January/February 2008, Contractor Advantage Magazine
Health Care Now Available
The difference is whether you want to pay for health services with after-tax dollars or the much lower cost of premiums.
By Mark Beckham
It has traditionally been difficult for contractors to get health benefits for themselves and their employees. The reason being, insurance companies will say, is that contractors are a poor risk. That is nonsense. They would certainly not be in business long if they were always falling off a scaffold or being whacked by a roof truss.
Fortunately, the problem of finding a benefits package has been solved. Castle Building Centres Group Ltd. recently unveiled plans for Castlecare for Contractors, a new group benefits program for contractors and their employees.
The package includes:
• Extended Health Care
• Dental
• Life Insurance
• Dependent Life Insurance
• Accidental Death & Dismemberment
As I see it, there are two important reasons to buy a health care package.
The first is for the company owner. Quite simply, the difference is whether they want to pay for health services with after-tax dollars or the much lower cost of premiums. As an example (based on Ontario tax rules, other provinces may vary), let’s say your monthly benefits premium is $200 for an annual premium of $2,400. The premium is deductible as an expense to the corporation so the actual cost to the firm, at a 23% corporate tax rate, is $1,848. Now, let us also say that someone in your family becomes seriously ill and needs drugs for six months at a cost of $500 per month for a total of $3,000. Assuming a 50% tax rate, you would have to earn $4,500 in income to pay the $3,000 in drugs. It boils down to paying the $3,000 by either earning $4,500 in personal income or paying $1,848 in premiums. The cost saving is obvious and significant. Similar cost comparisons apply to dental expenses, upgrades to a semiprivate hospital room, and other accidents, illnesses and medical conditions we prefer not to think about.
The second reason to have health benefits is that they are a huge competitive advantage for attracting and keeping valuable employees. We both know that if you and a competitor offer the same salary, but he provides benefits and you do not, your employee will likely walk. I see it all the time. We know how hard it is to find and keep reliable and competent employees.
In an industry as competitive as this one, benefits are a huge advantage.
What does a benefits package cost? There is no one answer, because everyone’s needs are different. Premiums for benefits packages are based on the design of the program and the demographics (age and sex) of your employees. For example, life insurance premiums are lower if you start paying premiums in your 20s instead of taking out a policy when you’re in your 50s.
The same applies to extended health benefits. If you want a private room instead of a room with two beds, the premium is higher. Essentially, the cost depends on what you want.
I would like to assist you in developing a no-obligation Castlecare group benefits program that meets the needs of you, your family, your business and your employees. Click here for more information about Castlecare Programs.
ARCHIVES: Castlecare articles in Contractor Advantage magazine
March/April 2009 How to succeed in tough times
January/February 2009 The Bronze Benefits Plan
November/December 2008 Can you spare 15 minutes?
September/October 2008 It may not be sexy but insurance really matters
July/August 2008 What to look for in a broker
May/June 2008 Benefits can make a difference
March/April 2008 Major expansion plans
January/February 2008 Health Care now available
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