A Private Health Services Plan (PHSP) is a flexible alternative to group insurance that has been part of the income tax act for more than 30 years. A PHSP is designed to offset and reduce medical expenses, benefiting both employees and employers alike.

PHSP’s can be leveraged by a number of entities. Corporations use them to save on benefits costs with increased options. Such plans cover business owners, employees, spouses, children under the age of 18, and active shareholders in a corporation. For unincorporated individuals operation businesses, there are some limitations, with a household maximum of $1,500 per adult and $750 per child.

For organizations or individuals facing additional medical expenses that group insurance doesn’t cover in full, a PHSP can be an effective supplement.

Benefits of a Private Health Service Plan

Upon setting up a PHSP, expenses from personal healthcare visits, dental, and vision that paid with out of pocket cash (after taxes) can be submitted to the plan. These expenses can then be reimbursed as a non-taxable medical benefit by the organization. These claims, when submitted during the fiscal year are fully tax-deductible and provide a valuable benefit to employees.

Many companies are using the PHSP to supplement or even replace parts of their group insurance. Because business owners can deduct the costs reimbursed and employee benefits are expanded beyond what a group plan might normally cover, it’s a benefit for all parties. Specific benefits to business owners include:

Customizable benefits that provide a more robust set of solutions for employees
Limit and cost varies based on the class of employees
More cost-effective than purchasing additional insurance supplements for health and dental coverage
The positive account balance can be rolled over
There is no immediate cost to enroll employees, no annual recurring costs, and no inactivity costs for having such plans

While one of the primary uses of a PHSP is to supplement existing insurance, there are several key advantages over traditional group plans for those that would replace part or all of their existing insurance plans. These include:

No recurring fees or monthly premiums. Payments are only made for expenses incurred.
Limits can be decided at the employer level.
There are no deductibles, dispensing fee caps, or limits on prescription drug options.
Pre-existing conditions do not interrupt or block coverage.

In addition to the core benefits of a PHSP, additional benefits can be added by employers to cover issues that can arise. These include:

Travel Coverage – If someone on the plan requires medical or surgical treatment while traveling outside of their own province, this additional policy will cover expenses up to the policy limit
In-Province Catastrophic – If coverage is treatment or surgery is required for a catastrophic illness, injury, or disease, this add-on will provide coverage up to the policy limit, within the lifetime maximum.

These add-ons can help further fill gaps for employees that traditional coverage or a PHSP on its own may not. These add-ons do require an additional premium, but are optional.

Read more about the different medical, dental, and vision services covered by a PHSP here.

How to Implement a Private Health Services Plan

A PHSP can be used to replace parts of your existing group insurance or to supplement coverage offered to your employees. Business owners can also directly enroll themselves or shareholders in such a plan, even if there are no employees in the company beyond senior executives.

You’ll maximize the value of a PHSP for your leadership team and employees by offering benefits that are not traditionally offered. This can be a strong incentive for employees, especially as larger and older companies continue to offer traditional plans without options for vision and many dental solutions.

Because a PHSP is highly customizable, it can be set up to match the specific needs of your business and isn’t required to follow the guidelines of an existing insurance plan. The result is a plan that fits how your business operates. To get the most from a PHSP and ensure it fits the unique needs of your business, work with a consultant that specializes in setting up and customizing plans.

Contact us to learn more or schedule your consultation with a member of the Niklife team to get started.

CEBA has been extended to October 31, 2020, making the program accessible longer to Canadians.

Originally launched on April 9, 2020, CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.

This $55 billion program provides interest-free loans of up to $40,000 to small businesses and not-for-profits.

Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).

As of June 26, 2020, businesses eligible for CEBA now include owner-operated small businesses that do not have a payroll, sole proprietors receiving business income directly, as well as family-owned corporations remunerating in the form of dividends rather than payroll. This means that more small businesses can access it.

Applicants with $20,000 or less in payroll in 2019 will have to demonstrate having Eligible Non-Deferrable Expenses between Cdn.$40,000 and Cdn.$1,500,000 in 2020. Expenses are considered “Eligible Non-Deferrable Expenses” if they were already incurred in January and/or February 2020, or are due to a legal or contractual obligation as at March 1 and cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID. CEBA is not intended to provide income support, or support for variable operating expenses to businesses.

CEBA applicants agree that the government may conduct audits to confirm the nature of the expenses applicants use to establish their eligibility for CEBA, and acknowledge that inaccuracies may lead to legal consequences.

The expanded CEBA is being made available gradually by more than 230 financial institutions across the country, starting with the larger banks. Other participating financial institutions will start offering the program over the coming weeks.