What Canadian Small Businesses Should Know About PHSP

Many small entrepreneurs do not know or realize the great benefits that the Private Health Service Plan or PHSP provides. Unlike traditional health insurance plans, which are expensive and complicated, PHSPs are cost-effective and virtually hassle-free. Other than that, they also cover a broader range of health care expenses than a typical insurance policy. Additionally, PHSPs provide tax-free benefits and can be tailored to individual needs or preferences.

It is for these reasons that they are considered the best option for small business owners seeking health coverage for themselves and their workers. However, the sad news is that many small businesses still think that group plans are the best, if not the only option they have when it comes to health expenses that are not covered by Medicare.

PHSP 101

Private healthcare plans were launched by the Canada Revenue Agency (CRA) in 1989. In essence, PHSP helps small business owners take care of the medical bills of loved ones, workers, and even themselves without having to worry about paying taxes. It’s this tax-free benefit from PHSP that makes it a great alternative to traditional health insurance plans.

One sector of the business industry that benefits greatly from PHSPs is the real estate industry. To be more specific, real estate agents are on the first list of those who benefit from this health coverage scheme. Real estate agents are, most of the time, self-employed. As such, they are not eligible to receive the benefits of many traditional health insurance plans. Because of this, they will have to use their own money each time they need to pay a medical bill. On the other hand, if an agent takes advantage of PHSP, their medical expenses will be treated as business expenses, deducted from their gross earnings from their job. Apart from real estate agents, sole proprietorships and unincorporated properties can also benefit from PHSP.

PHSP benefits

Aside from its tax-free benefit, another attribute that makes PHSP attractive is that it is flexible. A customer, let’s say they have a PHSP limit of $ 3,500, can spend that amount in any way they want. Of course, this is limited to a medical or dental setting. For example, you can spend a portion of the lump sum for your children’s dental needs or your wife’s medicine. In general, the client can tailor his PHSP to his or his family’s health needs.

Additionally, employees can also enjoy PHSP benefits. Workers often have no say in what medical issues need more or less coverage in group plans. For example, a certain employee may want more drug coverage but cannot do anything about it due to the limitations of their employer’s health insurance plan. Most of the time, only large companies can offer health insurance plans that give employees the freedom to select the coverage they want. However, with PHSPs, employees have the freedom to select the coverage they want and decide when and where the money they are entitled to will be spent.

PHSP eligibility

When it comes to eligibility, PHSPs are very flexible. Both unincorporated and incorporated companies can benefit from PHSPs. PHSPs also cover any type of medical or dental bill, as long as it is valid.

In general, there is no rule governing the number of workers a particular establishment must maintain to qualify. However, PHSP administrators may have their own set of rules or policies regarding this matter. Additionally, the CRA has also created some rules governing the implementation of PHSPs. For example, sole proprietorships can only finance $ 1,500 for themselves, $ 1,500 for their partners, and $ 750 for their dependent children.