As an individual that goes to the dentist, obtains subscription drugs or receives other medical treatment you have to have these costs paid.

So how do these medical costs get paid for?

There are two basic methods of payment.

You can pay for them personally or your company or employer can pay for them as part of a benefit plan.

If you pay for them personally, what are your options? You pay from your personal cash or you buy a personal insurance benefits policy with a Life Insurance company. Either way, its out of your personal after tax money.

So what is the second option.

If you own your own company or an employee of company that provides health benefits you have two fundamental options.

Obtain a health benefit plan with an insurance company or go the route of a PHSP or Private Health Service Plan.

An insurance company is governed by the insurance act and a well regulated environment.

A PHSP is governed by the Income Tax Act and is not governed by any financial institution regulations.

Both are perfectly suited to providing a company benefit plan.

A benefit plan will cover medical expenses that would be otherwise be acceptable under the tax act. This applies to both insurance companies and a PSHP.

So what’s the difference?

For starters, insurance companies dominate the market and are very large organizations. On the one hand they have the scale of economies, but also profit targets, regulatory reporting, risk premiums, and policies and procedures.

Providors of PHSP’s tend to be more flexible and cost effective for employers.

How so?

Flexibility in that as long as a person qualifies as a dependant or an expense qualifies under the tax act, these can be incorporated into a benefit plan.

Cost effective in that the PSHP market is not broker dominated and thus the commissions are significantly less which reduces overall cost. You pay for what you use not for a price set by the insurance company. Trying to beat the insurance company is a gamble and how many gamblers win?