Q.: What is a Private Health Services Plan (PHSP)?
A.: Canada Revenue Agency (CRA) allows business owners whether a Sole Proprietor, Partnership or Corporation to fully tax deduct healthcare, dental and vision expenses in a tax-effective and cost-efficient manner.
Q.: How is a PHSP more cost effective than a extended health & dental insurance plan?
A.: With a Private Health Services Plan (PHSP) the company does not pay a monthly premium and there is no co-insurance. Reimbursement is 100% and is paid by electronic fund transfer (EFT) within 3-5 business days directly into the employees bank account non-taxable.
With a group insurance plan the company must pay a monthly premium whether the plan is used or not and reimbursement is usually 80/20, 50/50 or the expense is not covered at all leaving the employee out of pocket a portion or the entire amount. Also, group insurance is a taxable benefit to the employee.
Q.: What is the maximum annual deduction allowed?
A.: For Corporations, there are no annual limits.
B.: Unincorporated individuals and their families, there is an annual limit of $1,500 per adult and $750 per child. For example, two adults and two children would be entitled to a maximum of $4,500 per calendar year.
Q.: Does it matter who spends the money from the household maximum? (Unincorporated)
A.: No. Anyone in the family can spend up to the total allowable amount for the entire family.
Q.: What’s the cost?
A.: One-time set-up fee plus applicable taxes. The additional cost is 10% administration fee on all claims submitted plus applicable taxes (only paid on administration fee) depending on which province you live in.
Q.: What happens to the money in the Trust?
A.: For pre-funded plans: The money in the trust account is held until claims are processed. The funds are then released to pay the claim.
For fund on demand plans: The money is deposited into the trust account and removed 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. And you can bring receipts forward one calendar year after set up.
Q.: Why use an Administrator/Trustee?
A.: Canada Revenue Agency (CRA) insists upon a third Party trustee and administrator to adjudicate for accuracy and compliance under Section 20.01 (1).
Q.: What is CRA's interpretation of Private Health Services Plans (PHSP) and Health and Welfare Trusts (HWT)?
A.: Guidelines for a Private Health Services Plan and Health and Welfare Trust are listed on Canada Revenue Agency website. Below are ITBulletins specific to this subject:
Q.: How do I enroll in a Private Health Services plan?
A.: Complete the online form or contact June Borlé 604-874-4429, toll-free 888-880-2266 or email firstname.lastname@example.org