PHSP Cost Savings
How Does PHSP Save Money? |
|
| Without Plan | With PHSP |
Your Company
|
$1560
|
Less Taxes: $560
|
$1000 Dental/Health Bill |
Your Company
|
$1100
|
Less Admin Fee: $100
|
$1000 Dental/Health Bill |
| Your Company Saves $460* (Dollar amounts are rounded) |
|
*Assume Alberta resident earning between $73,000 - $115,000
What happens when you have a $1000 dental bill?
With No PHSP
Let us assume you earn between $65,000 - $103,500 and you live in Alberta. Your company must advance you a salary, fee, or bonus in order for you to personally pay for your dental bill. The $1000 your company pays to you is subject to personal income tax. In this instance, your marginal tax rate would be 36%. (See Canadian Income Tax Rates)
Your $1000 dental bill effectively costs your company $1560 because your dental bill is paid with after tax dollars. Your company must advance you an extra $560 to cover the personal income tax attached to your dental bill (That is, $1560 times your personal tax rate of 36%; leaving you $1000 to pay the dentist).
In other words, your company must advance you $1.56 for every $1 spent on your personal health and dental bills.
Your current out of pocket plan: Cost plus 56%
Olympia Trust Company's PHSP will save you and your company money by turning your health and dental bills into pre-tax dollars.
With a PHSP
The $1000 dental bill will now be expensed using pre-tax dollars. Your company pays Olympia Trust a 10% administration fee in place of the tax. The total amount of the expense for your company is $1100.
In other words, your company must advance you $1.10 for every $1 spent on health and dental bills. You will save 46 cents on every dollar spent.
Olympia Trust PHSP: Cost plus 10%
All contributions under a qualifying PHSP are 100% tax-free to an employee and 100% tax deductible to an employer. Our 10% administration fee is deducted as well. Your office lease is paid for with pre-tax dollars. Why not make use of available tax legislation and turn your health and dental bills into eligible expenses?
How does Olympia Trust's PHSP compare to the personal medical tax credit?
I do not live in Alberta and I do not earn $73,000 - $115,000. How much will I save earning my income in my province? Use the tax calculator to find out.