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Frequently Asked Questions About Aquilian Benefits
1. How far back can I go when I establish the start date for eligible expenses in my Aquilian Benefits PHSP for my employees?
You as the planholder can specify the Effective Date. It is a bit convoluted but you do it by establishing your first "benefit year". Your benefit year can be any twelve month period ending in the current fiscal year. Suppose your fiscal year end is October 31, and we are now in the 2011 fiscal year. That means your earliest qualifying benefit year would end on the first day of the current fiscal year, which is November 1, 2010. So the earliest benefit year you can choose will end on November 1, 2010. Working back 12 months from that date gives the start of your first benefit year as November 2, 2009; this will be the earliest possible Effective Date for your Aquilian Benefits Plan.An Aquilian Benefits PHSP can be retro-active because a PHSP is defined as being "in the form of insurance", even though it is not traditional premium-based insurance where premiums paid by many cover the claims of a few. A PHSP is based on each business covering the medical expenses of its own plan with a "cost plus commission" to a third party provider (i.e. Aquilian Benefits). Since the planholder must cover the expenses, it follows that it will be the planholder that determines what dates your employees will be covered (within reason). As the owner of that business you establish the Effective Date based on your generosity to your employees and the ability of your business to cover the financial cost.
Remember you cannot "double dip", so any medical expenses you have already claimed on a personal tax return for a Medical Expense Tax Credit cannot be claimed again for a second benefit. However, if you did not claim them and you still have the receipts then they are deductible under your Aquilian Benefits PHSP.
2. On the enrolment application form do you want the postal address of the business, or our personal postal address?
The enrolment application should show your business mailing address of the planholder. This is where Aquilian Benefits will send all tax receipts and correspondence. We do not send business information to the employees; it is always sent to the business address. On Appendix A you would put the mailing address for each employee. This is the default address where the reimbursement cheques will be mailed for that employee. On each claim form, we allow the claimant to enter a new address and direct the cheque to any other postal address (essentially over-riding the default address for that claim only).3. I am a Sole Proprietor and plan to open an Aquilian Benefits PHSP. I have an expense coming up that will exceed the $1500 yearly limit. Can I carry forward that deduction?
Yes, you can submit an eligible expense over multiple years until it is fully re-imbursed.4. Our company has some employees and some shareholders and some who are both. How do we ensure our Aquilian Benefits PHSP is set up according to the rules?
An Aquilian Benefits PHSP is designed as an "employee" benefit and not a "shareholder" benefit. All members of the PHSP must be employees, so workers who are "shareholders-only" should establish themselves as employees as well. For planholders who are one-person companies and use dividends for the bulk of their compensation, they should pay themselves at least some salary to meet this definition. Lump-sum employment bonuses paid at year-end will avoid excessive payroll administration. Consult your accounting or taxation advisor for advice on this matter.5. Do we need to list myself, my spouse and our family members on Appendix A when enrolling for our Aquilian Benefits PHSP?
Only "Covered Employees" need to appear on the Appendix A form, although both spouses can be listed if they are both employees. Any expenses for you, your spouse, your children, and any other dependents can all be claimed under you as the Covered Employee. It covers any member of your household related by blood, marriage or adoption.6. How do we control the costs of health benefits using an Aquilian Benefits PHSP?
While no employee can be excluded from participating in your Aqulian Benefits PHSP, the planholder can contain the costs of operating a benefit plan. This is accomplished by assigning your employees into classes of coverage. Those employees which have a key role in the company such as the owner or principal can have a higher limit; middle management or supervisory level employees can be grouped with slightly less coverage. Clerical or labourers can have a class with lower coverage. And temporary, seasonal or part-time employees can be managed with probation periods, minimum hour limits and lower coverage. You can also make your Aquilian Benefits PHSP optional with the choice of opting out.7. How much should I set as my class limits?
You can equate $2000 to a one dollar per hour pay raise over a 2000 hour working year for your employees. From our experience, an average family of 4 spends about that much in routine expenses each year. So depending on your generosity and ability of your company to pay the costs of your Aquilian Benefits PHSP you can consider that as your middle level class. Management could be higher and operating staff could be lower. You can operate for some time and determine if that works for you. You as the planholder can lower or raise these limits at any time simply by letting us know your intentions. It is not unusual for some employees to have much higher annual limits. Consult your accounting or taxation advisor for advice on this matter.8. What is the meaning of "total income" and "income from sources other than self-employment" when I am determining if my self employed business is eligible for an Aquilian Benefits PHSP?
For the purpose of PHSP eligibility, your total income is the amount from line 150 of your income tax return, (before you deduct any amounts for a PHSP); minus the amounts you entered on lines 207(RPP Deductions), 212(Union Dues), 217(Business Investment Losses), 221(Carrying Charges), 229(Other Employment Expenses), 231(Clergy Residence Deductions), and 232(Other Deductions). For the purpose of PHSP eligibility, your income from sources other than self-employment is the amount from line 150 of your income tax return, (before you deduct any amounts for a PHSP); minus the amounts you entered on lines 135 to143(Business, Professional, Commission, Fishing, Farming Incomes excluding business losses which reduced the net amount reported on those lines), 207(RPP Deductions), 212(Union Dues), 217(Business Investment Losses), 221(Carrying Charges), 229(Other Employment Expenses), 231(Clergy Residence Deductions), and 232(Other Deductions).9. If I enroll, how can I be sure you're trustworthy and legitimate?
While we are as legitimate as all other PHSP providers in Canada, we will need to earn your trust to keep your business. With our company operating on only a small profit margin, you can be sure we are not a get-rich-quick scheme. To be prosperous we need to have a long, positive relationship with your business. Long relationships can only be built on trust. We'll protect your privacy. We'll provide a valuable service at a fair price. We'll help you reduce your health benefit expenses. We'll be frank and honest with you. We'll succeed when all of our customers succeed. If we continue to do all those things, then we'll have earned your trust.10. I currently have a traditional benefits plan. Why should I switch?
Benefit premiums have risen over the last year and are set to rise again. Limits to coverage, partial reimbursement and fee guides all limit what you get back. In general, benefit plans are structured for providers to make a 15-35% margin over actual claims costs. This means that few people actually claim sufficient amounts to cover the premiums they pay. By having an Aquilian Benefits PHSP you pay for only what you use and this can add up to significant saving each year on top of the potential tax savings. In addition to cost savings, an Aquilian Benefits PHSP has a number of other advantages over traditional benefit plans, including more comprehensive coverage, 100% reimbursement, greater flexibility, and simplicity.11. I currently have a PHSP with another provider. Why should I switch?
If you are transferring a PHSP from another provider, the $100 enrolment fee is waived. Eligible Deductions1. My spouse has health benefit coverage under her employer. Can I deduct the eligible expenses that are not covered by her plan under my Aquilian Benefits Plan?
Yes! This is a common and acceptable usage of a PHSP. Your Aquilian Benefits Plan is supplementary to your wife's benefit plan. The process would continue just as it is now. Once you receive the statement from her insurance company indicating the amount that was not covered by her plan, you simply send that insurance carrier's statement to Aquilian Benefits, circling the claimed amounts, along with your business cheque. You will be reimbursed for the disallowed amounts under the spousal plan. Any expenses that were only partially covered by her plan or were totally ineligible can be considered for a claim under your Aquilian Benefits Plan. If you know beforehand that a particular service is not covered (say chiropractic or massage therapy) by her plan, you can speed up your reimbursement by submitting the original receipt from the health provider directly to Aquilian Benefits. Plus, once you have reached your annual limit on any limited service with her insurance company, you can submit the remainder of those receipts directly to us.2. As a result of a divorce, my biological child is living with his other parent. Are health expenses for that child deductible under my Aquilian Benefits PHSP?
No. Covered Employees may only claim expenses for individuals who are living in their household. Your household means your principal home at a single address where the full-time occupants, regardless of age, are dependent on you for their living expenses. This is not the same definition as "Dependent" used in many other tax-related discussions.3. My parents live full-time in an attached suite in my home for which they pay no rent. Are their health expenses deductible through my Aquilian Benefits PHSP?
Yes. Covered Employees may only claim expenses for individuals who are living in their household. Your household means your principal home at a single address where the full-time occupants, regardless of age, are dependent on you for their living expenses. This is not the same definition as "Dependent" used in many other tax-related discussions.4. Some of my medical supplies have Sales Tax on the receipt. Should I include the GST/HST and PST in my Aquilian Benefits claim?
Yes. The full cost of eligible health expenses including GST, HST and/or PST should be included on your claim.5. I have to pay for parking when I visit my doctor. Is this a deductible health expense?
No. That is not a health services expense.6. Are vaccinations for travel overseas an eligible expense for our PHSP?
