Health & Dental Plans for the Self Employed
The Olympia Health & Dental Plan (Plan TWO for sole proprietors) will enable you to use your family’s health and dental expenses as a fully deductible business expense. So rather than pay health and dental insurance premiums, you only pay for what you actually need. In addition, if you already have extended health insurance, you can still use this program to cover portions of expenses not covered by your existing plans.
Plan TWO provides a unique option for sole proprietors to reduce taxes and cut health care costs considerably.
What will I save on my family’s health and dental expenses?
Savings with the Olympia Health & Dental Plan can be as high as 30% on every dollar you spend for healthcare costs. With a higher income and larger healthcare expenses the savings will be even more substantial. Using the Olympia Health and Dental Plan you are effectively converting family health and dental costs into a business expense – so the deductions become more valuable as taxable income increases.
Example 1 – Self Employed Professional with $1,000 in family health & dental expenses
Savings will depend upon your province of residence and your marginal tax rate. The following example assumes $1,000 in health and dental expenses with an income of $40,000. The effective tax rate is 40% when CPP is considered.
Without Plan TWO, the proprietor must claim their health and dental expenses through the Medical Expense Tax Credit (METC). This tax credit is calculated based on income and medical expenses incurred (details are shown at bottom of this page). In this example, the proprietor would receive no tax savings. The “NO PLAN METC” bar in figure 2 illustrates this situation.
The proprietor using Plan TWO will effectively reduce their taxable income by $1,000. The tax savings realized through this deduction amounts to $400.
How Do Claims Work?
Below is an example of a $1,000 health and dental expense and the steps involved for making a claim with Plan TWO. Instead of charging a premium (like an insurance company), Olympia charges a 10% administration fee on all claims.
The process is very straightforward and easy to understand. Olympia administers the plan and any expenses claimed become a tax deduction for your business.
The claims process works as follows:
- Step 1 - Sole proprietor pays for health or dental expense personally (example - $1,000.00)
- Step 2 - Sole proprietor completes claim form with receipts
- Step 3 - Sole proprietor sends Olympia funding for the claim, plus a deductible 10% administration fee. ($1,100.00)
- Step 4 - Olympia reimburses sole proprietor for the original amount ($1,000.00)
Example 2– A Professional with Plan TWO
Jeanette is an independent real estate agent operating as a sole proprietor. Jeanette and her family have an insurance plan through her husband’s employer, but the family still spends about $2,000 per year for expenses not covered by insurance. They currently pay for these expenses “out of pocket” or with personal after tax income. Based on Jeanette’s personal income tax rate, her business must earn approximately $3,000 in total income to pay for these expenses. ($3,000 minus $1,000 in personal taxes.) This leaves her with $2,000 to pay for the family’s health and dental expenses.
By implementing an Olympia Health and Dental Plan, Jeanette is able to transfer those same health and dental expenses (currently costing her $3,000 in total) into her business to be used as a business expense. For a small administration fee of 10% of her claims (10% X $2,000 of health care costs = $200) she is now able to deduct 100% of these costs as a business expense.
The savings in this situation are significant:
| Before using an Olympia Health & Dental Plan | Total cost: | $3,000.00 |
| After signing up for an Olympia Health & Dental Plan (Cost of expenses $2,000 plus 10% administration fee $200) |
Total cost: | $2,200.00 |
| Total Savings: | $800.00 |
Eligible Health & Dental Expenses
The Olympia Health and Dental Plan is much more thorough for covering expenses than traditional health and dental insurance plans. Olympia is operating as an administrator, not an insurer, so we do not restrict the types and amounts of health and dental care expenses submitted.
Please click on the following sections for details about covering expenses that you are interested in:
- Dental cleanings, major dental work (including braces & root canals)
Details on eligible dental expenses… - Vision coverage (frames, lenses, contacts, laser eye surgery)
Details on eligible vision care expenses… - Prescription medications
Details on deducting prescription medications… - Chiropractic, Massage & Physiotherapy treatments
Details on deducting chiropractic, massage and physiotherapy treatments… - And more!
