Health & dental insurance that pays for itself
Under the current Income Tax Act, business owners could have great advantage in receiving tax relief from a health insurance plan. Premiums for individual health and insurance plans, may be considered a deductible business expense or an eligible medical expense.
This is an example I got from Desjardin SoloHealthcare:
- 35 years old
- Single parent with two children (11 and 14 years old)
- Independent worker (Graphic Designer)
Annual Premium for Health & Dental Coverage = $1,949
Tax Saving = $607 (Assuming marginal tax rate of 31.15%)
Net Cost = $1,342
Annual Expenses Reimbursed from the Health & Dental plan:
- Drugs = $156
- Eye exam and glasses = $150
- Dental care = $393
- Laboratory test (blood test) = $155
- Massage Therapist (6 visits) = $288
- Foot orthotics (for his child) = $200
- Total of Health care cost = $1,342
Fees Paid By Ken = $0
The information here is provided as an example only and is not representative of all cases. Amounts have been rounded off the nearest ten. The premium reflects 2010 rates. Check with a professional to determine if you are eligible for tax deductions.
For federal income tax purposes, the maximum deductions is generally $1,500 for an individual and $1,500 for the insured spouse, if applicable, plus $1,500 for each person 18 years of age and older with the individual. $750 is added for each insured person under age 18. The portion not deducted from the premiums is considered a medical eligible for a tax credit.
Different rules might apply to Quebec, and rules could be subjected to change.