OPIP/Health Spending Account
If you are a physician in Ontario, you may be eligible for the OMA Priority Insurance Plan (OPIP). This plan was designed to provide physicians with flexible, comprehensive health insurance at a low cost. There are many different options available for you and your family.
Health Spending Accounts (HSA) are available to all self employed individuals. This is a non-traditional health care plan that provides flexible health care solutions for you and your family. For physicians eligible for OPIP, a HSA can be used to fill the gaps that exist in some of the plan options that are available. To learn which option best suits your needs and other details, visit the appropriate links below:
The Ontario Priority Insurance Plan (OPIP) is a plan designed by the Ontario Medical Association (OMA) and the Ministry of Health and Long Term Care, to provide inexpensive health benefits to physicians. There is an annual premium of $50, plus a taxable benefit for the premiums paid on your behalf by the Ontario government. The plan options available include:
- $430 Health Spending Account
- Extended Health Care Plan
- $50,000 Critical Illness Insurance
- $350 Health Spending Account and $50,000 Critical Illness Insurance
- Extended Health Care Plan and $50,000 Critical Illness Insurance
Anyone who works an average of 15 hours or more a week as a practicing physician within Ontario is eligible for this plan. Evidence of health is not required if you apply within 90 days of starting practice, graduating residency, moving to Ontario, or incur a life changing event. A life changing event includes marriage, divorce, child birth, adoption or the loss or gain of your or your spouse’s insurance coverage.
For full details and enrollment or change forms, please visit http://www.opip.ca/.
The Benecaid Health Spending Account (HSA) is similar to a bank account in which you deposit a set amount of money each plan year. Contributions are recognized as a 100% business deduction. You can submit expenses incurred by you or your dependents that are deemed “eligible medical expenses” under the Income Tax Act for tax free reimbursement.*
The list of “eligible medical expenses” is long and varied, but will include all benefits found in traditional health care plans as well as many that are not. Some benefits not normally found in these plans include audiologist services, laser eye surgery, elderly parents and dependent care, fertility drugs and treatment, testing for scholastic ability in children and tuition for special needs education. Coverage is available to you and your family including older children, parents and other members of your immediate family who are financially dependent on you.
Each year you determine the amount of money you wish to fund your HSA based on the estimated annual health and dental expenditures for you and your family. Premiums are based on the contribution amount, administration fees and method of payment. With every deposit, you are charged an administration fee to cover the cost of adjudicating claims, plus additional taxes. On average this equates to 12% of your contribution amount.
There is no limit on the amount you can contribute as long as the amount is reasonable (your CA can be consulted if your desired contribution amount is questionable). Any excess funds not used in the year they are contributed roll over indefinitely.
The annual contribution limit to the plan is capped at $1500 per adult (18 years of age and older) and $750 per child. Excess funds that are not used within 24 months of contribution are forfeited. The amount of contribution allowable is pro-rated based on the tax year.
Full time employees can be added to your Benecaid plan and given their own account. You can decide the contribution for your employees’ account each year.
The HSA provides a tax efficient and flexible way to provide benefits to your employees. This benefit is a better way to provide an increase in compensation as the benefit is tax free to the employee and the funds deposited do not require employer/employee CPP or EI remittances. For employees of a corporation, there is no limit on the contribution level and the funds roll over indefinitely. For employees of a non-incorporated entity, there is a limit of $1500/adult and $750/child and a 2 year rollover of funds.
- The tax issues discussed in this document are presented in broad and simple terms. Individual situations may affect the tax deductibility of the premium and tax free nature of the reimbursement. Consult your CA as to the tax implications of a HSA for you and your business.
- For incorporated physicians, the benefit provided through the HSA must be reasonable and provided by virtue of your employment status with the corporation and not that of a shareholder.
- For non-incorporate physicians the amount of premium that can be deducted as a business expense is limited to the amount of premium paid on your behalf for all full-time employees.
The changes in treatment of the HSA between incorporated and non-incorporated physician is a function of the terms of the Income Tax Act.
Physicians who enrolled in the extended health care plan (EHC) with OPIP will have to satisfy an annual deductible of $2000 for family and $1000 for singles before benefits are payable. There is also no coverage for vision or dental. In order to make the plan a fully comprehensive benefits package a Benecaid Health Spending Account (HSA) can be used to fill in the gaps. This plan can be used to reimburse the expenses not covered by OPIP Extended Health Coverage due to the deductible not being met, or it is not an eligible expense.
For those physicians who chose the Health Spending Account through OPIP instead of the EHC plan, Benecaid can be used to supplement the OPIP HSA to cover additional uninsured medical and dental expenses above and beyond the OPIP limit.