29 November 1999 External T.I. 9929025 - PHSPS AND MEDICAL EXPENSES

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: One of the requirements of a private health services plan (PHSP), as defined in subsection 248(1) of the Income Tax Act (the "Act"), is that reimbursed expenses must be limited to those which would have otherwise qualified as medical expenses under subsection 118.2(2)of the Act. (1) We have been asked whether non-critical expenses (e.g., circumcision and wart removal) that are no longer covered by a provincial government insurance plan are eligible medical expenses. (2) A second concern is whether costs in respect of an emergency medical service (this enables an individual to summon medical help to the individual's location through the use of a button, transmitter, etc.) is an eligible medical expense.

Position: (1) general comments were provided. (2) Costs in respect of the emergency service are not eligible medical expenses.

Reasons: 1) the available information was limited. (2) the costs are not described in subsection 118.2(2) of the Act.

XXXXXXXXXX 					992902
M. Eisner
November 29, 1999

Dear XXXXXXXXXX:

Re: Health Care Spending Accounts

This is in reply to your letter of October 27, 1999, concerning the above-noted subject.

You have indicated that you are concerned with the administration of health care spending accounts under which individuals are entitled to be reimbursed for eligible medical expenses. One of your concerns is whether non-critical medical expenses (e.g., circumcision or wart removal) that are no longer covered by a provincial government insurance plan are eligible medical expenses. A second concern is whether the cost of installation and monthly charge in respect of an emergency medical communication service (the "Emergency Service") is an eligible medical expense. The Emergency Service enables an individual to summon medical help to the individual's location through the use of a button, transmitter, or other similar method.

Our Comments

In the case of your first concern, it is noted that the expenses were previously covered under provincial health insurance plans which may be an indication that they are eligible medical expenses. In other words, just because they are not paid by the provincial plan does not necessarily disqualify them as medical expenses for income tax purposes. In order for an expense to be an eligible medical expense, it is necessary that it be described in subsection 118.2(2) of the Act. Comments on this provision are set out in Interpretation Bulletin IT-519R2 "Medical Expense and Disability Tax Credit". In case of the wart removal or circumcision, it is our general view that the related amount would normally be an eligible medical expense pursuant to paragraph 118.2(2)(a) of the Act on the basis that it would be paid to a medical practitioner, as defined in subsection 118.4(2) of the Act, in respect of medical services (See paragraph 20 of IT-519R2 for comments on paragraph 118.2(2)(a) of the Act).

In the case of your second concern, costs of acquiring certain devices or equipment, when prescribed by a medical practitioner, are eligible medical expenses. The devices and equipment are listed in section 5700 of the Income Tax Regulations (See paragraph 57 of IT-519R2). In our view, the equipment, including installation, in respect of the Emergency Service is not an eligible medical expense as it is not listed in Regulation 5700. It is also our view that the costs of renting such equipment would not be an eligible medical expense.

The publications referred to in this letter may be obtained from your local tax services office or our Internet web site (www.rc.gc.ca).

We trust that our comments are of assistance to you.

Yours truly,

John Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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