Hi, I’m Christina Wyatt Certified Financial Planner with Bauld insurance, a locally owned and operated insurance company. Today we’re going to be talking about healthcare spending accounts and how they are under utilized for corporate business owners. Well, working with one of my business clients, we put together some cashflow plans for the one for them personally one for their business and we started looking for inefficiencies in those cashflow plans.
One of the things that I found, which I find more often than not, is that this client was paying for their medical expenses to their health plan personally. They were also paying for additional medical expenses personally out of pocket. That’s using 55 cent dollars for your medical expenses. You don’t need to do this.
With some simple changes to their banking and setting up a health care spending account. They began saving personal taxes that they didn’t need to be paying. You know, you don’t need to be an accountant to know that you want to save personal tax whenever possible. Something I might ask one of my clients, did you know that most incorporated business owners are paying for their children’s braces with personally tax dollars? Are you utilizing a healthcare spending account?
I often see incorporated business owners not using or under utilizing a health care spending account. healthcare spending accounts are as they are sometimes called HSAs. Are you know a CRA approved method to provide medical dental and vision benefits in a tax efficient manner. Even if you have that health plan set up personally or group plans for your company: There’s still that 80% You know, the 80% that’s covered and then the 20% that’s not or those expenses like braces that aren’t covered by any group plan. Those are the things that you want to be running through your healthcare spending account.
Why? A corporation can write off 100% of the costs related to the HSA and the expenses are reimbursed tax free. This can be a huge tax savings over time. I say it all the time. A corporate business owners should never be paying for medical expenses with personally tax dollars. It’s just not tax efficient.
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Other videos in this series for business owners: