What is a Private Health Services Plan?
In a nutshell, a Private Health Services Plan (or PHSP for short) is an employee benefit plan that allows you as the company/business to write off medical expenses as a business expense. Your business/company reimburses the employee for the medical expense they incurred through a third party (such as Accountable Value Financial Services or AVFS for short). This may seem complex, but the process is quite simple; visit How it Works for full details.
Are there any limits?
Yes and no. If your company is incorporated (Inc, Ltd, Professional Corporation, etc), then there is technically no limit on how much you can claim. We highly recommend that you do not exceed between 10% and 20% of your annual taxable salary in one year worth of claims. If your company/business is NOT incorporated, if it is a sole proprietorship, then you are limited on the dollar amount you can spend in a calendar year. This limit is determined based on how many members of household you have (household is defined as someone related to you by blood, marriage/common law, or adoption living under the same roof). It’s broken up between adults and minors. Each adult can contribute $1500.00 and each minor can contribute $750.00 to the total household amount for anyone to claim from.
What is Covered?
Simply put, any medical expense or device that you purchase for a medical condition OR that you have a prescription or Doctor’s note for, is covered.
Is it Legal?
Absolutely yes! In the late 70’s, the Canadian Government created the legislation that allows businesses to do this. It piggy-backs off of the medical expense tax credit by using the same defined medical expenses that is covered on your personal taxes. As of August 2018, CRA states:
The CRA now considers that a plan is a PHSP as long as all or substantially all of the premiums paid under the plan relate to medical expenses that are eligible for the medical expense tax credit (METC). The plan must also meet all other conditions as outlined in paragraph 3 of Interpretation Bulletin IT-339R2, Meaning of private health services plan.
For more information check out:
Accountable Value Financial Services is a purely digital company. You can register online, submit claims online, receive electronic statements, invoices, and receipts. We purge all personal and private information as soon as it is received so your information stays personal and private. To register for a plan with us, please visit our online registration form.
