How a PHSP works - an example.Step 1 – A Covered Employee purchases the health service they need, and pays the health provider personally. The purchaser keeps their detailed receipt for submission to the plan.
Let’s use a $100 dental expense as an example. Once the dental service completed and is paid for personally, a detailed receipt for $100 is obtained from the dental office. The patient is now out-of pocket $100 and has a detailed receipt to prove it.
Pre-Authorized Plans Mean Speedy Reimbursement
Because the Planholder has already made arrangements with us to fund claims via Pre-Authorized Debit (PAD) we don't need anything else. The form and instructions for doing so are on this page. Always keep the original receipts and a photocopy of the completed claim form for your records.
Step 3 – Adjudication and Reimbursement of the Claim.
When DR Associates receives the claim form, receipt(s), etc., we carefully adjudicate the claim to ensure the health expense is eligible, the claim is correct and accurate in every other respect, and that it complies with the Canada Revenue Agency rules. DR Associates strives to complete this process the same day we receive your claim and to reimburse claimants within 5 business days. Any portion of a claim that is disallowed for some reason will be refunded to your business, including the pro-rated administration fee and GST, and you and the claimant will be notified.
The reimbursement payment is then made directly to the claimant by DR Associates. In our example, the payment to the claimant would be for $100. Payment is made electronically via Direct Deposit into the claimant's bank account. To register for Direct Deposit payments, claimants simply send a copy of a VOID cheque to DR Associates. (Before doing so you must read the Direct Deposit Authorization on our website. By sending us your VOID cheque you agree to the terms on that form.)
Step 4: The Final Result: a health plan you and your employees love!
The employee has now been fully reimbursed by their employer for the health service they initially paid for personally, and is no longer out-of-pocket any money at all. From the employee’s viewpoint, a PHSP/HSA is better than traditional health and dental insurance because it offers more comprehensive coverage and is faster - with fewer co-pays, limitations, restrictions and exclusions.
From the employer's viewpoint, you are only paying for health expenses actually incurred, you are not overpaying as is necessary with premium-based insurance plans - and there is no monthly premium expense. Your business has spent $105.25 funding your employee's $100.00 health expense in the example above. As a result, the employer in our example receives a 100% tax deductible tax receipt for $105.25 from DR Associates at the end of your fiscal year.
Another, often overlooked, benefit of PHSP/HSAs is that this type of health benefit plan is more closely attributed to the employer providing it, and hence builds loyalty with your employees much better than third-party traditional premium-based health insurance. The net effect of these transactions is that you, the business owner, have now paid the cost of providing your employee with a tax-free health benefit. And remember, YOU control the cost of the plan by setting the yearly maxium that you are prepared to pay for each class of employee**.
- For small business owners with no arms-length employees, this means your family health benefits are now tax-free.
- For businesses with employees, the 5% fixed fee combined with limits established by the planholder make a PHSP/HSA much more economical than premium-based health & dental insurance.
- There is a direct, tangible loyalty connection between the employer and the employee unlike any traditional premium-based insurance plan.
*DR Associates is required to charge GST on our administration fee. Please be sure to include this amount in the payment as calculated on the claim form.
**Please note that it is up to the Planholder to inform their employees which employee Class they are in and the annual dollar limit designated for that Class. For changes to Classes and Annual Limits, just email our office. All plan changes are free of charge for the life of the plan.
Here's a video explanation of how a PHSP/HSA works: (Note the industry standard 10% fee is twice our 5% DRA fee!)