Entrepreneurial Benefit Solutions

Whether you’re an entrepreneur with a few staff, a solopreneur work on your own or a slightly olderpreneur, the benefit issues that you face are similar. Friends and family are major forces and you have more ideas than cash.

Since you likely take enough financial risk in your business it might be wise to reduce some of your personal financial risks with long-term disability insurance, travel medical insurance and catastrophic health care insurance.

If you’re into the second or third tax bracket you’re likely interested in turning personal expenses into business deductions. The easiest way to do that is to setup a health spending account.

The cost of a health spending account is determined by the amount of expenses you want covered plus an administration and taxes that total approximately 21.5% depending on your province of resident.

Corporations do not have limitations on their health benefit plans but proprietorship and partners are:

• required to have to a professionally administered plan,
• must cover all full-time employees,
• are limited to a maximum annual deduction limit per employee is $1,500 plus $1,500 per dependent (spouse & child) 18 and older plus $750 per dependent child under the age of 18 if less than half of the employees are at arm's length (unrelated).

As your business grows and you recruit more staff, resist the urge to buy a traditional group insurance benefit package. Most employee benefit plans nurture a sense of entitlement that will be difficult to reverse. There’s a good chance your employee understand risk almost as well as you do. So customize your design a benefit plan to meet the specific needs of your company.

Plan Redesign - Wholesale Retail - 1983

In order to manage costs, in 1983, prescribed drugs were limited to those that require a prescription and orthodontia was limited to children. Long-term disability coverage was enhanced.

A major plan overhaul was performed in 1991. The goal was to broaden coverage and rely on coinsurance and annual maximums to stabilize costs. Vision care and major dental were introduced. Dental frequency limits and coinsurance for non-preventative dental services and most medical services was introduced.

In 1994, private hospital coverage was removed and semiprivate was limited to $2,500 annually per individual. Drugs were limited to $2,000 annually per individual with formulary drugs reimbursed at 100% and non-formulary drugs reimbursed at 50%.

In 1998, the short-term disability program was replaced with a Supplemental Employment Insurance benefit plan.

Observations
Bold plan design changes has limited cost increases to less than half of the general CPI rate.