You and your employees want a proper medical benefits plan: but traditional group benefits are just too expensive -- especially for smaller companies.
In order to maintain that 70-30 ratio, traditional insurers will also limit you in various ways, for example only paying a percentage of dental, only paying for a certain number of treatments per year, and completely excluding many legitimate medical treatments and drugs.
Like most of us, you probably have various routine expenses; dental, drugs and so forth. Traditional insurers use only a portion of your premium to pay a little toward these routine expenses. On average, don't expect to get back more than $70 in routine medical services for every $100 premium you pay the insurer.
The PreTax Health Spending Account Benefit
With traditional insurers, you're paying those routine costs anyway, plus 30%. With a PreTax Health Spending Account, your company can control precisely how much it wants to spend on medical: it'll pay the cost of each claim up to the company-specified limit, and only a 10% admin fee. These are expenses, and completely tax-deductible. The benefit received by employees is also 100% tax-free.
You'll have far fewer restrictions on what's covered, you can set precise spending limits by class of employee (and have them decide how they want to use it), AND you'll save the $2 to $4 per person per day you're currently overpaying in unnecessary salary taxes to Canada Revenue Agency.
Half of Employees Prefer a Health Care Benefits Plan over the Equivalent in Cash
The Sanofi-Aventis health care survey, the most comprehensive survey of its kind, polls approximately 2100 health benefit members. Benefits Canada reported this finding in the most recent survey (2009).
Employer And Employee Tax Benefits
Consider that a $1,000 health benefit provided to the employee via a Health Spending Account, actually buys the employee $1,000 in health care. By contrast, an extra $1,000 paid in salary is fully taxable; the employee only ends up with around $700.