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HEALTH AND WELFARE TRUSTS IN CANADA

Health and Welfare Trusts offer an interesting option for providing healthcare and dental benefits to employees. Tax consequences of a properly structured health and welfare trust (or any component within a health and welfare trust) are favorable to both the business offering the benefits as well as to the employees. In simple terms, without getting into technical details and requirements, health and dental benefits offered through these "trusts" are fully tax deductible to the employer's company as well as being received completely tax free by the employees.

Health and Welfare Trusts present the opportunity for more flexible benefit plans to staff, while offering much tighter cost control for employers. Typically more health and dental related expenses are eligible for coverage through these plans than what is available through regular insurance plans. So this means better results for (often) less cost.

There are several components to a health and welfare trust or "health trust". However, many organizations and professionals (including financial planners, accountants and insurance advisors) frequently refer to several types of similar plans with the same name of "health and welfare trust". While from a technical standpoint this isn't completely accurate, most advisors will refer to all of the following as a "health trust":

Regardless of the casual names mentioned surrounding these plans, the overall concepts are very similar. Typically a business will set up a PHSP, HSA or Health Trust to offer low cost, effective benefits to their employees. In many cases, this option will be used for small companies and self employed business owners, as these plans typically fit very well with small organizations.

 

To learn more, download our Beginner's Guide to Health Spending Accounts for an owner / operator business with no arm's length employees:Download Beginner's HSA Guide for an incorporated individual

If you are a business owner with arm's length employees, download the below guide instead:

Beginner's Guide to Health Spending Accounts