How A PHSP/HSA Works

What is a PHSP?

HealthRabbit provides a cost-plus service structured as a Private Health Services Plan, or PHSP, or a Health Spending Allowance (HSA) as defined here. The HSA is a mechanism where the health expenses of business owners and employees in certain circumstances can be transformed into a legitimate business expense and a non-taxable benefit to the employee, through use of a third-party (HealthRabbit).

If the reduction of personal taxes is greater than the cost of operating the PHSP, then a tax-savings is captured. This is beneficial especially to the self-employed, consultants, or professional corporations where the benefit is for immediate family.

Benefits for the Self-Employed

  • Your family heatlh, dental, and vision expenses become fully deductable.
  • Comprehensive coverage with few limits.
  • Supplements spousal plans using regular benefits.
  • Reduction in personal and business taxes. 

Benefits for the Employer

  • The key benefit is tax savings by converting employee benefits to a business expense.
  • Offers a means of providing health, dental, and vision coverage while managing costs and only paying for what is used.
  • You can tailor the program to what your business can afford with only a few simple rules to abide by.
  • PHSPs work well to cover gaps with traditional insurance where full coverage is not available.
  • Ability to provide coverage where regular health insurance would not be feasible, increasing employee loyalty, retention, and satisfaction. 

Benefits for the Employee

  • Privacy - Claims are submitted to HealthRabbit directly. The employer only sees limited detail on the invoice. No receipts pass the employer's desk.
  • Freedom to spend your health dollars where you need them. Regular insurance caps many services at a low amount while other services are not used. Use your full allotment at your discretion.
  • No premiums to deal with and money reimbursed to you is not a taxable benefit.
  • If you purchase supplemental insurance, the premiums are eligible to be paid under the PHSP.

Overview of Employer Enrolment

Enrolment to a HealthRabbit Private Health Services Plan is done online and is a simple process.  Information you will need prior to enroling:

  • Legal Business Name
  • Business Mailing Address
  • Number of Employees
  • Incorporation Status
  • Fiscal Year End
  • Plan Administrator Contact Info
  • Coverage Class Amounts
  • Funding Type Preference (Funded or Scheduled)
  • Employee List (Not required for Sign-up, but is required before we can process claims)

In addition to the above information, you will need to decide on the year-end date for employees to submit claims and the effective date for the plan to start (you can set this as early as the start of the current fiscal year).

Once submitted, we will review and complete the setup of your account. You will receive an invoice for the enrolment fees, and if applicable, your pre-funding amount. Once the fees are paid, and your Employees list has beeen submitted and processed, your employees will receive a welcome email with instructions for setting up their account and submitting claims. All employees receive their own account linked to your company where they can submit claims and view their claim history. Email addresses are the key way for all site users to access the site.

For Pre-Funded Companies:

Once setup is complete and welcome packages are delivered, your employees can start submitting claims and you willl receive reports based on your funding thresholds and fiscal year-end dates.

For Scheduled Payment Companies:

We will contact you to set your scheduled dates and claim submission deadlines for the first year. Invoices will be delivered based on these dates and claims will be made when payment is made.

Overview of Employee Coverage Process

What does using a PHSP look like to an employee? It's fairly simple and will be similar to your experience with supplemental insurance:

  1. Receive and Pay for Service - The covered employee receives health or dental service from a health service provider and pays for the service.
  2. Submit Online PHSP Claim - The covered employee logs into HealthRabbit.ca and submits a claim, uploading an image of digital file of their receipt.
  3. Get Reimbursed - HealthRabbit will review the claim and make payment arrangements under the businesses setup. Pre-paid plans will have payment generated in 1-2 business days. Scheduled accounts will have the funds held until the release date (status in your dashboard will show the claim as "Approved - payment scheduled").

The time to receive reimbursement is dependant on the type of plan the employer is enrolled in. The fastest option is a pre-funded plan. Scheduled payment plans still allow an employee to plan the timing of when they incur their expenses but are dependant on employer-chosen dates. Employees receive reimbursement of 100% of their out-of-pocket expenses, including any GST or HST paid. 

 

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