Why use an Olympia Health & Dental Plan?
This innovative program will enable you to have your business pay for your family's health and dental expenses and then deduct 100% of the cost as a business expense. If you already have extended health insurance, you can still use this program to cover portions of expenses not covered by your existing plans.
This plan provides a unique offering that enables small business owners to take tax free money from their corporation to pay for their family’s health and dental expenses. Plan ONE can significantly reduce taxes and cut health care costs considerably.
How much will I save on health and dental costs?
Your savings using Plan ONE can be significant. The higher your income and the higher your health and dental expenses are — the more you save.
The illustration below shows savings of more than 30%. This is a fairly typical example.
Example 1 – Small Business Owner with $2,000 in Health and Dental Expenses
Savings depend on your province of residence and your marginal tax rate. The following example assumes a marginal tax rate of 40% and a total of $2,000 in health and dental expenses.
The “No Plan” bar illustrates the total cost of health and dental expenses for the small business owner. The owner receives taxable income from their business and uses the after tax portion to pay for their health and dental expenses. In this instance, the total cost of the expenses are $3,333 – or $2,000 for the health and dental expenses and $1,333 for income tax.
The “Olympia Plan” bar illustrates the total cost to the business using the Olympia health and dental plan. The $2,200 total includes our 10% administration fee.
The “Savings” bar illustrates the total savings to the business owner of $1,133.
How Does It Work?
Below is an example of a $2,000 health and dental expense and the subsequent steps involved with Plan ONE. In lieu of a premium, Olympia charges a 10% administration fee on all claims.
The process is quick, simple, and easy to understand. Olympia administers the plan and benefits paid out are 100% tax free to eligible employees. The claims process works as follows:
- Step 1 - Employee (you) pays for health or dental expense personally (example - $2,000.00)
- Step 2 - Employee completes claim form with receipts and submits to employer
- Step 3 - Employer sends Olympia funding to reimburse the claim, plus a deductible 10% administration fee. ($2,200.00)
- Step 4 - Olympia sends employee a personal reimbursement cheque for the original amount ($2,000.00) which is received tax free by the employee
The $2,200 payment is deductible by the employer.
The $2,000 reimbursement is tax free to the employee.
Example 2 – A Professional with Plan ONE
Jared is a professional engineering consultant who owns an incorporated company. He splits income from the company with his spouse and they do not have an insurance plan. Typical health and dental expenses for their family total $2,500 per year. They currently pay for these expenses “out of pocket” or with personal after tax income. Based on Jared’s personal income tax rate, his corporation must pay him approximately $4,000 in total income to pay for these expenses. ($4,000 minus $1,500 in personal taxes.) This leaves him with $2,500 to pay for the family’s health and dental expenses.
By implementing an Olympia Health and Dental Plan, Jared is able to transfer those same health and dental expenses (currently costing him $4,000 in total) into his company to be used as a business expense. For a small administration fee of 10% of his claims (10% X $2,500 of health care costs = $250) he 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: | $4,000.00 |
| After signing up for an Olympia Health & Dental Plan (Cost of expenses $2,500 plus 10% administration fee $250) |
Total cost: | $2,750.00 |
| Total Savings: | $1,250.00 |
What types of expenses are eligible?
As this is not an insurance plan, the Olympia Health & Dental Plan does not restrict plan usage as many benefits programs do. Therefore all of the following expenses are eligible:
- Dental services (including major dental work)
Dental coverage details… - Vision care (glasses, contact lenses, laser eye surgery)
Vision coverage details… - Prescription drugs
Prescription drug coverage details… - Chiropractor, Massage Therapy, Physiotherapy
Chiropractic, massage and physiotherapy coverage details… - Premiums paid for other health and dental plans
Details on deducting health and dental insurance premiums… - And more!
Enrollment Cost
There is a one time enrollment fee of $335 for your company and $40 for each eligible employee to enroll in this plan. This fee is 100% tax deductible to your business.
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.
To calculate your own savings using an Olympia Health & Dental Plan compared to the Medical Expense Tax Credit, click here.
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?” In many situations, this is the best reason to sign up for this program because:
- Premiums paid or deducted at source for health and dental plans (not including provincial health plan premiums) are eligible expenses for the Olympia Health & Dental Plan. This can create a deduction for your business even if the plan is set up through your spouse.
- 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: $6,000
Insurance coverage: $1,500 (50% of bill up to $1,500 maximum)
Uncovered amount: $4,500 (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 small business owners.
