PRIVATE HEALTH SERVICES PLAN

WHAT IS IT?

In the 1998 Federal Budget, the Honourable Paul Martin improved a law (Section 248[1]) that allowed businesses to pay for their employee's dental and medical costs and deduct those costs. Then, by running these expenses through a third party Trust, the business could have the employee's receive these benefits tax free – while avoiding group insurance company's added ‘margins'.

These costs are either paid out directly to the medical practioner or are reimbursed to the employee directly, through a third party Trust.

This is an employee benefit that allows businesses to offer medical and dental coverage to their employees in a cost efficient and cost–controlled manner. Employers who are ‘employees' by nature of their business being an incorporated company may take advantage of the plan. Incorporated one-man businesses may set up a plan without other employees. One person Sole Proprietors may do so as well, but are subject to certain limitations as per CCRA guidelines.

This plan provides Cost Control to the business and Cash Control to the Employee – a ‘win-win' situation for everyone in your business!!

WHAT CAN BE DEDUCTED?

Any medical or dental expense as allowed by CCRA for the purposes of the Personal Medical Exemption. See Appendix ‘B' - under "Eligible Expenses" - for a full description.

WHEN IS IT EFFECTIVE?

As this not an insurance plan, most PHSP's may have their effective dates back-dated to the first day of their current fiscal year. Certain limitations apply.

WHAT DOES IT COST?

There is a one time set up fee for the actual Trust. After that, the only charges are a "claims fee", ranging from 10% to 15% of submitted claims, and (for larger groups only) a monthly administrative service charge of $5.00 to $10.00 per employee. All fees and service charges are tax deductible and are significantly less in aggregate than the 30% to 40% margin often charged by many group health & dental  insurance plans.

WHAT DOES THE THIRD PARTY TRUST ADMINISTRATOR DO?

The Administrator will administer the Trust for you. This includes keeping track of your benefit monies, how much an employee has used, adjudicating the claims and paying out the claims. The claims process is done directly with the employee under the terms of the plan as set by your business. Claims forms are sent by the employee directly to the Administrator and the cheques are sent by the Administrator directly back to the employee.

WHO IS THE BEST THIRD PARTY TRUST ADMINISTRATOR?

A chartered trust company is the preferred administrator as they are required by the government to maintain a large, protected claims reserve to guaranty the payment of claims. No other PHSP supplier offers this type of guaranty.

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