PRIVATE HEALTH SERVICES PLAN (PSHP)
FREQUENTLY ASKED QUESTIONS

Enrolment
Eligible Deductions
Claim Submission Process
Costs
PHSP Concepts

Enrolment

1. How far back can I go when I establish the start date for eligible expenses in my PHSP for my employees?

You as the planholder can specify the Effective Date. It is a bit convoluted but you do it by establishing your first "benefit year". Your benefit year can be any twelve month period ending in the current fiscal year. Suppose your fiscal year end is October 31, and we are in the 2008 fiscal year. That means your earliest qualifying "benefit year" would end on the first day of the current fiscal year. Therefore, it must end on November 1, 2007. Working back 12 months from that date defines the start of your first "benefit year" as being November 2, 2006. The reason a PHSP can be retro-active is because a PHSP is defined as being "in the form of insurance". However, it is not traditional premium-based insurance where premiums paid by many cover the claims of a few. A PHSP is based on each business covering the medical expenses of its own plan with a "cost plus commission" to a third party provider (i.e. Brock Health Administration). Since the planholder must cover the expenses, it follows that it will be the planholder that determines what dates your employees will be covered (within reason). As the owner of that business you establish the Effective Date based on your generosity to your employees and the ability of your business to cover the financial cost.

Remember you cannot "double dip" so any medical expenses you claimed on a personal tax return for a Medical Expense Tax Credit cannot be claimed again for a second benefit. However, if you did not claim them and you still have the receipts then they are deductible under your PHSP.

2. On the enrolment application form do you want the postal address of the business, or our personal postal address?

The enrolment application should show your business mailing address of the planholder. This is where Brock Health Administration will send all tax receipts and correspondence. We do not send business information to the employees; it is always sent to the business address.

On Appendix A you would put the mailing address for each employee. This is the default address where the re-imbursement cheques will be mailed for that employee. On each claim form, we allow the claimant to enter a new address and direct the cheque to any other postal address (essentially over-riding the default address for that claim only).

3. I am a Sole Proprietor and plan to open a Brock Health Administration PHSP. I have an expense coming up that will exceed the $1500 yearly limit. Can I carry forward that deduction?

Yes, you can submit an eligible expense over multiple years until it is fully re-imbursed.

4. Our company has some employees and some shareholders and some who are both. How do we ensure our PHSP is set up according to the rules?

A PHSP is designed as an "employee" benefit and not a "shareholder" benefit. All members of the PHSP must be employees, so workers who are "shareholders-only" should establish themselves as employees as well. For planholders who are one-person companies and use dividends for the bulk of their compensation, they should pay themselves at least some salary to meet this definition. Lump sum employment bonuses paid at year end will avoid payroll administration. Consult your accounting or taxation advisor for advice on this matter.

5. Do we need to list myself, my spouse and our family members on Appendix A when enrolling for our PHSP?

Only "Covered Employees" need to appear on the Appendix A form, although both spouses can be listed if they are both employees. Any expenses for you, your children and your spouse can all be claimed under you as the Covered Employee. It covers any member of your household related by blood, marriage or adoption.

6. How do we control the costs of health benefits using a PHSP?

While no employee can be excluded from participating in your PHSP, the planholder can contain the costs of operating a benefit plan. This is accomplished by assigning your employees into classes of coverage. Those employees which have a key role in the company such as the owner or principal can have a higher limit; middle management or supervisory level employees can be grouped with slightly less coverage. Clerical or labourers can have a class with lower coverage. And temporary, seasonal or part-time employees can be managed with probation periods, minimum hour limits and lower coverage. You can also make your PHSP optional with the choice of opting out.

7. How much should I set as my class limits?

You can equate $2000 to a one dollar per hour pay raise over a 2000 hour working year for your employees. From our experience, an average family of 4 spends about that much in routine expenses each year. So depending on your generosity and ability of your company to pay the costs of your PHSP you can consider that as your middle level class. Management could be higher and operating staff could be lower. You can operate for some time and determine if that works for you. You, as the planholder can lower or raise these limits at any time simply by letting us know your intentions.

8. What is the meaning of "total income" and "income from sources other than self-employment" when I am determining if my self employed business is eligible for a PHSP?

