Private Health Services Plan

What is a Private Health Services Plan?

Whether you are a sole proprietor, small business, or incorporated company, with PHSP you can offer your employees a comprehensive, non-taxable medical benefits package — and deduct 100% of the resulting expenses from your business income.

How does it work?

Your company contracts with the PHSP administrator to pay tax-deductible expenses not covered by basic health and dental group insurance plans.

Funded or non-funded plans can be accommodated.

The reimbursement process is simple and painless:

  1. The covered plan member pays the medical expenses completely up-front.
  2. The member presents the original receipt(s) and claim form to the plan administrator who then submits it.
  3. The corporation is invoiced for the full amount of the expense, plus 10% administration fee, and applicable taxes.
  4. Once the corporation pays the invoice, the provider then reimburses the employee/plan member 100% of the expense.

Some different conditions apply to unincorporated and incorporated businesses. The following chart summarizes them.

Benefits
Item Unincorporated Incorporated
Flat rate
% of income
Per family member
Non-taxable

 

General
Item Unincorporated Incorporated
Expenses: deductible
Funded/unfunded
Travel req’d.
Insurance cycle  Jan. 1-Dec. 31 (may be prorated) 365 days from anniversary of effective date

 

What are the advantages?

  • Expenses paid through a PHSP are 100% tax-deductible to the corporation.
  • Employees enjoy a tax-free benefit.
  • Out-of-pocket medical costs are turned into tax-deductible corporate expenses.
  • Provides additional coverage for employees.

What does it cost?

Fees Taxes
$150.00 one-time setup fee 5% GST on 10% fee
10% administration fee on claims 8% PST on claim & administration fee (Ontario)
2% premium tax on claim & administration fee (Ontario)