Yes, provided they are prescribed & delivered by a nurse or doctor licensed in your province.7. Can I deduct the cost all my activities that are proactive healthy pursuits, such as sports, gym or swimming lessons?
No. An Aquilian Benefits PHSP is intended to cover the cost of health services and treatments provided by medical practitioners. Taxation law is not in this case designed to influence healthy lifestyles. However, recent tax changes have made certain sports activities for children deductible on your personal tax return. Consult a tax professional for more information on this.8. I have employees who travel to foreign countries. Are premiums for travel medical insurance a deductible expense on our Aquilian Benefits Plan?
Yes, Travel Insurance for personal injury or medical expenses is an eligible expense. Other travel-related insurance that is not specifically for health expenses is not covered. For example, flight cancellation insurance and liability insurance are not eligible expenses.9. One of my employees is very risk-averse; can he purchase commercial health insurance with the funds I allocate annually to him per year with our Aquilian Benefits Plan?
Yes. This is an eligible expense. It does mean that employees may not have any funds left over for 100% coverage of the routine expenses.10. What is the definition of a medical practitioner when it comes to prescribing services that are eligible under a PHSP?
In layman's terms, a medical practitioner is an individual registered as such by the appropriate provincial or national governing body for that profession, such as a College or Association. Further clarification is provided by the CRA Interpretation Bulletin IT 519R2 and CRA provides a handy reference list of authorized medical practitioners by province or territory for the purposes of claiming medical expenses.1. Do we have to send the original medical receipts or are photocopies acceptable? I am concerned in case the originals are lost or not approved?
Generally Aquilian Benefits requires original receipts for our records. We do recognize they are not available in some circumstances and we will accept photocopies of receipts on occasion. We do not suggest you send photocopies routinely. If any expenses are disallowed we will return the original receipts to you. We do strongly recommend you make photocopies of the receipts as postal mail does on occasion get misdirected.2. Do we have to submit a claim form for each separate member of the family for a Covered Employee?
No. You can mix children and spouses on the same claim form. The reimbursement cheque will be made out to the payee shown on the top of claim form. You would only submit separate claim forms if you want separate cheques. For example, if a Covered Employee paid for his own dental work and the spouse of the Covered Employee paid separately for their own dental work. If two claim forms were submitted, Aquilian Benefits would issue two separate cheques made out to each spouse.3. I have expenses for last year and some for this year already. Do I have to make separate claims for each fiscal year?
The medical service date is only used to ensure it is after your plan's Effective Date. Once your fiscal year closes, you will receive a tax receipt that will be deductible against your taxes for that fiscal year. The Aquilian Benefits transaction date is recorded as the day the claim is received at our office. If you miss a particular health expense it can always be claimed the following year, and it will apply to your business taxes in the year it was claimed.4. My year end is May 31. How long after that date do we have to submit our expenses for the year?
Since it is the transaction date with Aquilian Benefits, not the medical service date that determines to which fiscal year the expense will apply, we expect to receive all expense claims on or before your year-end date. This allows us time to prepare your annual summary and deliver it to you in time for your tax advisor to do your business tax return. If you are expecting a large expense near your year-end that you wish to deduct in that year, please contact us via email at info@aquilian.ca to make special arrangements to keep your file open for a short time.5. One of my Covered Employees has a big expense with his children's orthodontics. It is larger than I have budgeted to cover in a year on our PHSP limit. What can he do?
It is an eligible expense, so he can submit the expense in chunks (multiple times) over several years until it is fully reimbursed. For example, he can claim his regular expenses this year and then with any room he has at year-end he can claim it against these orthodontics. After a few years, he will have recovered his expense while not exceeding your company budget for the PHSP.6. How often can claims be submitted? Is there a time limit or a minimum claim amount?
At Aquilian Benefits you can submit as often as you like for any amount you like. We have no minimum claim amount nor frequency restrictions. The cost is simply a percentage of the claim so it does not affect the timing. There are no surcharges or hidden fees if you make small claims or submit numerous times.7. When I submit claims do you need the bank receipt if I pay by MasterCard or Visa?
No. You only need to submit the health expense receipt from your medical practitioner. Your method of payment has no bearing on your PHSP claim. In fact, we would prefer that you did not include your Visa or MasterCard receipts as that financial information is private and is not required to process your claim. Our claims staff shreds those receipts when they arrive.8. How come I have to pay the whole medical expense again? Why can't I just submit a cheque for your fee and the taxes?