How Much Can I Claim?
Annual deduction limits for unincorporated businesses are set by the government and restricted to $1,500 per year for family members 18 years or older, and $750 per year for members under 18 years of age – combined into a family total. For example, a family consisting of a husband, wife and two children under the age of 18 would be allowed $4,500 per year for the family. ($1,500 + $1,500 + $750 + $750). For significant dental work such as braces, please contact Olympia Benefits for payment options to maximize your deductions.
Enrollment Cost
Self employed business owners can enroll in the Olympia Health and Dental Plan for only $375.00 plus applicable taxes. This fee is 100% tax deductible to your business. If you have any employees, there is an additional charge of $40.00 per employee to add them to your plan.
Administration Cost
Once your business is enrolled, there is a 10% administration fee applied to all claims submitted and processed. This fee will only be applied to eligible expenses submitted through your plan. In the case that an expense is submitted and is not eligible for any reason, there will be no charge to your business.
Don’t I already deduct my health and dental expenses?
There is a common misconception regarding the deduction of health and dental costs on personal tax returns. While it is true that there is a “Medical Expense Tax Credit” available on your personal tax return, it is also very true that this rarely creates any form of significant tax savings.
How does the Medical Expense Tax Credit work?
The Medical Expense Tax Credit available is based on income and the actual dollar amount of medical and dental expenses incurred in a given year. However, there is a minimum threshold which must be reached before any tax credit occurs (based on income; nearly $2000 for high income earners). This is followed by only a small percentage of a tax break on expenses exceeding that threshold. This means that business owners in a high marginal tax rate who spend less than $2000 per year will not receive any tax breaks at all. If you spend more than $2000 per year, you will receive approximately 25% of whatever exceeds the threshold.
Using an Olympia Health and Dental Plan, you can deduct 100% of those costs right from the first dollar.
What if I already have an insurance plan in place?
One of the most commonly asked questions is “can this plan benefit me if I already have a health and dental plan in place?”
Even the best insurance plans don’t cover 100% of everything. If you choose to continue using an insurance plan, you can use your Olympia Health and Dental Plan to deduct any expenses (or percentages of expenses) that are not covered by your current plan.
Example:
Total cost for braces: $3,500
Insurance coverage: $1,500 (50% of bill up to $1,500 maximum)
Uncovered amount: $2,000 (eligible for the Olympia Health and Dental Plan)
What is a Private Health Services Plan?
The Olympia Health and Dental Plan is technically referred to as a Private Health Services Plan, or a PHSP. Private Health Services Plans are often referred to by different names. The term “PHSP” is also commonly called a:
- Health Trust
- Health & Welfare Trust
- Health Spending Account (HSA)
Regardless of which name is used, these types of benefits plans originate from the Income Tax Act and as a result must be structured properly. It is important when choosing a provider for these services to ask the right questions and be sure that the plan has been set up within the requirements of the Income Tax Act. The deductions made available through this plan are only valid with Canada Revenue Agency (CRA) if all compliance regulations are met. Olympia has met these detailed requirements since 1996.
For more information on the technical details of a Private Health Services Plan, please click here. For detailed information on how to choose a PHSP provider, please click here.
About Olympia Benefits
Olympia Benefits Inc. (Olympia) is a wholly owned subsidiary of Olympia Financial Group. Olympia Financial Group is a public company listed on the Toronto Venture Stock Exchange (TSX-V: OLY).
Olympia specializes in the administration of health and dental plans for small businesses. Since 1996, Olympia has opened more than 25,000 health and dental plans for small business owners.
Olympia has three commitments to our customers:
- To provide a comprehensive health and dental plan that reduces costs.
- To meet the emerging healthcare needs of Canadians.
- To provide superior customer service.
For more information about Olympia Benefits Inc. please click here. Otherwise, please contact us today for more information on our unique and extremely effective health and dental plans for self employed business owners.
