Holy Dental Bill! Help me HSA!

To continue with my dental experience, I decided to ask for a series of estimates for braces – the invisible kind not the kind Tutti wore back in the eighties.  Many of you are asking yourself…why on earth would you want braces?  Especially at your age?  Well, I have always had a bit of an overbite and when my wisdom teeth came in, they caused my teeth to be extra tight.  So, I am exploring the option of getting braces…..until I received the quote.  The cheapest solution will probably be $6,000 for what I am looking for – the equivalent of two 42″ Plasma Screen TVs or new hardwood floors in the house!

I don’t need them right away and can start saving today.  Since Gremolata is incorporated, I qualify for a Health and Welfare Trust.  I don’t want to go overboard here deposit-wise, but I could easily allocated $300 a month towards an HWT in my name.  This could be considered the core health benefit plan for the company.  This would provide me with $3,600 a year in deposits less a 10% administration fee ($360).  Using this schedule, I would have enough saved up for the braces in two years.  The dentist suggested I wait 6 months before I even consider the consultations with the specialist, so this time line works well for me.

Let’s do some tax talking for a minute.  The $3,600/year would become a business expense for the corporation as a cost of doing business – keeping me healthy.  The $3,600 deposited into my Health and Welfare Trust, as an employee of the corporation, would be a tax-free benefit for me (as long as I continue to reside outside of Quebec).  In essence, I am now receiving $3,600 in additional compensation I can use for braces without having to pay the income taxes on the amount.

So, there you have it.  I can use my Health and Welfare Trust to pay for my braces and save both myself and the company money.  I can be flexible with a deposit schedule I am comfortable with financially and use the funds when I have reached my goal.  You now understand how to save money as well as my dental records.  Ah, the internet.

New Eligible Claims for Medical Tax Credit & HSA

Tax-free Savings Accounts (TFSA) were not the only thing announced during the federal budget this week.  New allowances were made to the list of eligible claims in addition to some strong actions to be taken to tighten up the words and rules on prescriptions and vitamins.  Go Flaherty, get tough with those supplement-poppin baby-boomers!

The budget approved the following items to be included as eligible expenses: altered auditory feedback devices for the treatment of a speech disorder; electrotherapy devices for the treatment of a medical condition or a severe mobility impairment; standing devices for standing therapy in the treatment of a severe mobility impairment; and pressure pulse therapy devices for the treatment of a balance disorder.  Expenses for service animals specially trained to assist an individual who is severely affected by autism or epilepsy to cope with the individual’s impairment, was also added.   Currently, the rules only recognize an individual who is blind, deaf or has a severe impairment that markedly restricts the use of the individual’s arms or legs.

Finally, the budget announced that it would revise the wording on prescription drugs.  Currently, drugs, medications and other preparations are eligible for the Medical Tax Credit when they are both prescribed by a recognized medical practitioner (or a dentist) and recorded by a pharmacist.  However, recent court decisions have interpreted this measure to include, in some cases, the cost of vitamins, supplements and drugs that could otherwise be purchased without a prescription.  To clarify the issue, the government is going to clarify the wording for eligible drugs and medications to ensure that those that may be purchased without a prescription remain ineligible.

This is good news!  By reinforcing the rules, the government is taking a serious stance on the importance of the Medical Tax Credit as well as Health Spending Accounts.  This should be a taken as stern message to some of the fly-by-night HSA providers to shape up your adjudication and HSA knowledge, or ship out!