Personal Finance

Recommendations for Private Health Plans (extended medical)

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  • Dec 10th, 2020 8:45 pm
[OP]
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Dec 18, 2004
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Burnaby

Recommendations for Private Health Plans (extended medical)

Hi!
I'm on a 1 year contract with my employer and they aren't providing benefits.
I'm looking for some advice on extended health benefits (private health plans).

Can anyone suggest or advise me.

Thanks!
17 replies
Deal Addict
Jan 21, 2018
4349 posts
4406 upvotes
Vancouver
Might be better asked in the Small Business forum, since private health plans are available only to companies, not unincorporated individuals.

Any company can establish its own private health plan and get the same tax benefits as a group plan from an insurance company. But the CRA tends to cast a watchful eye on individual proprietors to prevent abuse, so it may be best to use the services of a company that offers private health plan services including vetting and record keeping for a small premium like 5%. It looks better to the CRA.
Newbie
May 22, 2019
25 posts
11 upvotes
I would just contact manulife and sunlife and get a quote.

He is looking for extended health like dentist so it is private health care.
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Oct 13, 2007
3504 posts
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Edmonton
terranaj98 wrote: Hi!
I'm on a 1 year contract with my employer and they aren't providing benefits.
I'm looking for some advice on extended health benefits (private health plans).

Can anyone suggest or advise me.

Thanks!
Are you coming off a previous employer plan? If so, you will get better rates and better coverage.
[OP]
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Dec 18, 2004
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Burnaby
starchoice wrote: Are you coming off a previous employer plan? If so, you will get better rates and better coverage.
Yes.
I thoughts so... however as a previous poster said.. manulife flex seems to be cheapest.

also costco discount !
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Nov 19, 2004
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Cambridge, ON
If you are self employed (don't need to be incorporated), look into Brock Health. You pay your own medical expenses, but you can go through the plan to make them a deductible expense.
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Mar 25, 2012
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I would steer clear of them. They often have first year caps or high deductibles that basically give you nothing in return when you factor in the premiums.

Instead, toss $100-150 per pay period (or per month) into a high interest savings account and use that as your health spending account. Save your pennies. These individual health and dental plans are the biggest scam and ripoff going. Look up Green Shield Canada or Pacific Blue Cross on Yelp and they literally have 1 star or less. Customer service is abhorrent and deplorable.

They're just slightly better than a payday loan.

#micdrop

Cheers,
Doug
Jr. Member
Sep 13, 2013
199 posts
231 upvotes
Montreal, QC
When I researched this a couple of years ago, it turns out that a PHSP like Brock Health is not recognized at the provincial tax level in Quebec, only federal, so the tax reduction is not as significant and possibly not advantageous compared to the medical expenses tax credit. As such, there is a tax benefit to "real" private health insurance as opposed to any other option, contrary to the impression that, almost by actuarial definition, you can only lose money by buying insurance for non-emergency expenses.
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Nov 18, 2008
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KuduIO wrote: When I researched this a couple of years ago, it turns out that a PHSP like Brock Health is not recognized at the provincial tax level in Quebec, only federal, so the tax reduction is not as significant and possibly not advantageous compared to the medical expenses tax credit. As such, there is a tax benefit to "real" private health insurance as opposed to any other option, contrary to the impression that, almost by actuarial definition, you can only lose money by buying insurance for non-emergency expenses.
so as a small incorporate business owner in montreal, it is better not to get private insurance?
"Every marathon you run, your heart scars and you will die faster. If you think running a marathon is fitness, then you know NOTHING ABOUT HEALTH & FITNESS."
- Training 101
Deal Addict
Sep 14, 2012
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Montreal, QC
terranaj98 wrote: Hi!
I'm on a 1 year contract with my employer and they aren't providing benefits.
I'm looking for some advice on extended health benefits (private health plans).

Can anyone suggest or advise me.

Thanks!
When I was laid off, I believe that opted to get the FollowMe plan shown in https://www.manulife.ca/personal/insura ... ental.html

However, prior to opting into it, I did a cost analysis and for me, I was saving money for opting for the FollowMe plan which I selected as opposed to paying out of pocket for it my medical needs.
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Jan 21, 2018
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Vancouver
L4cky wrote: so as a small incorporate business owner in montreal, it is better not to get private insurance?
It depends how small. The major insurers do offer company group plans for as few as 4-5 employees, but below that it's basically individual rates. Those rates are typically double the company group rates. You might be able to find a slightly cheaper rate if you can discover some other group you already belong to offering group insurance, like a professional association.