For the purpose of PHSP eligibility, your total income is the amount from line 150 of your income tax return, (before you deduct any amounts for a PHSP); minus the amounts you entered on lines 207(RPP Deductions), 212(Union Dues), 217(Business Investment Losses), 221(Carrying Charges), 229(Other Employment Expenses), 231(Clergy Residence Deductions), and 232(Other Deductions).

For the purpose of PHSP eligibility, your income from sources other than self-employment is the amount from line 150 of your income tax return, (before you deduct any amounts for a PHSP); minus the amounts you entered on lines 135 to143(Business, Professional, Commission, Fishing, Farming Incomes excluding business losses which reduced the net amount reported on those lines), 207(RPP Deductions), 212(Union Dues), 217(Business Investment Losses), 221(Carrying Charges), 229(Other Employment Expenses), 231(Clergy Residence Deductions), and 232(Other Deductions).

9. If I enroll, how can I be sure you're trustworthy and legitimate?

While we are as legitimate as all other PHSP providers in Canada, we will need to earn your trust to keep your business. With our company operating on only 5% profit margin, you can be sure we are not a get rich quick scheme. To be prosperous we need to have a long, positive relationship with your business. Long relationships can only be built on trust.

We'll protect your privacy. We'll provide a valuable service at a fair price. We'll help you reduce your health benefit expenses. We'll be frank and honest with you. If you can be served better by one of our competitors, we'll recommend them to you. We'll succeed when all of our customers succeed. If we continue to do all those things, then we'll have earned your trust.

10. Are you a member of the Better Business Bureau?

Although we are not an accredited member of the Better Business Bureau, they do track complaints for non-accredited businesses. You can check the BBB Reliability Report for Brock Health Administration Ltd. It confirms no complaints have ever been received.

11. Whenever I call your office it always goes to voicemail. Doesn't anyone answer your phone?

We do not have a staff receptionist at this time. The marketing group handles all contacts coming from telephone and email because most calls are new or potential customers. We are quite proud our customer service volume is very low because once established a Brock Health PHSP is a very reliable function.

Our marketing group is a small team and almost always out of the office on sales visits. Each customer deserves their undivided attention so they don't take calls directly during sales visits. However, they do monitor all calls and emails and will respond back as quickly as possible, often before the end of the day. So please leave a voicemail or send an email for prompt response.

Eligible Deductions

1. My spouse has health benefit coverage under her employer. Can I deduct the eligible expenses that are not covered by her plan under my PHSP?

Yes this is a common and acceptable usage of a PHSP. Your Brock Health PHSP is supplementary to your wife's benefit plan. The process would continue just as it is now. Once you receive the statement from her insurance company indicating the amount that was not covered by her plan, you simply send that insurance carrier's statement to Brock Health, circling the claimed amounts, along with your business cheque. You will be reimbursed for the disallowed amounts under the spousal plan. Any expenses that were only partially covered by her plan or were totally ineligible can be considered for a claim under your Brock Health PHSP. If you know beforehand that a particular service is not covered (say chiropractic or massage therapy) by her plan, you can speed up your reimbursement by submitting the original receipt from the health provider directly to Brock Health. If you know it will be deemed ineligible there is no point in sending it to her insurance company first. And once you have reached your annual limit on any limited service (such as orthodontics) with her insurance company, you can submit the remainder of those receipts directly to us.

2. As a result of a divorce, my biological child is living with his other parent. Are health expenses for that child deductible under my PHSP?

No. Covered Employees may only claim expenses for individuals who are living in their household. Your household means your principal home at a single address where the full time occupants, regardless of age, are dependent on you for their living expenses. This is not the same definition as "Dependent" used in many other tax related discussions.

3. My parents live full time in an attached suite in my home for which they pay no rent. Are their health expenses deductible through my PHSP?

Yes. Covered Employees may only claim expenses for individuals who are living in their household. Your household means your principal home at a single address where the full time occupants, regardless of age, are dependent on you for their living expenses. This is not the same definition as "Dependent" used in many other tax related discussions.

