• Using a fully insured plan• Out of pocket• Private Health Services Plan (PHSP)

How we pay our medical expenses

There are tax consequences in not using a PHSP

• 3% Rule

• Using after tax dollars

Why settle for a non-refundable tax credit when you can deduct the entire medical cost from income?

CRA 3% Rule …. Line 330• Your total expenses have to be more than either 3% of your

net income (line 236) or $2,152, whichever is less. • The calculation used takes three elements into account.

• Actual medical expense, less• 3% of income, or• $2,152Which ever is less

$60,000 income with $2000 medical expenses

• With PHSP– Cost: $2,000– Fee(10%): $200

$2,200

Deductible as an expense

$ 2432 includes taxes

• Without PHSP– Cost: $2,000– Deduct: $1,800 (3% Rule)– $200

Provincial Tax Credit = 6%

Federal tax Credit = 15%

Total Non- Refundable

Tax Credit $42