What is a Private Health Services Plan (PHSP) in Canada?
A Private Health Services Plan (PHSP) is a group health plan that offers tax advantages to cover eligible medical expenses beyond what provincial healthcare covers, benefiting both employers and employees in Canada.
Key takeaways
- PHSPs offer tax benefits for medical expenses not covered by government plans
- They can be designed to fit specific business needs
- Employees receive tax-effective reimbursement for eligible health costs
Understanding PHSP Basics
A Private Health Services Plan (PHSP) is a type of group benefit plan that allows employers to reimburse employees for eligible medical expenses on a pre-tax basis. This means the reimbursement is not considered income, providing significant tax savings.
Key Features of PHSPs
PHSPs offer several advantages: - Tax Efficiency: Reimbursements are typically tax-effective for employees. - Flexibility: Plans can be tailored to cover a wide range of health expenses, from prescription drugs to dental care and paramedical services.
Eligible Expenses
PHSPs cover a broad spectrum of eligible medical expenses. These include: - Prescription medications - Dental work - Vision care - Paramedical treatments like physiotherapy or massage therapy
How PHSPs Work with Government Plans
Unlike government health plans, PHSPs are designed to complement existing coverage. They cover expenses that provincial healthcare does not, such as dental work and prescription medications.
Frequently asked questions
Can any business offer a PHSP?
Yes, but it's important to consult with an expert to ensure the plan is structured correctly for tax purposes and meets all regulatory requirements.
What are the tax benefits of PHSPs?
Reimbursements under a PHSP are typically not considered income by Canada Revenue Agency (CRA), allowing employees to save on taxes.
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