Self Insured Programs
There is reason to be concerned about the spiraling cost of health care. It affects the level of service provided by government
programs and the cost of insured programs. Insurers establish premium based on anticipated claims plus their margin to administrate
a program. Within their calculations are factors for claims which have been incurred but not reported (IBNR), trend, inflation, and more.
For those willing to assume some of the risk for fluctuating claim costs, there can be great value in considering self insured models.
An advantage of self insured programs is that you remove excess insurer profit from your margin and pay based only on your claims plus an
administration fee. Plans can still include pay direct drug cards and out of country travel emergency. You can even purchase "stop loss"
coverage for catastrophic claims.
We highly recommend a complete review of the pros and cons before choosing to use this method for benefit plans.
Administrative Services Only (ASO)
ASO involves the employer self-insuring all or any combination of the company’s Short Term Disability, Extended
Health and Dental Care benefits. An insurance company or a program administrator adjudicates the claims (making sure that the claims meet the Canada
Revenue Agency rules), and charges the employer for the amount of the claims plus administration fees. This is an efficient method for both the
employer and employee.
This is usually a part of any existing insured benefit plan. An employer can provide tax free reimbursement for
eligible out of pocket medical and dental expenses that are not fully reimbursed. Employer cost is the amount of the claim plus an administration fee.
Health Care Spending Accounts (Flexible Spending)
Under this type of plan, employees are allocated an amount of dollars each plan year. They choose how
they want to spend their own dollars on eligible health and dental expenses and are then reimbursed from the program. As per CRA guidelines, dollars in a
Health Care Spending Account that are not used after 2 years are lost to the employee.
Health & Welfare Trust (H&W T)
This model can be similar to the ASO
or Cost Plus programs (above). An employer enters into an agreement with a plan provider who will hold dollars in trust for the payment of eligible health
and dental claims submitted by their employees.
Private Health Services Plan (PHSP)
A Private Health Services Plan is an effective way for a business to convert
all health, medical and dental expenses into a fully tax deductible business expense. This can result in very significant savings for small business or large
A PHSP is a CRA approved plan that makes health and dental expenses a deductible Company expense instead of a personal one.
A low cost plan with
no deductible, no monthly premiums and no renewal charges, the PHSP allows your company to provide employees with a non-taxable medical benefit while allowing
the company a fully tax deductible expense.
Contact us for further information!