How a PHSP/HSA plan works - an example.1. Your employee purchases the health service they need and pays their health provider personally. The employee then obtains a detailed receipt for the service they received.
Let’s use a $100 dental expense as an example. Once the dental service is completed and is paid for up front, a detailed receipt for $100 is obtained from the dental office. The employee is now out-of pocket $100 and has a detailed receipt to prove it.
Because the planholder (employer) has already made arrangements with us to fund claims via Pre-Authorized Debit (PAD) we don't need anything else from the employee. The form and instructions for claims are on this page. The employee should always keep the original receipts and a photocopy of the completed claim form for their records.
3. Adjudication of the Claim.
When DR Associates receives the claim form and receipt(s), 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. The employee will be notified if any portion of their claim is ineligible for some reason.
4. Reimbursement of the claim.
The reimbursement payment is then made directly to the claimant's bank account by direct deposit. In our example, the payment to the claimant would be for $100. To register for Direct Deposit payments, claimants can 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.)
5. 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.
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 no co-pays, limitations or exclusions. And, of course, the benefit (reimbursement) is tax-free.
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! Your business has spent $105.25 funding your employee's $100.00 health expense in the example above (our 5% fee is $5 and the GST* on our fee is $0.25). As a result, the employer in our example receives a 100% tax deductible tax receipt for $105.25 at the end of their fiscal year.
Another, often overlooked, benefit of PHSP/HSAs is that this type of health benefit plan builds loyalty with your employees much better than third-party traditional premium-based health insurance. These plans reduce staff turnover and can even motivate employees to perform better. And remember, YOU control the cost of the plan by setting the yearly maxium for each employee**.
*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 if you are on the Pay-As-You-Go plan.
**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 - or anything else - just email our office so we have something in writing. All plan changes are free of charge for the life of your plan.