I’ve seen the Private Health Services Plan touted on the FEAT boards as a way to save a few hundred dollars, if you are a small business owner. The PHSP makes medical expenses tax deductible as opposed to receiving a tax credit of 20.7% (combined Federal and Provincial rate). This could potentially save a few hundred dollars in tax.
Keep in mind however that the PHSP is subject to maximum claims of $1,500 per spouse and $750 per child. This amount may be combined to allow one family member to claim all of the allotment. Any expenses not claimed through a PHSP can be claimed as a standard medical expense, but keep in mind you still have to cross the 3% of net income or $2,052, whichever is less. Depending on your circumstance, it may not be worth it to have a PHSP.
I don’t have a PHSP and I don’t know of one to recommend. If you google PHSP, you can find more information than I have provided here.
What if my business is incorporated?
There are private health service plans (PHSP) available only to incorporated businesses.
The way a PHSP plan works is it will cover all medical expenses for all persons (i.e. employees, spouses, children and even shareholders) as a tax free benefit. This plan is not insurance and as such doesn’t have all the traditional exclusions, limits or approval processes for reimbursement.
This would be applicable to incorporated owner operators and partnerships such as doctors, dentists, lawyers, accountants, computer programmers & consultants. If you work for an incorporated small business you can also ask the owner to consider adding this plan as a benefit and have claimed expenses directly reduce your payable income.
Using the plan means medical expenses are a non-taxable benefit to you and are taken out of the pre-tax gross income of the incorporated business. So the amount you save is directly related to your marginal tax rate (minus the plan’s fees). This can result in a significant savings over paying for ABA therapy out of post-tax salary and receiving a meager tax credit.
Different plan providers have different fees, many are based on the amount of the expense which would be OK for very low small medical expenses. However for the large fees associated with ABA therapy, or any other therapy, medication or medical expense a fixed cost claim fee is significantly less expensive.
Here are some of the plans I have heard of; more can be found on google.
Sun Life Health and Welfare Trust