By Jackie McCann-Scott, Invested Mama
If you have been following this series on income protection for entrepreneurs, you will have figured out by now that I am a big fan of choice.
There is nothing worse than being backed into a corner with no curves.
Nowhere is this truer than when it comes to protecting your access to affordable health care.
I still remember vividly a call I received early in my career from a young woman looking to secure a drug plan. She felt stuck in a going-nowhere job for an employer who did not value work/life balance. She had decided to give in her notice and put her talents toward starting her own business. The plan was written, the startup funding secured, and the excitement palpable. There was just one problem: she had learned that her group health and dental plan offered very few options for conversion to a personal plan. The new stand-alone drug coverage had low annual limits and high monthly premiums. She had also learned that due to a pre-existing medical condition—Crohn’s Disease—she would not be covered for the very thing for which she most needed a plan. There was nothing I could do.
It remains one of the toughest conversations I have ever had with a client.
If you share my passion for options, here are a few points to consider when you’re choosing a health care plan.
Group plans –
Great if you can get ’em
If you have a partner who has access to group health and dental benefits, you should take full advantage of it. Or if you have at least two full-time employees yourself, the three of you can collectively shop around for your own group health and dental plan. Rates are often better when you band together, and your company can pick up some or all the premiums. The other real benefit of a group plan is that there are no medical questions, and therefore no exclusions for pre-existing conditions.
You do have to be careful in small groups that one member with high claims can make the group unaffordable for everyone over time. For this reason, I recommend that every person covered by a group plan add Assured Access to their plan. This innovative and inexpensive policy offered exclusively by Medavie Blue Cross takes a snapshot of your health today and guarantees your access to personal coverage down the road if you lose your group benefits for any reason, regardless of how your health has changed since the original snapshot was taken. It removes the risk of a person becoming uninsurable while covered by a group plan.
Personal plan –
À la carte, anyone?
Insurers understand that people have different needs, priorities, and budgets. Most have done a great job of unbundling prescription drug, dental, vision, and paramedical services so that you can pick and choose the combination that is best for you. For example, I often advise clients with good oral health to skip the dental coverage if affordability is a concern. Dental modules can be very expensive, and most dental offices will allow you to work out a payment plan if you need major dental work. On the other hand, if you need cancer treatment, the out-of-pocket costs are immediate and can be as devastating as the diagnosis itself if you don’t have proper drug coverage in place.
Pay as you go, but better
If your business is incorporated, there are options to have your company pay for your health care expenses directly. Your business gets a 100 percent deduction for the expense, and you receive the benefits 100 percent tax free. The CRA publishes a list of medical expenses that can be run through a private health spending account (PHSA) and also provides guidelines on how much can be covered by the company based on a “reasonableness” test. There must be a third party who administers claims and ensures the process follows the CRA guidelines. These PHSA providers require a one-time set-up fee and charge a nominal cost to process claims (all of which are fully deductible by the corporation). Once set up, the claims process is usually online, simple and—in the words of one of my business owner clients—“super slick.”
To determine which of these options may work for you, seek advice from a trusted advisor. I always say, “Conversations keep your choices intact!”
Jackie, owner and founder of Invested Mama Inc, was raised by the original Invested Mama: a single parent who not only could stretch a dollar for miles, but had a deep respect for money and the freedom it can provide. Jackie has since spent nearly two decades helping individuals and families address their own financial wellness with the same direct and clear approach that was taught to her. She provides a full range of financial planning, insurance, and investment solutions to her clients, utilizing the best resources in the industry. As a financial advisor, she aims to instil a sense of control and peace of mind around money that will empower her clients and keep them moving forward.