American corporations expanding into Canada often hire a Canadian citizen to work for them within Canada and serve their Canadian customers. Due to significant differences in the healthcare systems between the two countries (e.g. Canada has province-sponsored medical benefits), US companies can be at a loss as to how to provide benefits for their Canadian employee(s).
The most important thing advisors should do for US companies in this situation is to keep it simple. Presenting them with an overly complicated solution often leads to analysis paralysis. Remember, an HR department in the United States will have no idea how our Canadian healthcare system works – and they may not care. They just need to provide coverage for their one or two Canadian employees.
They want to know:
- What will it cost?
- What will it cover?
We recommend two specific plans for US corporations in this situation, depending on their preferences:
1. Healthcare Spending Account Plus (HSAP) Plan
If they are looking for simplicity and long-term cost control, a healthcare spending account plus (HSAP) plan is ideal.
The US company can set a “defined contribution” – a predetermined amount annually – that will be available to the Canadian employee to cover all eligible medical and dental expenses for their family throughout the year. The employer gets complete cost control and the employee gets a high level of flexibility.
The HCSA is also the last payor, so if the Canadian employee is already covered under their spouse’s plan, claims will go through the spouse’s plan first. Unpaid amounts or expenses that aren’t covered by the spouse’s plan can be paid with the HCSA.
We recommend SelectFlex if the corporation wants a more “traditional” plan style. SelectFlex is designed to provide conventional coverage for small groups – with one notable difference: the employer can choose which benefits to offer through SelectFlex.
SelectFlex provides options for groups of 1 or 2 and options for groups of 3 or more, so the US corporation can tailor their plan based on how many employees they have in Canada and which benefits they want to offer those employees.
US Corporations with Larger Groups of Canadian Employees
When the American company’s presence in Canada begins to grow beyond small group numbers, more benefits options become available. They may want to offer a more comprehensive benefits plan.
Whether the company has a single Canadian employee or a larger group, the important thing for advisors to keep in mind remains the same: make it as simple and easy as possible for the US company to set up benefits for their Canadian employees.
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