Private health services plan (PHSP)
A private health services plan (PHSP) is, under the Income Tax Act, a contract of insurance for hospital or medical expenses, or a medical or hospital care insurance plan, other than a provincial or listed federal plan. The CRA says an employer’s contributions to one for employees create no taxable benefit for them.
The CRA’s Employers’ Guide on taxable benefits says that if an employer contributes to a private health services plan, such as a medical or dental plan, for employees, there is no taxable benefit for them. A buyer meets the term when staff ask whether their coverage continues after a sale.
Employee-paid premiums
The same guide says premiums an employee pays to a plan are qualifying medical expenses the employee can claim on their income tax and benefit return. In its section on medical travel, it notes that payments an employer makes because of an obligation under a collective agreement may be considered a private health services plan.
In the Income Tax Act
Section 6(1)(a) of the Income Tax Act includes employment benefits in income but excepts a benefit derived from an employer’s contributions to or under several plan types, among them a private health services plan. Whether a particular arrangement qualifies is a question to put to the plan’s administrator and an adviser. For the wider taxable benefits rule and the group benefits plan term, see those entries.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentEmployers’ Guide – Taxable Benefits and Allowances (T4130)
- 02Government of CanadaGovernmentIncome Tax Act, R.S.C. 1985, c. 1 (5th Supp.)
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