the cost of traditional insured employee health benefits plans. Indeed, 72% of small business owners are concerned with the cost per employee of quality health plans. Utilizing flexible health spending accounts and other methods will cost Canadian businesses money, but that is a narrow-sighted view.

Consider, according to CBC News, sick days cost Canadian businesses an average of $16.6 billion a year. Sick time costs, paying overtime for covering employees, and the like all lead to increased business costs. Further, missing quality employees because of illness can be the difference between revenue and uninterested consumers.

In the end, small business health insurance plans will cost Canadian small businesses. However, the investment will pay off in more effective, more efficient employees, and loyal ones at that.

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