A Private Health Services Plan (PHSP) that meets your needs
Information for Accountants
This information is provided to assist Accountants in understanding the technical details of HealthPlus such that they can properly advise their clients on whether to participate in HealthPlus.
Key Tax Legislation and CRA Interpretation Bulletins
HealthPlus (The Private Health Services Plan (PHSP) offered by CAPCORP Planning (2003) Inc.) is structured to qualify as a "private health service plan" as defined in Sub section 248 of the Income Tax Act of Canada. The enabling legislation for a PHSP is discussed in the Interpretation Bulletin IT 339R2 . HealthPlus operates as a "cost plus" plan. We do not offer Health Spending Accounts nor hold trust payments on account.
The discussion of eligibility for claiming a specific health expense is discussed in the Interpretation Bulletin IT 519R2 .
The tax free operation of a Private Health Services Plan (PHSP) for planholders and covered employees is specifically explained in IT-85R2 .
Information and examples for claiming PHSP expenses are provided by Canada Revenue Agency in the T4002 Business and Professional Income Guide . The specific discussion of PHSP deductions can be found under line 9270 - Other Expenses.
In most cases, Canada Revenue Agency expects a service business to trigger taxation at some point in a transaction. In this case, both the recipient (employee) and the employer (PHSP Planholder) avoid taxation under the PHSP enabling legislation shown above.
- Under a PHSP, health care expenses become classed as tax free medical plan re-imbursement and not a taxable benefit to the employee.
- A PHSP and any expenses incurred for its operation become tax deductible to the business.
- When one takes into consideration the 10% administrative fee and taxes, HealthPlus has limited tax saving advantages at incomes below $42,000 (in Ontario – varies somewhat by Province).
The expenses eligible for re-imbursement are the same as the Medical Expense Tax Credit (METC). The eligible expenses are numerous and in many cases exceed anything available with a traditional insured employee benefit plan. We are experts in this field and can discuss coordinating benefits between a group insurance plan and HealthPlus, an individual health plan.
Unlike the METC there is no threshold of 3% of taxable income.
As always with Canada Revenue Agency, the reasonableness of the business deduction claimed is very important. The Planholders accountant is the best person to provide this advice. When no "arm's length" individuals are employed by the corporation the reasonableness should be especially prudent.
For tax reasons, we only allow incorporated employers to participate as funders of HealthPlus claims and we do not offer HealthPlus in the province of Quebec. The benefits of HealthPlus are significantly reduced in these situations.
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