You must submit the whole amount of your claim including the medical expenses, administration fee and taxes. The reason for this is there are 3 legal entities involved in two separate transactions. Your business is paying Aquilian Benefits and Aquilian Benefits is reimbursing the Covered Employee. If there were not a full payment by the employer to the PHSP, then the employee reimbursements would not be tax-deductible. Interpretation Bulletin IT-339R2 Section 3 explains the basic elements of a PHSP and the indemnification of one party (the Covered Employee) by another party (the PHSP planolder).9. Do I get my receipts back when I submit them to Aquilian Benefits?
No. Aquilian Benefits keeps the original receipts in secure storage for 7 years and then shreds them. This is for any investigation that Canada Revenue Agency might launch against any of our customers. We cooperate fully with CRA in those circumstances. However, if you need the original receipts, for example in warranty issues with a device, we will be happy to return the originals (and keep photocopies). There is no charge for that. We do encourage you to keep your own photocopies of all receipts before they are submitted, in case they are lost in the Canada Post mail.10. Do you accept MasterCard or Visa for claim payments?
No. We only accept cheques for claim payments. Becoming a credit card merchant would significantly increase our administration fees. In any event, since we are required to collect original medical receipts in the mail for adjudication, a credit card transaction would not speed up the claim processing time.11. Does it matter if the original medical expense is paid with the business credit card, or my personal credit cards?
It is best not to use your business credit card to pay for personal medical expenses. The medical services were delivered to individuals not to a business entity. The individuals may pay the medical practitioner by any means at all, including their personal credit cards.12. I have a large claim with multiple pages. Can I send one lump sum cheque, or do I need to send one check for each page of claims?
Yes, you can send one lump sum cheque for the entire claim, regardless of how many pages. One small hint: if you are using the Excel spreadsheet claim form you can put the "Total Claim" (not the "Total Fee Payable") from your first page as "Balance Forward" on the first line of the subsequent page. Then the last page of the spreadsheet will have the correct "Total Fee Payable" for the entire claim.1. Do we need to pay a $100 enrolment for each employee when we sign up for our Aquilian Benefits Plan?
No. An Aquilian Benefits Plan is a service that is sold to the business (planholder) for one single $100 fee regardless of the number of Covered Employees. We do not charge any fees to adjust your list of Covered Employees. You can make changes free of charge at any time.2. Does it cost anything to change my list of Covered Employees?
No. You can simply send us an email or include your changes with your next claim and we will update the records at no charge.3. Is the $100 enrolment fee an annual charge?
No. The $100 enrolment fee is "one-time-only" to cover the costs of things like paper, computer programs, data entry, postage, printing, etc. There are no annual fees at Aquilian Benefits.4. Some PHSP service providers charge Annual Renewal Fees, or Termination Fees. What are the other unadvertised fees at Aquilian Benefits?
There are no annual renewal fees at Aquilian Benefits. Similarly, we do not charge any fees for you to terminate your plan. We have no unadvertised charges of any kind. Our $100 enrolment fee and our 10% administration charge are the only two costs you will ever have at Aquilian Benefits.5. Why doesn't Aquilian Benefits charge GST/HST on the Application Enrolment Fee?
Services to arrange the issuance of PHSP policy are exempt from GST/HST. The discussion of this subject by Canada Revenue Agency is under "Exempt Supplies" in GST/HST Memorandum 17.9 - Insurance Agents and Brokers.6. Can an Aquilian Benefits Plan be set up for my employees to help them save money while still providing comprehensive coverage?
Absolutely! You can easily provide your employees with an Aquilian Benefits Plan having a pre-set spending amount for the various classes of employees (e.g. $500, $1,000, $5,000, $15,000...). Like traditional benefits plans from insurance companies, all employee reimbursements from an Aquilian Benefits Plan are tax-free. This can save your employees significant dollars without giving them with a pay increase that would give them only a few more after-tax dollars to pay for benefits. An Aquilian Benefits Plan provides employees the ultimate flexibility and broadest coverage while optimizing benefit dollars. For employers it is the simplest way to provide employee benefits and have cost certainty. An Aquilian Benefits PHSP is a great way to attract and retain employees!1. I paid my dentist in full with my credit card. I don't understand why I have to pay Aquilian Benefits a second time. I don't I'm think getting free dental coverage with a PHSP. Am I correct?
