What is a Private Health Services Plan? Private Health Services Plans are often referred to by different names. The term “PHSP” is also commonly called a:
- Health Trust
- Health & Welfare Trust (HWT)
- Health Spending Account (HSP)
Regardless of which name is used, these types of benefits plans are regulated by the Income Tax Act and as a result must be structured properly. It is important when choosing a provider for these services to ask the right questions and be sure that the provider has been set up within the requirements of the Income Tax Act. The deductions made available through this plan are only valid with Canada Customs and Revenue Agency if all compliance regulations are met. How does a PHSP work? Private Health Services Plans (PHSPs) are very simple to use regardless of the size of your business. Many small business owners, including sole owner/operators will choose to use a PHSP simply because it is more cost-effective for covering health and dental costs than any other option available and it is easier to understand than an insurance plan. A PHSP simply provides the opportunity for your business to reimburse you for your family’s health and dental costs without the requirement of paying monthly premiums. Your business will simply act as the “insurer” and reimburse you for dental bills, vision care expenses, chiropractic treatments, etc. Using a third party administrator for this type of health plan you create the ability to fully deduct all of these costs and receive all benefits paid out as a non-taxable benefit to you as an employee of your business. While this process is certainly simple in concept, there are still numerous regulations that must be followed in order for the deduction and the non-taxable benefits to qualify. Contact Us for more information!
