Private Health Services Plan Sole Proprietor
PHSPER_sole_page.pdf (printable pdf version)
A Private Health Services Plan is a cost effective, tax efficient means for Corporations to cover health and dental expenses or supplement existing group insurance benefits for their employees.
Working as a stand alone plan or with your existing group benefits coverage, a PHSP can:
• Provide reimbursement to your employees for their medical expenses
• Cover items not covered or paid for under a current group insurance program,
• Reimburse costs incurred for medical expenses to employees,
• Create a tax deductible business expense
What is PHSP?
PHSP is a tax-effective means of covering Health, Dental or Vision Care expenses. When properly set up, a Private Health Services Plan (PHSP), recognized by Canada Revenue Agency (CRA), allows businesses to deduct health-related expenses eligible under the Income Tax Act. Eligible PHSP charges are treated the same as group insurance premiums; as a deductible business expense. PHSP reimbursements paid to individuals are not taxable in the hands of the employee who receives them (except in Quebec where provincial taxes apply). IT-339R2 – Meaning of PHSP
PHSP covers all supplies and services considered eligible medical expenses under the Canadian Income Tax Act. You designate the spending limits and you and your employees receive 100% coverage for all eligible expenses to that limit with no monthly premiums. This could include prescription drugs, dental, vision, orthodontic treatments, the co-insurance amounts you are responsible for, or expenses that may be in excess of limits under your current group insurance program.
PHSP Feature Highlights
• Expenses/ costs are known upfront
• No initial set up fee
• No monthly premiums
• Employer has the option of different employee classes with different spending limits
• Employees are reimbursed for qualifying expenses
• 10% Adjudication fee is charged on eligible claims (HST is charged on adjudication fee only)
• Benefit levels can be prorated for the plan’s first year
• Plans are based on a calendar year
What is an allowable expense?
Please see the list of eligible expenditures.
Expenses_page.pdf
Eligibility
You may qualify for deductions if;
a) Your net income from businesses in which you are regularly and actively engaged must represent at least 50% of your net income for the year.
b) Your net income from sources other than business does not exceed $10,000.
c) Your Sole Proprietorship employs at least one employee other than yourself.
Spending Limits
Maximum of $1,500 for individual and other members of the household who are 18 years of age or older and $750 for each member under the age of 18.
Business owner’s coverage must be equal to the least amount of coverage offered to employees.