4. Some of my medical supplies have Sales Tax on the receipt. Should I include the GST and PST in my PHSP claim?

Yes. The full cost of eligible health expenses including GST, HST and/or PST should be included on your claim.

5. I have to pay for parking when I visit my doctor. Is this a deductible health expense?

No. That is not a health services expense.

6. Are vaccinations for travel overseas an eligible expense for our PHSP?

Yes, provided they are prescribed & delivered by a nurse or doctor licensed in your province.

7. Can I deduct the cost all my activities that are proactive healthy pursuits, such as sports, gym or swimming lessons?

No. A PHSP is intended to cover the cost of health services and treatments provided by medical practitioners. It is not legislation designed to influence healthy lifestyles. However, recent tax changes have made certain sports activities for children deductible on your personal taxes. Consult a tax professional for more information on this.

8. I have employees who travel to foreign countries. Are premiums for travel medical insurance a deductible expense on our PHSP?

Yes, Travel Insurance for personal injury or medical expenses is an eligible expense. Other travel related insurance that is not specifically for health expenses is not covered. Things such as flight cancellation insurance, or liability insurance are not eligible expenses.

9. One of my employees is very risk averse and wants to purchase commercial health insurance with the funds I allocate to him per year with our PHSP?

Yes. This is an eligible expense. It does mean that employees will not have any funds left over for 100% coverage or the routine expenses.

10. On the "What is Not Covered" section what does it mean when it states "Medical expenses for which you are reimbursed or are entitled to be reimbursed from other plans"?

The "entitled" clause refers to claims which are submitted to a medical plan or PHSP for tax deduction and then subsequently submitted to another medical plan or PHSP for re-imbursement. It is basically outlawing "double-dipping".

11. In order to prescribe PHSP eligible services, what is the definition of a medical practitioner?

In layman's terms, a medical practitioner is an individual registered as such by the appropriate provincial or national governing body for that profession, such as a College or Association. Further clarification is provided by the CRA Interpretation Bulletin IT 519R2

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Claim Submission Process

1. Do we have to send the original medical receipts or are photocopies acceptable? I am concerned in case the originals are lost or not approved?

Generally Brock Health Administration requires original receipts for our records. We do recognize they are not available in some circumstances and we will accept photocopies of receipts on occasion. We do not suggest you send photocopies routinely.

If any expenses are disallowed we will return the original receipts to you. We do strongly recommend you make photocopies of the receipts as postal mail does on occasion get misdirected.

2. Do we have to submit a claim form for each separate member of the family for a Covered Employee?

No. You can mix children and spouses on the same claim form. The re-imbursement cheque will be made out to the payee shown on the top of claim form. You would only submit separate claim forms if you want separate cheques. For example, if a Covered Employee paid for his own dental work and the spouse of the Covered Employee paid separately for their own dental work. If two claim forms were submitted, Brock Health Administration would issue two separate cheques made out to each spouse.

3. My year end is May 31. How long after that date do we have to submit our expenses for the year?

Unlike RRSP transactions, Brock Health Administration operates our PHSP service on a transaction date model. We expect to receive all expense claims on or before your year end date. This allows us time to prepare your annual summary and tax receipt and deliver it to you in time for your tax advisor to do your corporate tax return. If you are expecting a large expense near your year end, please contact us via email at info@brockhealth.ca to make special arrangements to keep your file open for a short time.

4. I have expenses for last year and some for this year already. Do I have to make separate claims for each fiscal year?

It is the transaction date with Brock Health Administration, not the medical service date that determines to which fiscal year the expense will apply. The medical service date is only used to ensure it is after your planholders Effective Date. Once your fiscal year closes, you will receive a tax receipt that will be deductible against your taxes for that fiscal year. The Brock Health Administration transaction date is recorded as the day the claim is received at our office. If your miss a particular health expense it can always be claimed the following year, but it will apply to your business taxes in the year it was claimed.

5. One of my Covered Employees has a big expense with his children's orthodontics. It is larger than I have budgeted to cover in a year on our PHSP limit. What can he do?

It is an eligible expense so he can submit the expense in chunks (multiple times) over several years until it is fully re-imbursed. For example he can claim his regular expenses this year and then with any room he has at year end he can claim it against these orthodontics. After a few years, he will have recovered his expense while not exceeding your company budget for the PHSP.