Keep in mind that extended health insurance is not designed to be cost-effective on a cost-vs-return basis. Basically the insurer charges the company 1.5 to 1.8 times the average amount they pay out (or expect to pay out based on group demographics). If their payouts rise above that in any given year, they will raise your rates until they are paid back. So why would companies go for this bad deal? Three reasons: 1) Employees expect benefits as an important perk, 2) It provides coverage for rare catastrophic issues beyond the company's ability to pay, and 3) there's a tax benefit. The tax benefit is that the cost of group health plans is tax-deductible to the company, and not a taxable benefit to the employee. If you pay your own health-care costs, you will probably be taxed at full income-tax rate on that money due to the high deductible that the CRA imposes on personal health care expenses.

One way to get around this problem for very small companies is the PHSP (Private Health Services Plan), which allows companies to set up their own health benefits plan and get the same tax benefit as a group plan from an insurer. It doesn't even have to be self-administered by the company - you can contract a PHSP management company to do it for you for as little as a 5% premium on claims. The company has to pay its own health care costs on behalf of employees, but it is more cost-effective than any group plan from a major insurer. The drawback is of course that it is limited to the company's own financial resources, which won't be able to cover any major claim. The PHSP has to include limits much lower that a large insurer offers.

You cannot create a PHSP as an individual - it has to be a company. The company can craft its own plan with its own rules, so long as they follow the standard CRA rules for extended health insurance (for example, only the items listed on the CRA site can be covered as allowed medical expenses). The PHSP can even include individual health insurance plans from outside insurers, so you can craft a mix of how costs are covered.

There is some mention in this thread of what happens when you leave a company group plan, for example if you decide to strike out on your own as self-employed, or you lose your job, or you retire. In that case most of the group insurers offer you an option to transition to an individual plan that carries on from your group plan, as long as you act within a few months of leaving your former company group plan. The important thing to know about these carry-on plans is that they are a bad deal unless you have a pre-existing condition. You will notice if you research it that the insurers actually charge more for a carry-on plan than they do for the same coverage under a new individual plan. The reason is that for a new plan they can exclude pre-existing conditions, where as for a carry-on plan they cover any pre-existing conditions that were previously covered under the company group plan.
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Nov 18, 2008
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Scote64 wrote: It depends how small. The major insurers do offer company group plans for as few as 4-5 employees, but below that it's basically individual rates. Those rates are typically double the company group rates. You might be able to find a slightly cheaper rate if you can discover some other group you already belong to offering group insurance, like a professional association.

Keep in mind that extended health insurance is not designed to be cost-effective on a cost-vs-return basis. Basically the insurer charges the company 1.5 to 1.8 times the average amount they pay out (or expect to pay out based on group demographics). If their payouts rise above that in any given year, they will raise your rates until they are paid back. So why would companies go for this bad deal? Three reasons: 1) Employees expect benefits as an important perk, 2) It provides coverage for rare catastrophic issues beyond the company's ability to pay, and 3) there's a tax benefit. The tax benefit is that the cost of group health plans is tax-deductible to the company, and not a taxable benefit to the employee. If you pay your own health-care costs, you will probably be taxed at full income-tax rate on that money due to the high deductible that the CRA imposes on personal health care expenses.

One way to get around this problem for very small companies is the PHSP (Private Health Services Plan), which allows companies to set up their own health benefits plan and get the same tax benefit as a group plan from an insurer. It doesn't even have to be self-administered by the company - you can contract a PHSP management company to do it for you for as little as a 5% premium on claims. The company has to pay its own health care costs on behalf of employees, but it is more cost-effective than any group plan from a major insurer. The drawback is of course that it is limited to the company's own financial resources, which won't be able to cover any major claim. The PHSP has to include limits much lower that a large insurer offers.

You cannot create a PHSP as an individual - it has to be a company. The company can craft its own plan with its own rules, so long as they follow the standard CRA rules for extended health insurance (for example, only the items listed on the CRA site can be covered as allowed medical expenses). The PHSP can even include individual health insurance plans from outside insurers, so you can craft a mix of how costs are covered.

