It is a Canada Revenue Agency (CRA) approved health plan that allows incorporated and unincorporated businesses/sole proprietors to self-insure and deduct their medical expenses in a cost-efficient manner that is also very tax-effective.

Contributions made by an Employer (Plan Owner) to or under a PHSP, also known as a Health Spending Account (HSA) or Private Health Spending Plan, on behalf of an Employee (Plan Member) are excluded from the Employee’s income.

The amounts so paid must be for one or more of:

• the Employee (Plan Member)
• the Employee’s (Plan Member’s) spouse
• any member of the Employee’s (Plan Member’s) household with whom the Employee (Plan Member) is connected by blood relationship, marriage or adoption

As such, a Private Health Services Plan (PHSP) takes advantage of Section 248(1) of the Income Tax Act.

See IT339R2 – Meaning of Private Health Services Plan

Canada Revenue Agency (CRA) requires a third party arms-length Plan Administrator, such as Intendo Benefits Administration Inc. to adjudicate PHSP plans for accuracy and legal compliance.

If you compare a Private Health Services Plan (PHSP) to a premium-based health insurance, there are some differences worth noting. In both cases the medical practitioner was paid in full by credit card.

A premium-based health insurance, like Blue Cross, charges you fixed monthly premiums whether you make a claim or not. Whenever you do make a claim, the health insurance company pays it from their collective pool of premiums.

In a PHSP, neither the Employer (Plan Owner) or Employee (Plan Member) pays premiums of any kind. The Employer (Plan Owner) submits the payment to Intendo Benefits Administration Inc. (Plan Administrator) with the completed PHSP claim form and associated receipts. Intendo Benefits Administration Inc. uses that payment to cover the reimbursement to the Employee (Plan Member).

Simply complete and submit the online IBA PHSP Registration Form via the Register page. Then follow the instructions included in the online form to send us the business payment due to cover the registration fee as indicated in the online form, which we will match to your online registration using your business name. A tax receipt will be issued to the business since it is a deductible expense for business tax purposes. Also note that tax receipts are dated for when the online registration is submitted.

The IBA PHSP Claim Form (Excel) is used for adding new or updating existing employees (Plan Members). Removing existing employees (Plan Members) require an email from the employer (Plan Owner). Also remember that any expenses for the employee (Plan Member), their spouse and other family members can all be claimed under the employee (Plan Member) and can all be included on the same claim form. It covers any member of the employee’s (Plan Member’s) household related by blood, marriage or adoption.

As the Plan Owner you can specify the Effective Date. Our recommendation is to keep this to within your current business fiscal year. E.g. if your fiscal year ends on March 31st and you are currently in the 2018 fiscal year, we suggest you keep it anywhere within the range of April 1, 2017 to March 31, 2018 to ensure it is considered reasonable.

Note: You can only claim once, so any medical expense claimed on a personal tax return for a Medical Expense Tax Credit (METC) cannot be claimed via a PHSP for a second benefit. However, if you have not claimed an expense yet, or was only partially reimbursed via another health insurer, you still have the receipt and it meets the Effective Date specified, then the full amount of the unclaimed expense or shortfall from a partial reimbursement would still be eligible under a PHSP. In the case of a partial reimbursement, you also have to attach proof of the shortfall, i.e. health insurer statement reflecting the amount claimed versus reimbursed.

Even though there is no restriction, Plan Owners normally have their own guidelines for how often or when Plan Members can submit claims. From our experience, this typically varies from smaller business Plan Owners only allowing Plan Members to submit quarterly (every 3 months) or biannually (every 6 months) at the end of each 3 or 6-month period, to larger business Plan Owners having a monthly cutoff date, e.g. the 15^th of every month, when claims have to be submitted by to facilitate combined approval, submission and payment processing.

In addition, it is important to consider the following:

• An individual claim (one or more medical expenses, for one or more members in the same household, claimed by the same Plan Member on the same claim form) that is $2,000 plus in total, qualifies for the discounted administration fee of 4%. So, the Plan Owner may benefit from lower administration fees if claims are accumulated over a longer period and submitted less frequently. This should be carefully weighed against the inconvenience of Plan Members having to wait longer to receive their reimbursements.
• There is a minimum administration fee of $5 per individual claim (this implies that claims for less than $100 will be charged $5 instead of the usual 5% administration fee).

There are a couple of options available:

• Borrowing – The Plan Owner can allow the Plan Member to “borrow” into the next annual benefit coverage period. E.g. if a Plan Member has an annual benefit coverage limit of $2,000, but has a $3,000 medical expense for orthodontics, the Plan Owner can grant the Plan Member special permission to claim the full $3,000 in the current benefit coverage period, and reduce the Plan Member’s benefit coverage limit for the next benefit coverage period to $1,000.
• Installments – If the Plan Owner does not allow the “borrowing” option (as this could result in the Plan Owner’s PHSP budget being exceeded in the current annual benefit coverage period), the Plan Member can claim the medical expense in “installments” over multiple annual benefit periods until it is fully covered. As per the above example, the Plan Member will claim $2,000 in the current and $1,000 in the next annual benefit coverage period to claim the full $3,000 medical expense for orthodontics over two benefit coverage periods.

No, you are only required to submit the medical expense receipt or statement provided by your medical practitioner. We recommend you keep your credit card receipts to reconcile your credit card statements.

Yes, this is a common practice which we highly recommend to reduce bank charges on both sides.

We issue a tax receipt to the Plan Owner for every claim submission, which is produced from our accounting system and attached to the confirmation email sent when the claim has been processed. Please retain the tax receipts and remember to include them as deductible expenses for business tax purposes. Also note that tax receipts are dated for when the claim submission is received.