A PHSP does not provide free health benefit coverage. If you are comparing it to premium-based health insurance, there are some differences. In both cases the medical practitioner was paid in full by credit card. Health Insurance charges you fixed monthly premiums whether you make a claim or not. When you make a claim the insurance company pays it from their pool of premiums collected. In a PHSP your business does not have pay premiums of any kind. You submit your company business payment to us with your PHSP claim. Aquilian Benefits uses that money to pay the reimbursement to your covered employees. The employee is getting free dental, and the business is paying for it.2. I thought you also needed to purchase insurance to have a PHSP. How come Aquilian Benefits doesn't sell insurance?
If reading section 248(1) of the Income Tax Act in a casual way, it would seem insurance is required to qualify as a PHSP. However, that confusion became apparent to Canada Revenue Agency and that is why the Interpretation Bulletin IT-339R2 was released in August 1989 to address the matter. This Interpretation Bulletin, entitled "Meaning of private health services plan", was written specifically to clear up this confusion. Section 3 of this document clearly states a PHSP is a "plan in the nature of insurance" and it goes on to enumerate 5 sub-points which the Canada Revenue Agency believes describe that "nature". Furthermore, Section 6 specifically illustrates how the "cost-plus" model of a PHSP should function. You will find the bulk of the PHSP service providers in Canada, including Aquilian Benefits operate under this exact "cost plus" model.3. Our family has significant health care costs and writing such a big cheque will affect my business cash flow?
You do not need to wait until the end of your fiscal year to make a claim submission. If you are concerned about the effect of delays in turnaround on the reimbursement cheque on your business cash flow, we suggest you submit smaller claims more frequently; say quarterly or monthly. We do not have minimum amounts or charge anything extra for multiple claim submissions.4. What are the major advantages of an Aquilian Benefits PHSP for a small business?
Some of the major advantages of an Aquilian PHSP include:- Tax-Effective - Make your Health and Dental Expenses 100% deductible for your business and tax-free for the employee, and reduce taxes for both!
- Broader Coverage - Get a comprehensive range of coverage that is often excluded by traditional benefits plans.
- 100% Reimbursement - 100% of eligible benefits claims are reimbursed up to the limit you set.
- Works with Other Plans - Deduct any eligible expenses not covered by a spouse's plan or submit premiums from insured plans to your Aquilian Benefits Plan to make them deductible and reduce taxes. Get reimbursed for the annual deductible amounts under provincial drug benefit plans.
- Greater Flexibility - You can allocate your benefit dollars to where you need them most. The employee chooses which medical service is needed, not the insurance company.
- Simplicity - Benefit plans have become increasingly complex. A PHSP is an easy way to manage your Health and Dental costs. Pay only for what you use.
5. What are the advantages of an Aquilian Benefits PHSP over covering my health expenses "out of pocket"?
By establishing an Aquilian Benefits PHSP, you are able to deduct your Health and Dental costs as a business expense in a similar fashion to telephone, rent, and office supplies. This saves you a significant amount of money. Families typically spend between $1,500-$3,000 on Health and Dental each year. For an individual with a 30% marginal tax rate this would mean a savings of $450-$900 per year versus using after-tax, "out of pocket" dollars. Your savings will depend on the many factors that make up your personal marginal tax rate, how much you spend in a year, and your business tax rate. Ask your tax advisor about an Aquilian Benefits PHSP.6. Our family has coverage under a traditional benefits plan. Is an Aquilian Benefits PHSP still useful for me?
Yes. An Aquilian Benefits PHSP can be used as "top-up" plan. Any eligible Health & Dental expenses not covered by your traditional benefits plan are eligible for reimbursement by your Aquilian Benefits PHSP. For example, if your spouse has an employer-sponsored benefits plan, any non-reimbursed amounts from that plan may be claimed through your Aquilian Benefits PHSP. Simply submit the Explanation of Benefits as the original receipt to claim the non-reimbursed amounts. Insured premiums from other benefit plans such as travel medical insurance, health or dental benefit premiums, and catastrophic insurance are also eligible for reimbursement through an Aquilian Benefits PHSP. By establishing an Aquilian Benefits PHSP in combination with an insured plan you can make these insurance costs 100% tax-deductible as a business expense and save even more money!Contact
Postal address:
Aquilian Benefits Corp.
2189 6th Concession Rd.
Uxbridge, ON L9P 1R4
Telephone:
(647) 333-7229
Email:
info@aquilian.ca
Web:
www.aquilian.ca
