Health Reimbursement Plan

Your group plan lets you provide your plan members with comprehensive, cost-effective benefits coverage.

The Health Reimbursement Plan (HRP) takes that coverage one step further by allowing you to strengthen your coverage with valuable tax savings.

Before establishing a health reimbursement plan, you should consult with your independent tax advisor to review your needs and to determine whether a health reimbursement plan is ppropriate for your particular circumstances.

HRP Coverage

  • may be a tax-effective way to supplement health, dental and vision coverage that may be limited or not covered under your existing group plan
  • allows you to provide enhanced benefits to your key plan members in a way that is more tax-efficient than salary increases
  • is available to ICBA Benefit Services Ltd. plan sponsors

Who can be covered by an HRP?

An HRP provides coverage for a specific group of key plan members, such as managers and executives. All plan members in this specific group must be eligible for coverage.

HRP coverage also extends to any dependent for whom the plan member is entitled to claim a medical expense credit under the Income Tax Act (Canada). For example, HRP coverage would also be available for the dependent parent of a plan member, if the plan member is entitled to a medical expense credit for the dependent parent.

Which expenses are covered

HRP coverage supplements medical, hospital, dental and vision expenses that are limited or not covered under the terms of your existing group contract. Coverage is provided for those expenses that qualify as a medical expense under Subsection 118.2(2) of the
Income Tax Act (Canada), which may be amended from time to time.

How does an HRP work?

In three easy steps:

  1. Claims for eligible expenses are submitted directly to ICBA Benefit Services Ltd. You’re billed for the claim, plus a 10 per cent administration fee and applicable
    taxes. The administration fee is a minimum of $5. ICBA Benefit Services Ltd. may require payment of the full amount before the claim is reimbursed.
  2. ICBA Benefit Services Ltd. issues a claim cheque to the plan member for the amount of the expense.
  3. You write off the total claim and the administration fee as a business expense to the extent allowed by the Income Tax Act (Canada). The benefits received by the plan member are not taxable (unless the plan member resides in Quebec).


Cash in Advance

Payment to ICBA will be required in advance. The claim will be paid once payment is received and it is clear that the plan sponsor has agreed to accept responsibility for the claim cost.

Plan maximums

Available maximums range from $1,000 to $50,000. The maximum is combined for health, dental and vision expenses, and is applied per person, per calendar year.

Advantages

  • An HRP gives you the opportunity to provide additional benefits to your key employees
  • HRP coverage is paid for with pre-tax business funds, not personal disposable income
  • The full benefit amount, including the administration fee and associated taxes, is tax deductible as a business expense to the extent allowed by the Income Tax Act (Canada). The benefit is not taxable to the plan member (unless the plan member resides in Quebec).
  • There are no monthly premiums

Example

The child of an executive plan member in your organization requires a $3,000 orthodontic
treatment. Your organization’s group benefits plan covers basic dental treatment only.

Assume:

  • The executive’s personal taxation rate is 40 per cent
  • The HRP requires $3,000 plus a 10 per cent administration fee, for a total of $3,300.
  • The corporate tax rate for this business is 22 per cent Without HRP

Without HRP

  • The executive must earn $5,000 to have $3,000 available to pay the expense.

With HRP

  • The organization pays the expense through the HRP with $3,300 in corporate funds
  • The $3,300 is tax deductible for the organization.
  • The plan member receives $3,000 in nontaxable benefits
  • With a tax rate of 22 per cent, the net cost to the organization after tax is only $2,574

The HRP Advantage

Instead of spending $3,000 in after-tax dollars, the plan member’s cost is reduced to $2,574
and is covered by the organization. The plan member receives a $3,000 tax-free benefit
enhancement, and the expense is covered by the organization in the most tax-effective manner.

Note: Sales tax and premium tax will be added where required.

 

 

To sign up for HRP, please download this application form (pdfPDF 161KB) and
fax it to us at 604-298-7749

For existing clients with HRP, download a claim form (pdfPDF 161KB)

pdfAcrobat Reader required to view pdfs. Free download, if needed.

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