CRA New Position on Private Health Services Plans

January 1, 2015 implemented a new position on PHSPs. CRA now considers that a plan is a Private  Health Services plan as long as all or substantially all of the premiums paid under the plan related to  medical expenses that are eligible for the Medical Expense Tax Credit or METC. CRA’s position prior to  January 1, 2015 was that ALL medical expenses covered under a plan had to be eligible for the METC in  order for the plan to qualify as a PHSP. 

All or substantially all generally means 90% or more. Therefore, in most cases, 90% or more of the  premiums paid under a plan have to be for coverage of medical expenses that are eligible for the METC. 


Company XYZ pays $1000.00 a month for its group employee PHSP. The $1000.00 premium is based on  the following: 

1. $700.00 relates to coverage for prescription drugs that employees purchase, as prescribed by a  medical practitioner and recorded by a pharmacist. 

2. $200.00 relates to coverage for dental services paid to a Dentist. 

3. $80.00 relates to coverage for a medical test such as x-rays, electrocardiograms, urine analysis. 4. $20.00 relates to coverage for non-prescription vitamins. 

Since the first three items are eligible for the METC and total more than 90% of the entire premium,  the CRA would consider the plans to be a PHSP if all other conditions have been met. The other conditions to me met are outlined in paragraph 3 of Interpretation Bulletin IT-339R2,  Meaning of Private Health Services Plan. To find out what expenses are eligible for the METC, see Which  medical expenses can you claim?