Frequently Asked Questions
Important Questions and Answers about HUB FlexSave™.
Q: What is FlexSave™?
A: FlexSave™is a Revenue Canada approved plan (IT85 R2) that allows self-employed individuals and Corporations to tax-deduct their health and dental expenses in a tax-effective and cost-efficient manner. It is designed to provide employees with a tax free benefit for medical expenses they incur, paid for by their employer. That employer is permitted to deduct the full amount as an operating expense.
Flexsave™ is a Health and Welfare Trust (HWT) that was formed with strict adherence to the guidelines set forth in Revenue Canada Agencies (CRA) Income Tax Bulletin - IT 339 R2. The Flexsave™ HWT was formed 15 years ago and is a plan that adheres to the CRA Guidelines of both IT 339 R2, and IT 85 R2.
Q: What’s the Cost?
A: There is a one time set up fee of $250 for the corporation. There are no premiums and the additional cost is a 10% administration fee (plus applicable taxes) on the actual expense.
Q: Who administers FLEXSAVE?
A: HUB Financial is one of the largest financial services providers in Canada with offices across Canada.
Q: Why use an administrator?
A: Revenue Canada insists upon a 3rd Party Trustee and Administrator to adjudicate for accuracy and compliance.
Q: How is Flexsave Administered?
A: Claims can be paid in one of two ways. The healthcare practitioner (for example, a dentist) can bill HUB Financial directly. Once HUB receives the employers payment plus administration cost, they will reimburse the eligible employee. The second method (particularly for smaller expenses) is to pay for the expense and submit it to HUB Financial for reimbursement. You will then be reimbursed for the expense.
Q: What happens to the money if it is prefunded on the plan?
A: The money you contribute goes in a trust account and is withdrawn tax-free provided it is used for eligible healthcare or dental expenses. In accordance to CRA section 6 of IT85 R2, funds of the trust cannot revert to the employer or be used for any other purpose than providing health and welfare benefits for which the contributions are made.
Q: What’s Covered?
A: The Expenses must qualify for reimbursement for an “eligible medical expense” as defined under subsection 118.2(2) of the income tax act( or IT 519 R2), which includes many items not covered by most traditional medical and dental insurance plans.
Click here for a sample of eligible expenses.
Q: How do I submit a claim?
A: A copy of a claim form can be found by clicking on the following link:
claim form
Each employee is asked to
fill out their own claim form (due to the Privacy Act) and submit it to HUB Financial Inc. Please fill out the claim form with as much detail as possible and along with the original receipt, send it to the address listed on the form. Once HUB Financial Inc. receives the form, they will either issue a cheque to the employee directly or deposit the funds into their bank account (depending if
direct deposit form was completed). By completing the direct deposit form, this insures a quicker reimbursement period for your claims.
Q: What if I already have coverage through my spouse?
A: If you are currently covered under an extended health and dental plan through a spouse, our benefits will be coordinated with the other plan following industry standards. Under a traditional insurance plan, employees are often expected to pay a deductible or co-insurance out of their own pockets. These amounts can be expensed through our Flexsave™ plan. Furthermore, any medical expenses that have exceeded a maximum or are not covered under a traditional insurance plan can be submitted to Flexsave.
Q: What if I am a Sole Proprietor or Partnership that is unincorporated?
A: As long as you meet one of the following requirements required by CRA, you can qualify for a Flexsave™ plan.
- Your net income from self employment (excluding losses and PHSP deductions) for the current year is more than 50% of your total income
- Your income from sources other than self employment is $10,000 or less for the current year
There are limitations for the Unincorporated business with respect to allowable maximums
1. Unincorporated business with NO EMPLOYEES
A: Since 1998, the unincorporated business owner is allowed to tax deduct the cost of a PHSP up to a prescribed limit of $1,500 for themselves, $1,500 for their spouse, and $750 per child under age 18, and $1,500 per dependent over age 18.
Eg. A family of 4 people would have an aggregate maximum of $4500
2. Unincorporated business with ARMS Length Employees (not related)
A: When arms length employees are eligible for benefits, the maximum amount that is offered to that employee is the maximum amount the business owner can take upon himself/herself.
Eg. If Employee A receives $3000 maximum, then the employer can have $3000 maximum for himself (AND NOTHING THAT EXCEEDS $3000)
Q: What is the maximum allowable annual deduction for INcorporated companies?
A: Corporations are not regulated in the same manor as Self-Employed individuals in regards to set limitations, Corporations have been granted the right to decide the employee’s annual benefit allotment by class. While they haven’t been regulated on dollar amounts, CRA has indicated that benefits should be reasonable within relation to the employee’s remuneration package.
Q: What are the taxation rules governing FlexSave™?
A: Flexsave™ qualifies as a “cost-plus” or “trust account” Private Health Services Plan. The premiums paid to a PHSP by an employer are business expenses deductible against business income. The amounts are non-taxable benefits to the employees. This obligation can be implied by enrolling in the Flexsave program.
Q: What is Catastrophic Medical Coverage? Is it mandatory for Flexsave policy holders?
A: Catastrophic Medical Coverage (also known as STOP/LOSS) is coverage that provides protection for employees should something catastrophic happen medically in province. The term catastrophic can refer to development of cancer, a major automobile accident or any other unexpected occurrence. Under our stop/loss provision, once a person satisfies their deductible, the insurance company (AXA Insurance) will cover subsequent costs up to a maximum amount. To find out more details follow the link to Stop Loss/Travel Medical coverage.
For self employed UNincorporated individuals, Stop Loss insurance is a mandatory requirement in-order to satisfy the “nature of insurance” definition as listed in paragraph 3, subsection 2of IT 339 R2. For INcorporated businesses, this coverage is not required to be purchased but is always RECOMMENDED.
Q: Can I expense Provincial Health Care premiums through my FlexSave™ program?
A: Provincial Health Care premiums cannot be expensed through your Flexsave™ program. However, premiums that an employee or their spouse pays towards private, extended health and dental plans can be reimbursed through Flexsave™ program.
Q: What forms are required for creating a Flexsave account?
A:
1- Trust Application - also known as a master application, each company is required to fill this out as it provides contact information and informs us if you are incorporated or not.
2- Employee Enrollment - each employee is required to complete this EVEN if you do not have employees. This document informs us who your dependants are and what your maximums will be
3- Direct Deposit Form (recommended) - In order to get your money back in a timely manner, we recommend filling out this form as it will be sent to your bank faster than waiting for a cheque.
4- Stop/loss Travel Medical (if applicable) - required for Unincorporated business owners but recommended to Incorporated owners. The pricing is listed on the form itself.
5- Other forms - there are also two more forms you may wish to complete that are completely optional: The first pertains to if you decide to pre-fund a fixed amount coming out of your bank account each month. The second optional form involves preauthorized payment for the stop/loss insurance coverage Banking info.