Understanding Employee Health Benefits

Insurance companies that offer group health benefits are in business to make a lot of money for themselves and their shareholders. They know how much is going to be claimed and then charge more in premiums than what they pay out. You are, in reality, self insuring your own plan by covering all costs.

You know there is going to be claims and the total dollar value of these claims can be fairly accurately determined. So why pay high administration fees on top of benefit costs?

Your company can self-insure the known and predictable healthcare costs of its employees without paying the excess. This is done through a Health Spending Account, also known as a Private Health Services Plan. Revenue Canada requires that a Health Spending Account be administered through a third party administrator such as MediDirect. MediDirect charges an administration fee of 10% of your medical cost, as compared to up to 60% that insurance companies charge.

Every company and self-employed person is also in business to make money but to do that they need to be in control of costs. While you might not be able to control the rising cost of goods and supplies, you can control your employee health benefits. With a Health Spending Account, the business determines the annual dollar limit for each employee. This limit can be varied for different groups within the company such as part-time or seasonal employees. The business gains budget stability and the employees receive tax free health, dental and wellness benefits.

As a smart and cautious business owner, why pay more for benefits than you ne... Read more