What is an Olympia Health and Dental Plan? And what is Plan TWO?
In technical terms, an Olympia Health and Dental Plan is a Private Health Services Plan (PHSP). This fancy term and concept originated with the Canada Revenue Agency. The cryptic details of CRA's PHSP (now that's a mouthful) explain that under specific conditions a self employed individual (unincorporated) is able to deduct the cost of their medical expenses from their income.
Plan TWO is Olympia's consumer product that uniquely delivers the benefits of a PHSP - reduced taxable income. Self employed individuals will use Plan TWO to effectively deduct 100% of their personal medical expenses from their taxable income.
Why choose an Olympia Health & Dental Plan?
Plan TWO offers complete coverage for you and your family. The claim process is easy and turnaround for a claim is less than 72 hours. Plan TWO will significantly reduce your medical costs and lower your taxes. There are no premiums and you are in control.
Answer: Plan TWO is the best health and dental plan the self employed individual.
How do I join and what does Plan TWO cost?
You can sign up online or you can speak with one of our representatives.
To join Olympia there is a one-time setup fee of $375. When you are ready to make a claim, Olympia charges a 10% administration fee on the amount of your claim. There are no other costs involved with your plan. The prices do not include GST/HST.
Do I qualify?
There are three conditions to qualify for Plan TWO.
- The sole proprietor must earn 50% of their income from self employment.
- Income from ALL other sources cannot exceed $10,000.
- A contract of insurance must be in place. Either the Olympia Travel Plan or Exceptional Insurance Plan must be in place with Plan TWO. This is a qualifying requirement for a PHSP from the Canada Revenue Agency. View our insurance plans here.
How does Plan TWO work?
Let's use an example of a $1,000 health and dental expense.
Step 1 — Pay for health and dental expense personally. This payment is made from a personal account. Let's say your personal credit card. ($1,000). Then complete a claim form.
Step 2 — You send Olympia the claim form and funding plus the 10% administration fee. Let's say an online deposit from your bank account to Olympia. ($1,100)
Step 3 — Olympia reimburses you personally for your original personal expense. Let's say through direct deposit to your personal bank account. ($1,000).
The total reimbursement of $1,000 plus the administration fee of $100 is a deductible expense for the self employed individual.
OK. Why I'm paying for the expense twice?
Darn it! You're onto us. We were hoping you wouldn't notice.
All humor aside, you ARE paying for the expense twice. The important matter at hand is to understand why you are paying twice and what purpose it serves.
From a technical aspect (remember Plan TWO is linked with CRA and we all know their fondness of technicalities), there must be distinguished evidence of expenses being made under a qualifying PHSP. As Olympia is the administrator of your PHSP, the funds must pass through Olympia.
Answer: Qualify for CRA
Then how am I saving money (what purpose does the plan serve)?
Please bear with us on this explanation. As Plan TWO is interconnected with taxes, we will once again have to delve into the realm of taxes to answer this question. As if the topic of health insurance was not complicated enough, now we have to talk about taxes.
If your taxable income is $40,000, your effective tax rate is approximately 40% (depending on your province of residence and factoring in CPP). You will lower your taxable income by $1,000 using Plan TWO. This creates a savings of approximately $400.
How much can I spend in a year?
The proprietor and spouse can deduct $1,500 each per year. Dependants 18 and over can deduct $1,500 per year. Dependants under 18 can deduct $750 per year. The benefit limits are pooled meaning a family with 2 adults and 2 children have a potential deduction of $4,500.
Medical Expense Tax Credit (METC)
The METC is available through CRA as an aid for your personal medical expenses. Often a person will confuse the METC with "writing off my medical expenses". The fact of the matter is there is an incredible threshold in order to be eligible for the METC. Once the threshold has been met, the credit is negligible compared to Plan TWO.
To be specific, the threshold is the lesser of 3% of your net income or $2,024. You then receive a non-refundable tax credit at the lowest marginal tax rate of your province on the amount of your medical expenses exceeding the threshold. For further information please click here.
All said and done, the METC does not provide a meaningful savings compared to Plan TWO.
Private Health Services Plan (PHSP)