A Private Health Services Plan (or PHSP) is not insurance. It is a clever tax-saving vehicle created by the Canadian government that lets small business owners and other self-employed individuals turn medical expenses (including insurance premiums) into 100% deductible business expenses. By setting up a PHSP through a third party provider (such as McGill Health Services), individuals can now process a wide range of medical expenses (for the entire family) through their business. This offers significant tax savings over paying for them with after-tax dollars.
PHSP's were once only available to corporations. Fifteen years ago, changes to the Canada Revenue Act extended the benefits of PHPS's to small business owners and other self-employed individuals. Surprisingly few are unaware of these changes and the dramatic tax savings they offer.
HOW IT WORKS
In the simplest terms, a PHSP is a trust account set up by a business owner or self-employed individual and administered by a qualified third party. The account is either pre-funded based on estimated expenses or funded on an as needed basis. When an individual or his or her family incurs a medical expense not covered by a comprehensive insurance plan, the receipt is submitted to the plan administrator and reimbursed from the PHSP, thereby becoming a 100% tax-deductible business expense. The list of expenses that are covered by a PHSP is extensive and spans many areas of traditional and non-traditional healthcare.
A SIMPLE EXAMPLE OF POTENTIAL TAX SAVINGS
Check out this interesting article by CBC News | Business: PHSP: The Best Health Plan You've Never Heard of