6. How often can claims be submitted? Is there a time limit or a minimum claim amount?

At Brock Health Administration you can submit as often as you like for any amount you like. We have no minimum claim amount nor frequency restrictions. The cost is simply a percentage of the claim so it does not affect the timing. There are no surcharges or hidden fees if you make small claims or submit numerous times.

7. When I submit claims do you need the bank receipt if I pay by MasterCard or Visa?

No. You only need to submit the health expense receipt from your medical practitioner. Your method of payment has no bearing on your PHSP claim. In fact, we would prefer if you did not include your Visa or MasterCard receipts as that financial information is private and is not required in the course of our PHSP business. Our claims staff shreds those receipts when they arrive.

8. How come I have to pay the whole medical expense again? Why can't I just submit a cheque for your 5% fee and the GST?

You must submit the whole amount of your claim including the medical expenses, administration fee and GST. The reason for this is there are 3 legal entities involved in two separate transactions. Your business is paying Brock Health and Brock Health is reimbursing the Covered Employee. If there is not a full payment by the employer under the PHSP, then the reimbursements would not be tax deductible. Interpretation Bulletin IT-339R2 Section 3 explains the basic elements of a PHSP and the indemnification of one party (the Covered Employee) by another party (the PHSP planolder)

9. Do I get my receipts back when I submit them to Brock Health Administration?

No. Brock Health Administration keeps the original receipts in secure storage for 7 years and then shreds them. This is for any investigation that Canada Revenue Agency might launch against any of our customers. We cooperate fully with CRA in those circumstances. However, on request, we will be happy to provide photocopies of any receipts to you that you may need in the future. There is no charge for that. We do encourage you to keep your own photocopies of all receipts before they are submitted, in case they are lost in the mail.

10. Do you accept MasterCard or Visa for claim payments?

No. We only accept cheques for claim payments. Becoming a credit card merchant would significantly increase our administration fees. In any event, since we are required to collect original medical receipts in the mail for adjudication, a credit card transaction would not expedite the claim processing time.

11. Does it matter if the original medical expense is paid with the business credit card, or my personal credit cards?

You wouldn't use your business credit card in this instance. The medical services were delivered to real human beings not a business entity; they are the Covered Employees, so they can pay the medical practitioner by any means at all, including their personal credit cards.

12. How quickly will I receive my reimbursement cheques?

Even though we promise 5 day turnaround on our reimbursement cheques, we actually have enough staff to process all claims on the same day or next day. So depending on your mail delivery time to Alberta, you will see your re-imbursement cheque within about a calendar week. If you are concerned about the effect of delays on your business cash flow, may I also suggest you submit smaller claims more frequently? We do not have minimum amounts or charge anything extra for numerous claim submissions.

13. I have a large claim with multiple pages. Can I send one lump sum cheque, or do I need to send one check for each page of claims?

Yes, you can send one lump sum cheque for the entire claim, regardless of how many pages. One small hint; if you are using the MS Excel electronic claim form you can put the "Total Claim" (not the "Total Fee Payable") from your first page as "Balance Forward" on the first line of the subsequent page. Then the last page of the spreadsheet will have the correct "Total Fee Payable" for the entire claim.

Costs

1. Do we need to pay $100 enrolment for each employee when we sign up for our PHSP?

No. A Brock Health Administration PHSP is a service which is sold to the company (planholder) for one single $100 fee regardless of the number of Covered Employees. Further, we do not charge any fees to adjust your list of Covered Employees. You can make changes free of charge at any time.

2. Does it cost anything to change my list of Covered Employees?

No. You can simply send us an email or include your changes with your next claim and we will update the records at no charge.

3. Is the $100 enrolment fee an annual charge?

No. The $100 enrolment fee is "one time only" to cover the costs of things like paper, computer program, data entry, postage, printing etc. There are no annual fees at Brock Health Administration.

4. Some PHSP service providers charge Annual Renewal Fees, or Termination Fees. What are the other unadvertised fees at Brock Health Administration?

