For sole proprietorships, unincorporated businesses and incorporated companies a Health & Welfare Trust is a CRA approved plan for business owners to deduct healthcare expenses for their employees.

Private Health Services Plan (PHSP) fall under the guidelines of the Health & Welfare Trust.
PHSP allows sole proprietorships and unincorporated business owners to deduct 100% of qualified healthcare expenses from their taxable business income.

A Health Spending Account ( HSA) is a bank account used by an incorporated company to provide the health care dollars for the benefit of their employees.

The plan is an innovative way to tax-deduct money spent on healthcare and dental services. It can be used on its own or in combination with existing group insurance coverage. The plans are cost efficient and tax effective means of covering health and dental expenses or supplementing existing group insurance benefits.

Key points to consider:

1. The funds allocated to the HSA or PHSP can only be used for healthcare expenses
2. CRA requires a third party to administer the plan
3. There are rules and guidelines to follow, i.e. each employee class must receive the same benefit

Distinct Advantages:

1. Covers otherwise uninsured expenses such as orthodontics.
2. Expenses are a deductible business expense
3. Benefits are non-taxable income for the employee
4. Expenses paid for with pre-tax dollars