5 Key Things to Know About PHSPs in Canada

By Frontier Team•January 5, 2025•2 min read

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If you're a Canadian business owner or incorporated professional, you've likely heard the acronym PHSP tossed around. But what exactly is it, and why should you care? A Private Health Services Plan (PHSP) offers a smarter, more flexible way to manage health expenses while maximizing tax savings. Here are five essential things you need to know.

1. PHSP Stands for Private Health Services Plan

A PHSP is a CRA-approved benefit arrangement that allows Canadian businesses to reimburse employees (or yourself, if you're incorporated) for eligible medical expenses using pre-tax corporate dollars. Unlike traditional group insurance with fixed premiums and coverage caps, a PHSP operates on a pay-as-you-go basis—you only pay for what you actually use.

2. It's 100% Tax Deductible for Your Business

Every dollar your corporation spends through a PHSP is fully tax-deductible as a business expense. Meanwhile, reimbursements received are completely tax-free for the recipient. This creates a win-win scenario that can save incorporated professionals 30-50% compared to paying out-of-pocket with after-tax personal income.

3. Covers Everything CRA Deems Eligible

PHSPs aren't limited to just doctor visits and prescriptions. They cover a wide range of medical expenses including dental care, physiotherapy, mental health services, medical devices, vision care, and even massage therapy—basically anything the CRA considers an eligible medical expense under their guidelines.

4. Perfect for Incorporated Professionals and Small Businesses

Whether you're a solo consultant, contractor, or small business owner with staff, a PHSP adapts to your needs. It's especially valuable for incorporated professionals who want to convert personal health spending into legitimate business deductions without the overhead of traditional group insurance plans.

5. Simple, Modern Administration

Gone are the days of paper forms and endless waiting. Solutions like Frontier Health offer app-based claim submission with processing in 24 hours, transparent pricing with no hidden fees, and CRA-compliant administration so you can focus on running your business instead of worrying about audits.

A PHSP represents a fundamentally smarter approach to health benefits—flexible, tax-efficient, and designed for how modern Canadian businesses actually operate.

Ready to get started? Learn more about Frontier Health and set up your PHSP today.

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