There are no annual renewal fees at Brock Health Administration. Similarly, we do not charge any fees for you to terminate your plan. We have no unadvertised charges of any kind. Our $100 enrolment fee and our 5% administration charge are the only two costs you will ever have at Brock Health Administration.

5. How come Brock Health Administration doesn't charge GST on the Application Enrolment Fee like some other providers?

Services to arrange the issuance of PHSP policy are exempt from GST. The discussion of this subject by Canada Revenue Agency is under "Exempt Supplies" in GST/HST Memorandum 17.9 -Insurance Agents and Brokers.

6. You don't have a 1-800 number on your website. It costs me long distance telephone charges to call you. Why is that?

We recognize that a 1-800 number would be a nice feature to have and we have likely lost some business because of it. However, we have spared no effort in developing and maintaining the best possible information on this website. The costs of operating a 1-800 number, while not inconsequential, would need to be paid by our existing customers. At Brock Health, we work hard to keep a low cost business model so we can retain our 5% administration charge. If you want to eliminate your long distance charge, please contact us by email and we'll call you anywhere in Canada if you wish to speak with us at whatever time is convenient for you. We always reply to email queries with a personalized response.

7. My business is registered in Nova Scotia. You don't mention HST (Harmonized Sales Tax) on your website. What tax do you charge on administration fee for businesses in Atlantic Canada?

Yes, we do charge HST for customers in Atlantic Canada. We have separate forms available that show and calculate the HST on the Brock Health administration fee. We include a selection of those forms with each enrolment.

PHSP Concepts

1. I paid my dentist in full with my credit card. I don't understand why I have to pay Brock Health Administration a second time. I don't think getting free dental coverage with a PHSP. Am I correct?

A PHSP does not provide free health benefit coverage. If you are comparing it to premium-based health insurance, there are some differences. In both cases the medical practitioner was paid in full by credit card. Health Insurance charges you fixed monthly premiums whether you make a claim or not. When you make a claim the insurance company pays it from their pool of premiums collected. In a PHSP your business does not have pay premiums of any kind. You submit your company business payment to us with your PHSP claim. Brock Health Administration uses that money to pay the re-imbursement to your covered employees.

2. I thought you also needed to purchase insurance to have a PHSP. How come Brock Health Administration doesn't sell insurance?

If reading section 248(1) of the Income Tax Act in a casual way, it would seem insurance is required to qualify as a PHSP. However, that confusion became apparent to Canada Revenue Agency and that is why the Interpretation Bulletin IT-339R2 was released in August 1989 to address the matter. This Interpretation Bulletin is entitled "Meaning of private health services plan" specifically to clear up this confusion. Section 3 of this document clearly states a PHSP is a "plan in the nature of insurance" and it goes on to enumerate 5 sub points of which the Canada Revenue Agency believes describe that "nature". Furthermore, Section 6 specifically illustrates how the "cost plus" model of a PHSP should function.

You will find the bulk of the PHSP service providers in Canada, including Brock Health Administration operate under this exact "cost plus" model. The "Why Choose Brock" Page will point you to all the major PHSP providers where you can compare and confirm this fact.

3. Do you have any references for existing customers of Brock Health Administration?

Yes, references and testimonials are available on request.

4. How long has Brock Health Administration been in business?

Brock Health Administration is one of the newest PHSP providers in Canada. It was started in late 2005 after observing the Private Health Service Plan market could be served by a lower cost yet still fully comprehensive PHSP product offering. We spent about 8 months in research, staffing and development. We launched the company, our business, the website and our sales efforts in late 2006 with zero customers. We are quite proud of this website and have received many compliments and the results of our beliefs speak for themselves. Within eighteen months, we had customers in 5 provinces from Ontario to British Columbia. While we still have less than a thousand customers across Canada, we are proud to say none of our customers have terminated their business with us nor closed their Brock Health PHSP.

5. Our family has significant health care costs and writing such a big cheque will affect my business cash flow?

You do not need to wait until the end of your fiscal year to make a claim submission. If you are concerned about the effect of delays in turnaround on the reimbursement cheque on your business cash flow, we suggest you submit smaller claims more frequently; say quarterly or monthly. We do not have minimum amounts or charge anything extra for multiple claim submissions.