Q: Why deal with HUB Financial Inc. as your provider?
A: HUB Financial Inc. is a subsidiary of HUB International Limited and one of the largest financial services providers in Canada with offices across the country. HUB Financial Inc. provides efficient access for independent financial advisors to Canada’s major life insurance companies.
Q: What is FlexSave™?
A: FlexSave™ is a tax strategy that allows incorporated and unincorporated (with arms length employees) businesses to tax-deduct their employee benefit plan health and dental expenses in a tax-effective and cost-efficient manner. It is designed to provide employees with a tax free benefit for qualifying medical expenses they incur, paid for by their employer. The employer may be permitted to deduct the full amount as an operating expense.1
FlexSave™ was formed using the guidelines set forth in Canada Revenue Agency (CRA) Income Tax Bulletins - IT-85 R2, IT Folio: S1-F1-C1, IT-529 R2, IT -339 R2
Q: What is the cost?
A: There is a one-time set up fee of $250 for the business. There are no premiums. There is a 10% administration fee (plus applicable taxes) on the eligible claim amount.
Q: Who administers FlexSave™?
A: HUB Financial Inc. acts as the administrator for this plan.
Q: Why use an administrator?
A: CRA IT Bulletin IT-85R2 indicates the requirement for a third-party administrator in order for the plan to meet eligibility.
Q: How is FlexSave™ administered?
A: The employee pays for the health and dental treatments. Claim forms are then submitted to HUB Financial. Once the claim has been verified by HUB as qualifying, and funded by the employer, the employee will be reimbursed directly.
Q: What happens to the money if it is prefunded on the plan?
A: The money your client contributes goes in a trust account and is withdrawn tax-free provided it is used for eligible healthcare or dental expenses.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 is 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 Folio: S1-F1-C1), which includes many items not covered by most traditional medical and dental insurance plans.
Q: How do I submit a claim?
A: Claims can be submitted using the online claims feature in the Employee portal at www.flexsavebenefits.com. HUB Financial will process your claim and you will be reimbursed for your eligible costs. The length of time to process a claim varies on the funding options chosen by your employer.
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, the FlexSave™ plan is considered a second payor. 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 may be expensed through our FlexSave™ plan.1
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 the following requirements as set by the CRA, you may 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.
- You MUST have ARMS LENGTH EMPLOYEES (not related) also covered under the plan.
When arms-length employees are eligible for benefits, the maximum amount that is offered to the employee is the maximum amount the business owner can take upon himself/herself.
Q: What is the maximum allowable annual deduction for incorporated companies?
A: Corporations are not regulated in the same manner as unincorporated companies in regards to 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, the 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™ has been designed using the guidelines available from CRA. Every tax situation is unique and can be quite complex. Clients should always seek independent tax advice before putting a FlexSave™ plan in place or deducting expenses related to FlexSave™.
Q: What is Catastrophic Medical Coverage? Is it mandatory for FlexSave™ policy holders?
A: Catastrophic Medical Coverage is coverage that provides protection for employees should something medically catastrophic occur in province. The term catastrophic can refer to development of cancer, a major automobile accident, or any other unexpected occurrence. Under the stop/loss provision, once a person satisfies their deductible, the insurance company (SSQ Insurance) will cover subsequent costs up to a maximum amount. Catastrophic Medical coverage is not required but is strongly 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 may qualify to be reimbursed through the FlexSave™ program. Your client should discuss this with their tax advisor before implementing.
Q: What forms are required for creating a FlexSave™ account?
- FlexSave™ Application – This document explains the details of the Employer and plan structure.
- Employee Enrollment Form – Each employee is required to complete this form. This document informs us about dependents and coverage details.
- Direct Deposit Form – In order for reimbursement to occur in a timely manner, we recommend filling out this form.
- Optional Forms – Pre-Authorized Debit Agreement for stop/loss coverage and Pre-Authorized Debit for monthly deposit.
1 Every tax situation is unique and can be quite complex. Clients should always seek independent tax advice before putting a FlexSave™ plan in place or deducting expenses related to FlexSave™.