Designing compensation programs for key individuals in an organization is an area of expertise for Premier Health Advisors. Compensation may be in the form of:
- A plan of insurance
- A pension plan
- A medical plan
- Other deferred compensation schemes
Let us show you examples of the many plans we have designed for both public and private companies.
Wage Loss Replacement Program
A Wage Loss Replacement Program (WLRP) is a plan that is used to protect company executives/managers from loss of income. Premiums paid on a plan of insurance are deductible to the corporation, are not a taxable benefit to the executive, but are taxable when received as a claimed income benefit.
Executives are sometimes protected by this plan, a collection of individual policies that are non cancelable and guaranteed renewable and issued by a leading insurer. This plan is discounted by up to 15% by most insurers and provides more succinct and liberal coverage opportunities than traditional group LTD contracts. CCRA rules require that the establishment of a plan via resolution of the Board of Directors of the corporation and the members of the plan must be communicated to on a regular basis on the status of the program (i.e. noting any changes).
Premier Health has implemented many WLRP programs for its clients and would be pleased to assist you in setting up a program for your company.
Retirement Compensation Agreement (Arrangement)
A Retirement Compensation Agreement, (RCA) is a vehicle used to pre-fund supplementary retirement benefits outside and in addition to, a Registered Pension Plan.
- Tax advantages – contributions to an RCA are not subject to payroll tax. Plan Sponsors may deduct their contributions as expenses for tax purposes in the year they are paid
Incentive for key employees – an RCA can play an important role in attracting and retaining high-calibre employees
- Plan Sponsor funding – members receive a formal promise of a retirement benefit. When the company deposits the required contributions in a trust fund in order to capitalize the promised benefits, the members are assured that the benefit payments will be made.
- Creditor-proof – since plan assets are separate from company assets, they are protected from the Plan Sponsor’s creditors
Premier Health Advisors can assist you in determining if a RCA is of an advantage to your company, its key employees and/or members of your retirement program.
Individual Pension Plan
An Individual Pension Plan (IPP) is a defined benefit pension plan. It provides senior executives and business owners with the opportunity to achieve maximum tax relief combined with maximum retirement pension. The IPP is a sound business decision for both entrepreneurs and executives who have the income to support a more aggressive tax deferral arrangement. To qualify for an IPP, a member must:
- have T4 income
- be an employee of an incorporated company which is taxable under the Income Tax Act; and
- be age 40 or more and earn a minimum of $75,000 from the company sponsoring the IPP. This amount may be lowered to $50,000 provided it is the sole source of taxable income of the individual
- Tax advantages – all contributions and expenses are tax deductible. The pension benefit is equal to 2% of each year’s income, indexed to reflect the increases in the Average Industrial Wage until retirement
- Ownership of plan assets – depending on the plan rules, any actuarial surplus at retirement may be granted to the member. Within certain limits, the surplus may be used to upgrade pension benefits
- Guaranteed lifetime income – the IPP offers a predictable retirement income. An actuary determines the current annual funding requirements of the future retirement income. In the event of the member’s death after retirement, the surviving spouse will receive 2/3 of the member’s pension. However, if the member’s death occurs within 5 years of retirement, the spouse will receive the member’s full pension for the remainder of the initial 5 year period
- Past service funding – for executives and high earners, the IPP funding formula is more generous than the RRSP limits. Considering certain conditions, an IPP allows contributions for years of service prior to plan set-up, as long as the member was employed with the company
- Terminal funding – Revenue Canada restricts the benefits that can be pre-funded. Granted certain conditions however, the IPP can be amended at retirement to provide the most generous terms possible, including a pension indexed in full to consumer price increases, an early retirement pension with no reduction, as well as bridge benefits.
- Maximum flexibility at termination and retirement – the member has several options when employment is terminated or at retirement. The commuted value of the IPP may be transferred to or invested in a single or joint and last survivor annuity, a locked-in investment retirement vehicle (Locked-in RRSP, LIRA, LIF, or LRIF depending on applicable provincial legislation), or, if permitted under the terms of a new employer’s plan, to the Registered Pension Plan of a new employer
In the case where two or more shareholders are equity owners in a company, a loss of life and or a long term disability afflicting one shareholder can cause additional hardship not otherwise planned for.
Premier Health has employed innovative strategies to pre-fund the buy out of shares from equal, major and minority shareholders in key organizational positions when this takes place. Emphasis is placed upon understanding key tax issues as well as present and future value of the business in question.
Feel free to contact us at firstname.lastname@example.org to learn more about how to build value for your company through corporate owned insurance that benefits shareholders in a tax effective manner.
U.S Health Access Insurance Program
For executives who desire access to a ‘best doctors’ insurance program we have designed a program that covers individuals for medically necessary procedures that otherwise wouldn’t be available in acceptable time frames. Premiums are tax deductible to the corporation that purchases the policy on behalf of an executive and are not a taxable benefit to the individual covered.
360° Medical Review
360° Medical Review is a program that augments the services available in the Province of Ontario. Available through Premier Health Advisors Inc. and Medcan Clinic of Toronto, this medical review is becoming more and more popular for executives and their families. By choosing this program, the executive can receive up to date diagnostic medical services using the state of the art technology in one days visit. Tests include heart tests and screening, ultrasounds, bone density scanning, chest x-ray and respiratory function studies as well as many more.
Medical Trust Program
The Medical Trust Plan is a benefit plan designed to provide maximum flexibility for executives in both coverage and funding. This is a plan wherein the corporation funds a expected premium for health coverage given the executives plan for assessment and expense. Corporate dollars are set aside in a trust account that is used to pay for expected claims for the covered individual. This is applicable especially for the executive that travels extensively and is not comfortable with the umbrella protection that a plan of insurance offers.
Let Premier Health provide you with more information on any of these programs. Contact us at email@example.com.