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What Small Canadian Businesses Need to Know About PHSP

Many small entrepreneurs do not know or realize the big benefits that Private Health Services Plan or PHSP provides. Unlike traditional health insurance plans, which are expensive and complicated, PHSPs are cost-effective and virtually hassle-free. Aside from that, they also cover a wider range of health care expenses than a typical insurance policy. Furthermore, PHSPs provide tax-free benefit and can be tailored to suit the needs or the preferences of individuals.

It is for these reasons they are considered the best option for small entrepreneurs who are looking for medical coverage for themselves and their workers. However, the sad news is that many small business enterprises still think that group plans are the best – if not the only – choice they have when it comes to health expenses that are not covered by medicare.

PHSP 101

Private Health Services Plans were launched by the Canada Revenue Agency (CRA) in 1989. At its core, PHSP helps small businessmen take care of the medical bills of their loved ones, workers, and even themselves without having to worry about paying taxes. It is this tax-free benefit of PHSP that makes it an excellent alternative over traditional health insurance plans.

One sector of the business industry that greatly benefits from PHSPs is the real estate industry. To be more specific, real estate agents are on the top 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 every time they need to pay a medical bill. On the other hand, if an agent takes advantage of PHSP, his medical expenses will be treated as business expenditures, deducted from the gross income of his work. Aside from real estate agents, sole proprietors and unincorporated establishments 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 client, who let us say has a PHSP limit of $3,500, can spend the said amount in any way he wants to. Of course, this is limited to a medical or dental setting. For instance, he can spend a portion of the total sum for the dental needs of his children or the medicine of his wife. In general, the client can tailor his PHSP to suit his or his family’s health needs.

In addition, employees can enjoy the benefits of PHSP as well. Typically, workers do not have a voice as to what medical aspects need more or lesser coverage in group plans. For instance, a certain employee may want more medicine coverage but cannot do anything about it because of the limitations of his employer’s health insurance plan. Most of the time only large companies are capable of providing 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 that 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 enterprises can benefit from PHSPs. Any type of medical or dental bill, as long as it is valid, is covered by PHSPs as well.

In general, there is no governing rule as to how many workers a certain establishment needs to maintain in order for it to qualify. However, PHSP administrators may have their own set of rules or policies regarding this matter. In addition, the CRA has also created some rules that govern the implementation of PHSPs. For instance, sole proprietors are only allowed to fund $1,500 for themselves, $1,500 for their partners, and $750 for their dependent children.

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