Finding health insurance is a huge challenge for most small business owners. Most small firms don’t have enough employees to qualify for affordable group insurance rates, so often their employees and their owners have to make do without health insurance.
When you own and operate a home-based business, the challenge is even greater.
But there is a solution. Read on to discover the answer to health insurance for home based business owners.
A Health Spending Account (or HSA) is a tax planning vehicle available to small business owners across Canada. Based on Section 248 (1) of the Income Tax Act and CRA Bulletin IT 339R2, home-based business owners have been taking advantage of this tax break for over two decades.
Instead of paying for medical expenses personally, as an after-tax expense, small business owners can pay for medical expenses through their business, using before-tax dollars through a Health Spending Account.
By converting your expenses from personal to business, you effectively reduce the amount of tax you pay on the cost of your medical bills. If you have a personal tax rate of 40% and spend about $3,000 a year on your family's medical expenses, your business will save about $2,000 in taxes.
Threekey factors make a Health Spending Account the ultimate match for a home-based business owner:
A Health Spending Account typically has no premiums.