Frequently asked questions

Frequently Asked Questions About Aquilian Health Benefits Plans

Enrolment

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 2014 fiscal year. That means your earliest qualifying benefit year would end on the first day of the current fiscal year, which is November 1, 2013. So the earliest benefit year you can choose will end on November 1, 2013. Working back 12 months from that date gives the start of your first benefit year as November 2, 2012; 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 the business mailing address of the planholder. This is where Aquilian Benefits will send all planholder 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 address where the reimbursement cheques will be mailed for that employee. [Important note: We offer n0-cost direct deposit reimbursement to all employees; just scan/fax us a void personal cheque.]

3. I am a Sole Proprietor and plan to open an Aquilian Benefits PHSP. I have an expense coming up that will exceed my yearly limit. Can I carry forward that deduction?

Yes, you can submit an eligible expense over multiple years until it is fully reimbursed.

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 accountant or tax advisor for advice on this matter.

5. Do we need to list myself, my spouse and each of our family members on Appendix A when enrolling for our Aquilian Benefits PHSP?

No! 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 full-time permanent employee can be excluded from participating in your Aqulian Benefits PHSP, unless they voluntarily opt out, the planholder is able to contain the costs of operating a benefit plan. This is accomplished by assigning employees into different classes of coverage. Employees who 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. Temporary, seasonal or part-time employees can be excluded, or their cost can be managed with probation periods, minimum hour limits and lower coverage.

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 the ability of your business 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 senior employees to have much higher annual limits.

8. If I enroll, how can I be sure you’re trustworthy and legitimate?

While we have been in business since 2010 and have many clients who are accountants in public practice, we still need to earn your trust to keep your business. For us to be successful, 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.

9. I currently have a traditional benefits plan. Why should I switch?

Other kinds of employee benefit premiums have risen continuously and will continue to rise in the future. Limits to coverage, partial reimbursement and maximum fee guides all limit what you get back from other benefits plans. In general, benefit plans are structured for providers to make a 25-35% margin over actual claims costs. This means that very few people actually claim sufficient amounts to cover the premiums they pay. By having an Aquilian Benefits PHSP you pay only for what you use; this can add up to significant savings 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 total simplicity.

Eligible Deductions

1. My spouse has health benefit coverage under his/her employer. Can I claim the expenses that are not covered by that plan?

Yes! This is common and acceptable. Your Aquilian Benefits Plan is supplementary to your spouse’s benefit plan. The process would continue just as it is now. Once you receive the statement from his/her insurance company indicating the amount that was not covered by that 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 his/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 his/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/her 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 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 and 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. Tax law in Canada is not designed to influence healthy lifestyles in this way.

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 the employee may not have any funds left over for 100% coverage of the routine expenses not covered by his commercial insurer.

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 Income Tax Folio S1-F1-C1: Medical Expense Tax Credit and the CRA provides a handy reference list of authorized medical practitioners by province or territory for the purposes of claiming medical expenses.

Claim Submission Process

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 that you make photocopies of the receipts as postal mail does occasionally 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 direct deposit or cheque will be directed to the payee employee shown on the top of claim form.

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. 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. 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 or frequency restrictions. The cost is simply a percentage of the claim so frequency costs you nothing. 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 paid the original expense 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.

8. Why do I have to pay the whole medical expense again? Why can’t I just submit a cheque for your fee and the taxes?

In order for your health expenses to become a business expense, you must submit the whole amount of your claim including the medical expenses, administration fee and taxes. That’s because there are 3 legal entities involved in two separate transactions: Your business is paying Aquilian Benefits and Aquilian Benefits is then 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.

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 or electronic cash transfers (EFT/ACH, Interac, PAD, etc.) for claim payments. Becoming a credit card merchant would significantly increase our administration fees. In any event, since we need the original medical receipts to be sent to us by mail, 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: Copy the amount of the “Total Claim” (not the “Total Fee Payable”) from your first page into the first amount on the first line of the subsequent page and use something like “Balance Forward” for the description. Do this for any subsequent pages and then the last page will have the correct “Total Fee Payable” for the entire claim.

Costs

1. 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.

2. Some PHSP service providers charge Set Up Fees, Enrolment Fees, Annual Renewal Fees, or Termination Fees. What are the other unadvertised fees at Aquilian Benefits?

There are no set up or annual renewal fees at Aquilian Benefits. Similarly, we do not charge any fees for you to terminate your plan. We have no hidden charges of any kind. Our 5% administration charge is the only cost you will ever have at Aquilian Benefits.

3. Can an Aquilian Benefits Plan be set up for my employees to help me save money while still providing them comprehensive coverage?

Absolutely! Your Aquilian Benefits Plan will always have a pre-set maximum annual 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 reimbursements to an employee from an Aquilian Benefits Plan are tax-free (except in Quebec). This can save your employees significant dollars without giving them a salary or wage increase. An Aquilian Benefits Plan provides employees the ultimate flexibility and broadest coverage while optimizing your 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!

PHSP Concepts

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 is usually paid in full by you personally. Commercial 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 to pay premiums of any kind. You submit your company business payment to us only when there is a claim and only for that amount. Aquilian Benefits uses that money to pay the reimbursement to your covered employee. The employee ends up getting free dental, and the business is paying for it.

2. Our family has significant health care costs and writing such a big cheque will affect my business cash flow; how can you help?

You do not need to wait until the end of your fiscal year to make a claim submission. If you are concerned about 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.

3. What are the major advantages of an Aquilian Benefits PHSP for a small business?

Some of the major advantages of an Aquilian PHSP include:

  • It’s Very 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 annual limits 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 compared to paying my health expenses “out of pocket”?

By establishing an Aquilian Benefits PHSP, you are able to deduct many different health 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 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 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 insurer’s statement to us 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!