Case Study:
Medical Clinic
KnowledgeWell
Professional Corporations (PC) are usually managed as a separate entity from medical clinics. The PC is for the Doctor to manage his personal affairs and the clinic is separated from that. Doctor’s need to be aware that there are CRA tax rules related to tax-free benefits that they must be aware of and understand.
To operate their practice, they have a staff of a few employees. Like all small businesses they have difficulty getting affordable benefits through insurance companies for both themselves and for the employees that work for them.
Medical clinics derive their revenue from seeing and treating patients. Anytime they spend on administration and payroll takes them or their staff away from being with patients.
Introduction
Overview:
The staff were asking for benefits. The Doctor was also wanting benefits for himself. The Clinic could not afford benefits that were quoted by the insurance companies, and they wanted to know if there were other options.
The payroll was being run internally by the Doctor and the staff. They believed that their method of preparing payroll was efficient.
They thought they were taking less time on payroll because of time
not included to gather timesheets, calculating withholdings, etc.
A patient of the clinic suggested that they should contact PeopleWell to discuss options for benefits.
Years in Business:
12 years
Number of Employees:
7
MediDirect benefits,
Payroll & KnowledgeWell
PeopleWell Solutions:
Problem:
The Doctor was wanting options for benefits that they could afford. PeopleWell, the Doctor and his staff discussed what they wanted in benefits. Payroll came up in the conversation as wages and benefits are connected.
Each staff member, the Doctor and their families had different medical and dental needs. An analysis of group benefit plan coverages showed that the group as a whole would not be happy with the plan. The premiums were also cost prohibitive. For every $1.00 in premium, about $0.60 would
be paid to the employees. The Doctor saw little value in this. In addition, there are specific rules for benefits under CRA rules for Professional Corporations that need to be understood so the benefits are tax-free for
the Doctor.
The payroll process that was described to PeopleWell was thought to take the Doctor and staff roughly ½ hour per payroll to pay
the 7 employees. PeopleWell suggested that the clinic keep track of all the time they spent on payroll for a couple of
pay-runs and compare it to PeopleWell’s system value which they thought was expensive. They discovered they were taking 4 to 6 hours per payroll to collect timesheets and calculate Stat Holiday, Vacation and OT pay. They also were keeping track of vacation accruals on a separate spreadsheet.
Solution:
PeopleWell discussed the CRA rules related to shareholders of Professional Corporations with the Doctor. This included the benefit options available to the Professional Corporation and the staff of the Clinic. MediDirect plans provided the staff the options they could choose to cover their individual needs. The Doctor had a separate plan that satisfies CRA rules and provides a more robust plan for the Doctor. The costs of the benefits was easily understood and put $0.90 of every $1.00 in premium into the hands of the employees. This was acceptable to the Doctor because more money went into the employees hands.
The clinic was set-up on PeopleWell’s payroll system. This reduced the time the Doctor and staff spent on payroll to 15 to 20 minutes per pay-run to provide final approval. The 4 to 6 hours are now spent with patients generating revenue.
Conclusion:
MediDirect benefits by PeopleWell provided the employees individualized benefits that fit their family needs. The Doctor was happy that 90% of his benefit dollars would go into the employees hands tax-free. The Doctor also maximized the tax-free money that he was able to take from his Professional Corporation. PeopleWells’ single system allowed the company to manage their payroll at a much reduced cost and more time with their patients, increasing their revenue.
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