ROI of Benefits
Wednesday, May 11, 2011 |
posted by Lori Power |
Posted in: benefits, benefit plans, dental, hsa, health spending accounts |
ROI of Benefits
Life is all about choices and to have choices, you need to have options. Often we don't consider having options when it comes to paying for dental or health care services. However, not knowing those options can mean we are paying far more out of pocket for those services then we need to.
For example, a client owns a business and requires dental work in the amount of $3,588. The client has several options for coverage, but the primary focus from the client’s point-of-view is not paying out of pocket for the service so they are referred to Medicard, a patient finance company. Essentially, a credit card specifically for health care services.
The dental services are performed and Medicard takes care of the bill, treating it as a loan in the client’s personal name, not their corporate name. It is repayable over 60-months with the client paying $105.17 per month and being charged:
• 21.95% annual interest, which amounts to $2,719.48 over the life of the loan (at this point many will point out that this client does not have to continue the loan for 60-months, they can repay it at any time. True, but anyone following the financial skills of the average Canadian, know without my saying, that MOST will not repay early, they simply cannot afford to.)
• As well as the one time grantor’s loan finance charge of $215.28
By the time this $3,588 dental bill is repaid, five years AFTER the service, the client would be out-of-pocket $6,522.76! Almost double the original bill. It’s like continuing to pay for a sofa that has long since gone out of style and been sold it in a garage sale.
There is, of course another way, better way, the Quikcard way.
The same dental bill of $3,588 can be funded through their company Quikcard account with corporate money and NO sign-up fees. Health and dental services provided in Canada (outside the province of Quebec) are considered non-taxable, so the company does not have tax consequences of paying for this on behalf of the owner (also considered an employee).
The claim is issued and there is:
• A 12% administration fee charged on the dental bill, amounting to $430.56.
• GST charged on the administration fee, $21.53.
The grand total of the claim treated in this fashion is $4,040.09 creating a savings of $2,473.67 over the Medicard!
Savings are savings, no matter how you slice it … but let’s take it just one step further. The $2,473 is not only personal savings for this client, but because the Quikcard account is in the company name, the full amount of the dental bill becomes a 100% corporate tax deduction instead of the client having to repay the Medicard loan personally with after tax dollars, where in order to pay the $105 each month, the client had to earn $143!
Do you know about the choices you have in covering these services?
