How do you pay for your drug, dental and other medical expenses?
If you are like many Canadians, you are either:
- Paying all of your medical expenses out of pocket and hoping your accountant gets you a small tax break or
- Paying out-of-pocket for deductibles or expenses not covered by an insured plan (like braces or major dental repairs) and groaning about it
Regardless of which scenario you identify with, there is a better way of paying for healthcare if you are self-employed!
If you answer yes to at least 2 of the following questions then a health reimbursement account may be a more tax efficient way for you to pay for your medical expenses:
- Are you without a health and dental plan?
- Do you have a spouse and or dependants?
- Do you have more than $1,000 in out-of-pocket medical expenses?
- If you have a health and dental plan – do you have a cap on your drug coverage?
I met Aly at a fundraiser. Aly was a partner at her law firm, and had a group benefits plan through her small firm. Yet, she told me she was still paying almost $20,000 in additional medical expenses, not covered under her plan, expenses incurred mainly for her teenage kids.When I told her that I can show her how to avoid out-of-pocket medical expenses, she called me the very next day!
That is when I explained how a health reimbursement account works. Since Aly is self-employed, she can set up a health reimbursement account so that her business now pays for all of her medical expenses that are not covered by her group plan. Last year Aly saved over $7,000 in taxes with this simple strategy, using pre-tax business dollars to pay for her medical expenses – needless to say, Aly was thrilled!
So many self-employed professionals are not taking advantage of these types of structures to reduce their out-of-pocket medical expenses, simply because they’re too busy, too overwhelmed or aren’t aware of their options. They just charge it through and cringe at the bills when they arrive. Don’t let the lack of time or knowledge cost you unnecessary money. Keep more of your hard earned money and use it to enjoy life instead!
Want to find out how you can avoid out-of-pocket medical expenses and get the healthcare coverage you need? Contact me for a complimentary 30-minute consultation.
Aviva Abraham is a group benefits and insurance advisor at Creative Planning. She has been providing healthcare solutions for self employed and business owners since 2010. You can reach her at firstname.lastname@example.org or 416-545-5310.