Olympia Trust CompanyPrivate Health Services Plans (PHSPs) - Administration of Private Health Services PlansCorporate and Shareholder Services including transfer agent and trustee servicesSelf Administered Plans: RRSP, RRIF, LIF, LRIF, and LIRAForeign Exchange - Foreign Currency Exchange Services
Private Health Services Plan

PHSP Overview

Definition of a Private Health Services Plan (PHSP)

Section 248(1) of the Income Tax Act defines a PHSP. It is an extended health and dental plan that is distinct from government plans. In essence, a PHSP is a written contract between an employer and an employee. The purpose of a PHSP is to enable an employer to provide health and dental benefits to their employees on a tax-free basis. The employer is entitled to a deduction for the full amount of expenses paid out to the employee.

In other words, a PHSP is a health plan and a tax plan. The Plan maximizes the opportunity to fully utilize all health and dental services while merging this opportunity with existing Canadian tax laws. A business will purchase the Plan to achieve a wide and comprehensive range of health and dental services in the most cost effective route available.

There are two types of PHSPs:

  1. Traditional health and dental plans offered by most insurance companies. Blue Cross and Great West Life are examples. Typically, a premium is paid to the insurer.
  2. A cost plus plan whereby an employer contracts with a trustee to cover defined risks or claims (a specific dollar amount per plan year) of an employee and their dependents. The employer promises to reimburse the cost of such claims plus an administration fee.

The Olympia Trust PHSP is a pure example of an arrangement where an employer reimburses its employees for the cost of employee’s medical and dental expenses using a trustee to administer the plan details.

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