Incorporated Businesses

All amounts paid by the corporation are 100% deductible to the corporation and not taxable to the employees.

When setting up a Canada Insurance Plan plan for an incorporated company, there are a few added options that the business can implement upon set-up which are as follows:

  1. Differences in maximums between classes

Structure and classes should be clearly defined up front and in writing. There must be justifiable rationale as to why each class of employees is receiving differing benefits than another (as would be the case with traditional benefits). Benefits must be equal amongst classes and fair between classes. For example, by setting up one class with a benefit maximum of $1000, the next class should not exceed 2-4 times that benefit amount. 

It is also recommended that a board of resolution be included upon set up to clearly define who is eligible for benefits and at the allotted amount.

  1. Adding supplemental emergency travel medical insurance

As a member of the Canada Insurance Plan plan, all clients are eligible for the supplemental emergency in province and out of province insurance coverage (stop/loss travel medical).  If an owner offers one employee, they must offer it to everyone else.  It is a great benefit to have offered at a very competitive price.  For those who have no other benefits in place, it offers peace of mind knowing “emergency/catastrophic” events in peoples lives that cannot be controlled can at least be supported financially.

Note: premiums of the stop/loss travel medical can also be written off through the  Canada Insurance Planplan.    

    • Allowing unused benefit amounts to be carried forward by one year

Employers have the option of allowing their employees to carry forward unused amounts by one year.  However, in order to insure that there is an element of risk as deemed by the CRA, the carry forward period must not exceed the one year.

If an employee does not use their allotment after the one year period, they will lose that portion. 

In order to allow for this option, this needs to be communicated at time of set up.    

    • Adding co-insurance

In order for a health and welfare trust to maintain a non taxable benefit to the employee, the reimbursement must be paid by the employer.  The employer does have the option of adding a co-insurance level to aid in the cost.

Co-insurance is defined as the amount an employer will pay for the benefit.  The difference is the amount the employee will be charged.  For example, if  company ABC had an 80% co-insurance level and the cost of a drug was $145, then company ABC would be covering $116 (80% multiplied by $145) while the employee would be responsible for $29. 

Co-insurance levels are at the discretion of the business owner.  It is important to note that amounts paid by an employee are not deductible to the employer.