There is some mention in this thread of what happens when you leave a company group plan, for example if you decide to strike out on your own as self-employed, or you lose your job, or you retire. In that case most of the group insurers offer you an option to transition to an individual plan that carries on from your group plan, as long as you act within a few months of leaving your former company group plan. The important thing to know about these carry-on plans is that they are a bad deal unless you have a pre-existing condition. You will notice if you research it that the insurers actually charge more for a carry-on plan than they do for the same coverage under a new individual plan. The reason is that for a new plan they can exclude pre-existing conditions, where as for a carry-on plan they cover any pre-existing conditions that were previously covered under the company group plan.
very detailled. thanks!
"Every marathon you run, your heart scars and you will die faster. If you think running a marathon is fitness, then you know NOTHING ABOUT HEALTH & FITNESS."
- Training 101
Deal Fanatic
User avatar
Nov 18, 2008
7931 posts
1821 upvotes
Mont-Royal
Scote64 wrote: It depends how small. The major insurers do offer company group plans for as few as 4-5 employees, but below that it's basically individual rates. Those rates are typically double the company group rates. You might be able to find a slightly cheaper rate if you can discover some other group you already belong to offering group insurance, like a professional association.

Keep in mind that extended health insurance is not designed to be cost-effective on a cost-vs-return basis. Basically the insurer charges the company 1.5 to 1.8 times the average amount they pay out (or expect to pay out based on group demographics). If their payouts rise above that in any given year, they will raise your rates until they are paid back. So why would companies go for this bad deal? Three reasons: 1) Employees expect benefits as an important perk, 2) It provides coverage for rare catastrophic issues beyond the company's ability to pay, and 3) there's a tax benefit. The tax benefit is that the cost of group health plans is tax-deductible to the company, and not a taxable benefit to the employee. If you pay your own health-care costs, you will probably be taxed at full income-tax rate on that money due to the high deductible that the CRA imposes on personal health care expenses.

One way to get around this problem for very small companies is the PHSP (Private Health Services Plan), which allows companies to set up their own health benefits plan and get the same tax benefit as a group plan from an insurer. It doesn't even have to be self-administered by the company - you can contract a PHSP management company to do it for you for as little as a 5% premium on claims. The company has to pay its own health care costs on behalf of employees, but it is more cost-effective than any group plan from a major insurer. The drawback is of course that it is limited to the company's own financial resources, which won't be able to cover any major claim. The PHSP has to include limits much lower that a large insurer offers.

You cannot create a PHSP as an individual - it has to be a company. The company can craft its own plan with its own rules, so long as they follow the standard CRA rules for extended health insurance (for example, only the items listed on the CRA site can be covered as allowed medical expenses). The PHSP can even include individual health insurance plans from outside insurers, so you can craft a mix of how costs are covered.

There is some mention in this thread of what happens when you leave a company group plan, for example if you decide to strike out on your own as self-employed, or you lose your job, or you retire. In that case most of the group insurers offer you an option to transition to an individual plan that carries on from your group plan, as long as you act within a few months of leaving your former company group plan. The important thing to know about these carry-on plans is that they are a bad deal unless you have a pre-existing condition. You will notice if you research it that the insurers actually charge more for a carry-on plan than they do for the same coverage under a new individual plan. The reason is that for a new plan they can exclude pre-existing conditions, where as for a carry-on plan they cover any pre-existing conditions that were previously covered under the company group plan.
For PHSP, I can manage it on my own without any annual fees?
"Every marathon you run, your heart scars and you will die faster. If you think running a marathon is fitness, then you know NOTHING ABOUT HEALTH & FITNESS."
- Training 101
Deal Addict
Jan 21, 2018
4349 posts
4406 upvotes
Vancouver
L4cky wrote: For PHSP, I can manage it on my own without any annual fees?
Yes, you can. But there are 3 reasons for paying a management company 5% to do it:

1. They know what the CRA rules are and will help you run the program correctly and keep independent records.
2. You will be very grateful for (1) if the CRA ever takes an interest in your PHSP and starts asking questions.
3. If you have more than one employee, there is an issue of confidentiality. For example, do you want your boss to know about your mental health treatment?

Brock Health is an example of a PHSP management company that charges 5%.

If you decide to do it yourself, make sure you familiarize yourself with the rules, prepare a written program guide, follow the guide, and keep good records in case you are audited. An audit is more likely if you have an unusual volume of claims.
Member
Mar 25, 2008
465 posts
930 upvotes
Vancouver
I am learning a lot from this thread as my new employer doesn't do group plan benefit, and I have to start looking for Private health plans.

Is it possible to have dual extended benefits, like one from Manulife and one from Sunlife? And I am not talking about dual coverage when you and your spouse have extended health benefits and have each other as dependent.

TIA

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