Q.: What is a Private Health Services Plan (PHSP)?
A.: A PHSP is a Canada Revenue Agency (CRA) approved plan which allows healthcare, dental and vision expenses for active business owners and employees to become a tax-deductible expense and a non-taxable benefit to employees. The list of eligible benefits is exhaustive.
Q.: How is a PHSP more cost-effective than group insurance?
A.: With a PHSP there is no monthly premium, co-insurance, renewal increases, healthcare questions or age limit. Reimbursement is 100% paid within 3-5 business days directly into the employee's bank account.
With group insurance the company must pay a monthly premium and reimbursement is usually 80/20, 50/50 or the expense is not covered, leaving the employee out of pocket a portion or the entire amount.
Q.: Can a PHSP replace traditional group insurance?
A.: Yes, many progressive employers are now substituting extended health and dental benefits with a PHSP which is more tax-effective and cost-efficient.
Q.: What is the maximum annual deduction allowed?
A.: Incorporated businesses have no applicable limits.
B.: Unincorporated businesses must adhere to the maximum limits set out in the Income Tax Act, Section 118.2(1). Household maximum of $1,500 per adult, $750 per child and anyone in the family can use the entire amount.
Q.: What’s the cost?
A.: One-time set-up fee plus applicable taxes. The additional cost is 10% administration fee plus applicable taxes, depending on which province you live in.
Q.: What happens to the money in the Trust?
A.: For pre-funded plans: The money is held in the trust account until a claim is processed, then funds are release to pay for the claim.
For fund on demand plans: The money is deposited into the trust account and withdrawn once the claim is processsed, leaving a zero balance.
Q.: Can we backdate expenses?
A.: Yes. You can submit expenses retroactive to the beginning of the Corporations fiscal year or Calendar year for Unincorporated individuals. Also receipts can be brought forward one fiscal year or calendar year after set-up.
Q.: Why use an Administrator/Trustee?
A.: Canada Revenue Agency (CRA) insists upon a third party administrator to adjudicate for accuracy and compliance under Section 20.01 (1).
Q.: What is CRA's interpretation of a PHSP?
A.: Guidelines for a Private Health Services Plan are listed on Canada Revenue Agency website. Below is the IT-Bulletin specific to this subject stating a PHSP has been part of the income tax act since 1986.
Q.: How do I enroll in a PHSP?
A.: Simply complete the online form or call June Borlé 604-874-4429 ext: 103 or toll-free 888-880-2266.