What is a PHSP?
A PHSP, or Private Health Services Plan, commonly called a Health Spending Account, is a tax-saving plan designed by the Canada Revenue Agency for Canadian businesses as an alternative to traditional health insurance. PHSPs allow you and/or your company’s employees to take charge of your own health care spending.
In a PHSP, rather than having an insurance company provide coverage for a select list of treatments, your business makes payments to HealthSmart either as needed, or at regular intervals, depending on the plan you have. Once these payments have been made, employees covered under the plan can make claims to HealthSmart. These claims are fully reimbursed by HealthSmart as long as they are valid medical expenses as defined by the Canada Revenue Agency (this list is quite extensive – common ones are shown on our Eligible Expenses page) and there are still funds in their plan.
With a PHSP, your business can fully deduct the expenses of the PHSP, and your employees are fully reimbursed for the medical expenses by the company in a tax-free manner, resulting in substantial tax savings for the company and the individual.
I am a single employee, small business owner. Which PHSP is best for me?
If your business has only one employee, you are eligible for our simplified, low-cost Single Family Plan. This plan offers a streamlined payment process that allows you to make claims quickly and easily.
When you sign up for the Single Family Plan, the plan covers you and your entire family. Each adult (over 18) family member has $1,500 of coverage each year, and each minor family member has $750 of coverage each year. This coverage is not limited to that specific family member, but instead is pooled for your entire family. For example, if you and your spouse have one adult child living at home and one 10 year old also living at home then in total your family is eligible for total coverage up to $5,250 for a complete calendar year that may be claimed by members of the family.
In order to be eligible for the Single Family Plan, you must have a business that has one employee. This can either be a sole proprietorship which has no other employees, or a corporation that has only one employee receiving a T4. If you are a sole proprietor, there are additional requirements imposed to be eligible to set up a plan.
My small business has multiple employees. Which PHSP is for me?
If your business employs more than one employee then you will need to enrol for our Managed Plan which allows far more customization to the specific needs of your business. Please contact us if you would like more information on a Managed Plan. If you do not meet the requirements under a sole proprietorship, you will not be eligible for a PHSP at this time. If you are not sure if you qualify, please contact us and we will be happy to further discuss your options with you.
My employer signed me up for a PHSP. What do I do next?
If you are an employee of a Company that has signed up for HealthSmart’s service, welcome! Your employer has given you access to a very comprehensive medical expense reimbursement service. Speak to your Plan Administrator, or refer to your welcome package for the details of your plan.
How do I make a claim?
The claims process is very simple. First, incur the medical expense as you normally would. For example, pay the dentist, pharmacist, or registered massage therapist yourself. After making the payment and obtaining an official receipt, you are ready to make the claim.
At this point, go to our forms page and print the claim form. Complete this form with all the information requested. Send this form by mail or through our online submission form, and the receipts for the services to HealthSmart.
The HealthSmart staff will review the claim to ensure that; you have not exceeded your annual limit, the expenses are valid medical expenses, and that all required documentation has been provided. If the funds held with HealthSmart are not sufficient to cover your plan at that time, we will invoice you (or the owner of the business) for the difference.
Once your plan is fully paid up, we will mail a cheque for the medical expenses to you.
Your business is allowed to fully deduct the entire payment and you are fully reimbursed for your medical expense, saving you substantial tax.
I have traditional Health Insurance. Can a PHSP benefit me?
If you already have partial health coverage provided for you (for example your spouse’s employer covers you under a private plan), then you might be wondering how a PHSP will benefit you and your family.
Traditional health insurance often has limits on what coverage they offer in different areas. For example, glasses may only be covered to a certain amount each year, or there may be a small amount you have to pay for each prescription you have filled. As well, there will be things not covered by the insurance plan that are important to your family, such as laser hair removal (when done by a doctor), laser eye surgery, massage therapists, or various alternative medical treatments. With a PHSP you will be able to claim any of these amounts under the PHSP when they are not covered by the traditional insurance plan.
Do PHSPs have advantages over traditional Health Insurance?
Yes! Some advantages over traditional insurance include:
- Virtually all medical expenses are covered
- No premiums to pay. Costs are easy to control
- Only pay fees when a claim is made
- Easy to use claims process
- Quick claims turnaround
- Payments 100% tax deductible for employer
- Reimbursement 100% tax free for employees
- Employee can use benefits on what matters most to them