# Anyone Use a Private Health Services Plan



## OptsyEagle (Nov 29, 2009)

I am self-employed and heard that a private health services plan (PHSP) can allow me to tax deduct the medical costs for things like dental, drugs, etc.

Anyone using one? I also heard that one must or should use a 3rd party provider for this. Any thoughts or suggestions.


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## skiwest (Oct 24, 2011)

I do, it works well. Small reg fee then 5% on bills then they write you a personal cheque. They do review them to make sure everything is a allowable med expense. If not they refund back to company.

I know people that set up in their company that it would pay medical expenses as they occur direct from company. They said they write a company policy. But for me its easier for the company to pay the service company. They have on line forms to itemize all the bills. I don't have to worry about the record keeping.


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## OptsyEagle (Nov 29, 2009)

Thanks for your comments.

I am surprised that no one else seems to have any information on this plan/strategy. I would imagine this site has a lot of self-employed individuals, sole proprietors and/or corporations of one employee (owner).

This PHSP appears to be legal and allows these individuals to deduct all of their own and their families medicals costs, like dental, prescription drugs, and many others. You should know that by making these costs a tax deduction, that current rediculous medical tax credit, where one has to subtract 3% of their income, will pale in comparison. In a 45% tax bracket, this can significantly reduce your families costs and it seems to be all legal.

Is there not anyone using it?

Here is one company that provides it. http://www.costplus.ca/ They want 8% as a fee and I was hoping that it could be found at a cheaper price with a competitor.


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## skiwest (Oct 24, 2011)

I use same place but pay only 5% as my accountant has sent a lot of biz to that company.


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## MoneyGal (Apr 24, 2009)

http://www.taxtips.ca/smallbusiness/phsp.htm

It is not as valuable for sole proprietors as it is for incorporated businesses. Further, see this note from the above link: 

If there are no employees covered by the PHSP besides the sole proprietor, *the CRA's view is that a cost plus plan will not constitute insurance, so will not qualify as a PHSP*


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## steakman (Jul 22, 2012)

I've been using PUHL in Calgary as my provider. works like a charm so far.

cheers,

Stk


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## OptsyEagle (Nov 29, 2009)

Hi steakman: Are you self-employed or incorporated and do you have any full time employees?


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## steakman (Jul 22, 2012)

I am incorporated (Named Ltd company), and at this time, am the sole full time employee....when Im working.! lol. Been off since Dec 12, going back to Ft Mac early Feb for shutdown..

These plans are quite simple:

I paid an initial fee to join ~ 350 CAD

Then, whenever I have expenses be they dental, vision or drugs, I submit using PUHL's form, all the receipts (via e-mail / .pdf's). I total the cost of all expenses, add GST and 5% for handling. _That_ becomes the amount that is taken from my business account. I then, in a few days time receive a direct deposit to my personal account the actual out of pocket fees I incurred. The amount that came out of my business account is now a business expense. In order to keep the amount of claims reasonable, I usually wait for 2-3 months or longer if need be to make it worthwhile sending in a claim...not going to do it for just $50. 

As an aside, My wife has an insurance plant at her work. All claims for myself go through her insurance first, once I use up the annual amount through her insurance, then the rest goes through PUHL.

A great system and an excellent benefit for a business owner. I hope CRA doesn't mess with it.!!

stk


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## OptsyEagle (Nov 29, 2009)

Thanks for that. I was originally told that it would work for self-employed individuals working their business by themselves. I am beginning to find out that it works for incorporated individuals, alone, like yourself and only self-employed individuals that have at least 1 full time employee that they pay medical expenses for.

That rule snookers me and many others. I just wanted to confirm if this was correct by soliciting responses from other self-employed individuals in my situation.

Thank you for your responses. Yes it is a good deal. 

Pretty sweat for the companies that offer the service, as well. Take your money, give it back to you and keep 5%. I would be happy to do that with anyone, at any time, all day long. I would even offer that service at 4% because I am such a great guy. lol.


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## skiwest (Oct 24, 2011)

They do have to review all of the claim to ensure it is allowable. I have gotten a follow up question and if it wasn't allowable they send back a cheque back to the company. Who I deal with was a lot less, one time fee of $75.

I do the same and save up a lot of bills and do all at once. Hasn't been worth it for a year.


