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Health Benefit Plan (HBP)

Health Benefit Plan (HBP)

for Advisors

What is a Health Benefit Plan?

A Health Benefit Plan (HBP) offers incorporated professionals and business owners a reliable and economical way to provide expanded medical and dental coverage for themselves, their families and certain employees.

How a Health Benefit Plan works

To set up a Health Benefit Plan for your client’s business, first the client must set up a chequing account in the name of the HBP at their preferred bank.

The Health Benefit Process

  1. The covered plan member pays for medical expenses in full, up front.
  2. The covered member then presents the receipt and claim form for these expenses to the office bookkeeper, who will approve the claim.
  3. The corporation then makes a payment equivalent to the approved expense to the HBP account.
  4. A cheque is issued from the HBP account to the plan member for 100% of the bill/or the maximum allowed by the Health Benefit Plan.

Key Takeaways

  • Reimbursement of medical claims under a Health Benefit Plan is an employee benefit, versus a shareholder benefit. All participants must be in receipt of T4 salary.
  • An employer’s contributions to the fund cannot exceed the amounts required in order to provide the benefits outlined in the agreement.
  • The Health Benefit Plan requires similar treatment for all members within a classification. For example, if your client’s company wishes to make the Health Benefit Plan available to managers, then all managers must be included.
  • Contributions may be subject to retail sales tax and/or provincial premium tax depending on the client’s province of business, including, Ontario, Quebec and Newfoundland & Labrador.
  • A reasonable benefit must be offered to at least one class of arm’s length employees when applicable.
  • Members should be provided with letters confirming that their benefits and their eligibility for Plan benefits are as a result of their employment with the company.
  • Health spending limits are for the current year and cannot be carried forward in the next calendar year.
  • Due to privacy laws there is a need for the client to designate an outside person who can administer the Health Benefit Plan. Otherwise, it is acceptable for them to appoint a person within the company who is not responsible for hiring or firing employees.

Setup Process

  • Step 1
    Complete a HBP Authorization Form

    Complete and submit the HBP Authorization Form to GBL and we will prepare your client’s Health Benefit Plan documents.

     

  • Step 2
    Documents are Shipped

    The Health Benefit Plan documentation will be delivered to location listed on the HBP authorization form.

  • Step 3
    Execution

    Your client should sign Health Benefit Plan documentation and establish the account at the bank of his or her choice.

  • Step 4
    Notification

    Your client advises their employees of the benefits program, and employees begin taking advantage of the plan.

Frequently Asked Questions

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