Quebecers are increasingly choosing self-employment.
In recent years, there has been an increase in the number of Quebecers who opt for self-employment and offer their services as a contractor, working with multiple organizations instead of a single company.
This shift can be attributed to multiple factors, such as the outsourcing of work to contractors and the growth of e-commerce. The Internet has provided the opportunity for self-employed individuals to offer their services independently and build a business that would not have been possible in the past.
According to Statistics Canada, 2.67 million individuals were self-employed in Canada in 2011, accounting for more than 15% of the total workforce. While there are many advantages of self-employment, such as the flexibility it offers, there are some drawbacks, including the need to purchase health insurance independently.
Why self-employed individuals need health insurance
When group insurance from an employer is not available, and with the limitations of public medical insurance often resulting in uninsured individuals paying out of pocket for some medical costs, it is important that you have a supplementary health care plan to protect yourself, your family, and your investment in your business.
If you are like most self-employed individuals, you are the core of your business. You handle the day-to-day operations and keep things running smoothly. You cannot afford to fall ill, or your business will suffer. If you don’t work, you don’t make money. For this reason alone, having personal health insurance is a worthy investment.
Taking a proactive approach to your health, combined with proper coverage, allows you to focus on your business. And, if you do require medical attention, you can have peace of mind in knowing you will receive the proper care you need without the financial risk of having to pay out of pocket for medical assistance not covered by the Régie de l’assurance maladie du Québec (RAMQ).
Another benefit of private health insurance is that it can provide a tax benefit, since health insurance premiums are deductible from your annual income.
Health insurance for tax savings
In general, individuals and businesses cannot use their health insurance premiums as a tax deduction. However, there are certain circumstances that allow you to deduct the premium as a tax expense, and one of these circumstances is self-employment.
If you own a business or are self-employed, you may be able to deduct your personal health insurance premium from your income, even if you are a partner in a business. However, there are a number of terms and conditions outlined by the Canada Revenue Agency that apply. They are outlined below:
- You must currently operate as a sole proprietor or partner in a business.
- Self-employment income must be your primary source of income.
- Income from other sources must not exceed $10,000 per year.
- If you have full-time employees, equivalent health coverage must be offered to them.
- For sole proprietors without employees, the deduction amount is capped at $1,500 annually for you, your spouse, and other family members included in the policy.
As you can see, if you are self-employed and want a health insurance plan, you may also get a tax break, something that will definitely help you financially as you build your business over time.