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## steakman (Jul 22, 2012)

I hear ya Optsy..LOl

there are advantages to being incorporated..that is a big one in my opinion and not just for me, but for the whole family as my wifes insurance only covers 80% of whatever...

stk


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## YYC (Nov 12, 2012)

Hi Optsy, I am incorporated and use one for my family medical expenses. My wife and I both draw a salary from the corporation. I have considered purchasing health insurance through the company, but found that no matter how I run the numbers, the PHSP is a more logical choice. Instead of paying insurance for expenses that we "might" use, we simply write off those that we do actually use, with no limits. My wife's dental surgery in the $5k range last year was a complete write off for the company, where a health insurance plan would only cover a portion of that. You can also have a health plan and then top it up with the PHSP, which would probably be the way to go if you were the owner of a business with a few more employees.

We used Brock Health in Calgary. It's a $100 initial signup fee, then a simple 5% charge on any claims, use only when you need it. They are small and easy to deal with, and when you submit expenses, you get your check pretty quickly in the mail.

Feel free to PM me if you have any specific questions, I'd be happy to chat with you about it.


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## OptsyEagle (Nov 29, 2009)

YYC. You are absolutely correct. I use to work in the group insurance market and just so you know what happens. I would go get a quote from 2 or 3 companies and of course the client would almost always select the cheapest. The problem is. If this were life or disability insurance that would work fine. In group insurance, it only works for the 1st year. Your next years premium cost will be based on last years claims, plus a little for the insurance company and I am sure some for myself.

So I use to have to take the irate calls from my client, a year later, when the premium rates jumped by 40% or so, on the next invoice. One of the other quotes was probably 40% higher to start with but it was a realistic one. 

Anyway, with that being said, I agree, you will save a lot of money by insuring yourself with the PHSP.


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## heyjude (May 16, 2009)

I am incorporated and have a PHSP with Olympia Benefits, also based in Calgary. It has been in place for almost 10 years and if I remember correctly the signup fee was very modest. The services must have been prescribed by a licensed healthcare practitioner, but that includes physiotherapists, massage therapists, optometrists, hearing aid practitioners, as well as medications prescribed by a physician or nurse practitioner. Their commission is 10% but they do not charge GST. It works very well for me. As previously mentioned, I like the idea that expenses are incurred by the Corporation only if there are expenses to incur.


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## Just Confused (Apr 6, 2013)

OptsyEagle said:


> ... I am beginning to find out that it works for incorporated individuals, alone, like yourself and only self-employed individuals *that have at least 1 full time employee* that they pay medical expenses for.
> 
> That rule snookers me and many others. I just wanted to confirm...


This is not quite the situation. In fact, I'd say you've been given bad advice. Have a look at the CRA guide book (T4002) for filing business tax returns. It is located on the CRA website on this page. The discussion about PHSP's starts on page 26. The very first example on the next page talks about a making a PHSP deduction for a self-employed individual with no employees. I think a PHSP is clearly workable for you. If you Google "PHSP" and have a look at the various providers, you can get more concrete information. The first one "Brock Health" has a page with links to all the providers in one place.


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## 2tire2work (Jul 20, 2013)

I am looking to get some kind of health plan for my family as well. But when I look at details. I am kind of lost as to how much it actually cost me. 

Here is the quote from Brock health. "Let's use $100 for an example. A receipt is obtained from the health service provider. At this point the employee is out-of pocket $100.

The Covered Employee submits a health benefit claim with the original receipt to the PHSP planholder (the business).

The PHSP planholder forwards the original receipts by postal mail along with a business cheque totaling $105.25 (the medical expense $100 + the Brock Health fee $5 + GST 25 cents on the fee only). Now the planholder is also out-of pocket $105.25.

Brock Health adjudicates the claim, earns their 5% fee and sends a tax free reimbursement cheque ($100) to the Covered Employee. The employee is fully reimbursed and is no longer out-of-pocket anything. From the Covered Employee's viewpoint, it is identical to commercial health benefit insurance except quicker.

The PHSP planholder remains out-of-pocket. In return, the PHSP planholder (the business) receives a tax receipt of $105.25 from Brock Health at the end of their fiscal year.

So. I (the employee) spend $100 after taxed dollars and got back $100. But the employer (me) spend $105 before tax dollars from the company. So theoretically. I only saved the tax on the company's $105. So after the 13% corporation tax and my personal marginal tax on the $92. I am only saving on the income tax. Am I wrong?


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## OptsyEagle (Nov 29, 2009)

2tire2work said:


> ISo theoretically. I only saved the tax on the company's $105. So after the 13% corporation tax and my personal marginal tax on the $92. I am only saving on the income tax. Am I wrong?


It's all about the tax savings. Where else could money come from?


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## 2tire2work (Jul 20, 2013)

Thanks optsyEagle. You are right. Where else could money come from. But saving some money is better than nothing.


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