Is a PHSP/HSA right for my business?

Does My Business Qualify For a Private Health Services Plan?

Yes. Any business in Canada can have a PHSP/HSA.

1. Corporations: Limited Companies, Professional Corporations, LLPs

The size of your company does not matter. If your company pays corporate income taxes, it qualifies. For corporations there are no restrictions on the amount that can be claimed in any given year - you as the planholder determine the maximum reimbursement for your family and each employee class.

Small “non-arms-length” companies can reduce their personal taxes substantially.

Small and medium businesses with arms-length employees can offer affordable health benefits to retain valued staff.

If your company already has premium-based health insurance you can use a PHSP/HSA plan to cover its shortcomings - co-pays, limitations and exclusions - and contain the cost of rising premiums.

2. Unincorporated businesses: Sole Proprietorships or Partnerships

Although unincorporated businesses have some Canada Revenue Agency restrictions (see below), you can still benefit from having a PHSP. To qualify, you must be actively engaged in your business on a regular and continuous basis AND in the current or previous year:

Derive more than 50% of your total income from the self-employed business, OR
Your income from sources other than self-employment must be $10,000 or less.
For unincorporated businesses the restrictions on the amount that can be claimed in any given year are:

The owner/manager may claim $1500.
Their spouse may claim $1500.
Children under 18 may claim $750 each.
Other members of the household that are 18 or over may claim $1500.
NOTE: These limits can be exceeded if the proprietorship has “arms-length” employees included in the Plan, provided the amounts allotted to those employees exceed the limits set out above.

Now See how a PHSP can grow with your business:

If you are a self-employed contractor or incorporated consultant, tradesman or professional corporation, a Private Health Services Plan is a must for you. These businesses enjoy the maximum tax advantage available under CRA rules. Since your family will incur health and dental expenses on a yearly basis anyway, you can now enjoy a 100% tax deduction of them from your business revenue. Every established business in this category should have a PHSP in place.

The average family in Canada will have annual uninsured health expenses that can easily amount to $3000/year or more. A typical healthy family may only need a visit to the dentist for each family member, a pair of glasses and a few prescriptions to reach that amount. Depending on your personal tax rate and province of residence, your savings with a Private Health Services Plan can range from $350 to $850 per year! And in the case of a family member with a severe long-term illness or disability the benefit can be much higher.

Your family health and dental expenses become 100% deductible to your business.
You reduce your business and personal taxes (the personal benefit is tax-free).
You get comprehensive coverage of all routine health expenses with no restrictions.
You pay far less than you would in premiums for a traditional health insurance policy.
You can supplement an insured plan held by your spouse who is employed outside your business.

Larger businesses, incorporated or not, with arms-length employees (non-family members) must extend their PHSP/HSA to cover all employees. Now, as the business owner, your health and dental coverage for your employees becomes a cost versus value decision. You want to minimize your health benefit plan financial expense and still maximize your employee benefits to reward and retain good employees. A PHSP/HSA is by far the best way to do this.

The comprehensive health and dental coverage through a PHSP Health Spending Account plan will help you retain valued employees much better than a traditional premium-based health insurance policy with typical restrictions, co-pays and exclusions.
You can budget and forecast with certainty because there are no surprise premium increases - in fact, there are no premiums at all.
Your health benefit costs will never exceed the dollar amount you choose when you register - and you can increase or decrease those Class amounts whenever you want.
If you have a traditional premium-based health insurance policy, a PHSP/HSA plan can cover all those ineligible expenses and co-pays your insurance company won't. Your employees will love you for it.

As your business grows with more and more employees, you could be faced with significant privacy concerns and an increased administrative workload diverting staff from your valuable customers. At DR Associates we offer plan options that address both privacy concerns and the administrative workload - all at no cost to you:

Your employees can electronically submit claims directly to us from the privacy of their own home.
Funding of your plan can be via Pre-Authorized Debit to free your staff from administrative tasks.
Direct Deposit of reimbursement payments into a personal bank account speeds the payment process.
Reporting can be as frequent as you need to monitor your plan.

Direct Reimbursement Associates Ltd offers the lowest cost, highest quality Private Health Service Plans and Health Spending Account plans in Canada. We and our national affiliate are assisting over 7000 businesses in every province and territory. If you own a business, big or small, regardless of whether it is incorporated or not, you can start saving money today with a plan from DR Associates. Ask your accountant or Human Resources advisor about a Private Health Services Plan (PHSP) or Health Spending Account (HSA) Plan and register today. It's easy!