General

Q: How does Promedent PHSP work?

The employer enters into contract with Promedent to reimburse employee health care and dental expenses. When an employee submits a claim, Promedent notifies the employer that a claim has been filed. The employer pays the invoice on-line via approval of the claim. The invoice consists of the actual claim plus an administration fee of $60 (for claims up to $2000), plus GST/HST (as applicable by province). Payments are a deductible amount for the company, and the benefit paid to the employee is tax-free, and exempt from CPP and EI premiums. Funds not transferred immediately to an employee's bank account will be held in a separate trust account.

Q: How often should employees' claims be reimbursed?

Each claim reimbursed has a fee of $60 (claims totaling between $2,000 to $25,000 will incur a base fee of $60 plus 2% on amounts above $2,000. Claims over $25,000 will have a base fee of $750 plus 4% on amounts exceeding $25,000) plus GST/HST (as applicable by province), if electronic funds transfer ("EFT") is used. Fee for manual cheque claims are $100 (claims between $2,000 and $25,000 will incur a base fee of $100 plus 3% on amounts above $2000. Claims over $25,000 will incur a base fee of $790 plus 4% on amounts exceeding $25,000). Promedent recommends that you allow employees to make a claim up to twice a year (every 6 months). Owners of corporation will most likely only claim once at their year-end.

Q: What are the taxation rules governing Promedent PHSP?

As a "cost-plus" Private Health Services Plan, the premiums paid to a PHSP by an employer are business expenses deductible against business income. The amounts are non-taxable benefits to the employees. The employer must have an obligation under the employment contract to reimburse the eligible medical expenses of its employees. This obligation can be implied by signing up with Promedent.

Q: What expenses qualify for reimbursement?

The expenses must qualify as "medical expenses" as defined under subsection 118.2(2) of the Income Tax Act, which includes many items not covered by traditional medical and dental insurance coverage. Please refer to the Eligible Expenses section.

Q: Is there a maximum annual benefit limit with Promedent PHSP?

Incorporated companies are permitted to set their own reasonable maximum annual limits, but non-incorporated businesses have federally imposed maximum annual limit of $1,500 for an owner-manager employee, plus $1,500 for their spouse and $750 per child. If the unincorporated business employs non-owner employees, then the limit for the owner will be based on the least favoured non-owner employee.

Q: How will I benefit from using Promedent PHSP?

If you are the employer, your company provides tax-free employment benefit to your employees at a lower cost than other plans available. By providing health and dental benefits to your employees, you can improve employee morale and retention. If you provide this benefit in lieu of a pay raise, you could save the related CPP and EI premiums required for a pay raise.

If you are the employee, your medical and dental expenses are reimbursed. You have a tax-free benefit, and pay no premiums. You may pay lower CPP and EI premiums if you receive this benefit in lieu of a pay raise.