23 April 1991 Internal T.I. 903089 F - Private Health Service Plans

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.

Dear Sirs:

Re:  Private Health Service Plans

This is in reply to your letter dated November 2, 1990 and further to our telephone conversations (Weil   19(1) concerning the qualification of a supplementary health care plan (SHCP) as a private health services plan (PHSP) as defined in subsection 248(1) of the Income Tax Act.  This SHCP is a major part of a flexible benefits plan (FBP).  We apologize for the delay in forwarding our written response to your enquiry.

Under the FBP described in your letter,

24(1)

24(1)

You have asked whether the above SHCP constitutes a "plan of insurance" as described in paragraph 6 and 7 of the Interpretation Bulletin IT-339R2 and thus qualifies as a PHSP under the Act.

Our comments

From our conversation, we understand that your question relates to an existing flexible benefits plan implemented by one of your clients.  As you know, the Department does not provide opinions in such cases without knowing the name of the taxpayer and examining all of the relevant documentation.  Accordingly, the following general comments on your questions should not be construed as necessarily being applicable to your client's particular situation.

The meaning of a PHSP is set out in subsection 248(1) of the Act. The key requirement in this definition is that the plan in question must either be a "contract of insurance" or a "medical care insurance plan."  As stated in paragraph 3 of Interpretation Bulletin IT-339R2, the PHSP must contain the following basic elements:

(a) an undertaking of one person,

(b) to indemnify another person,

(c) for an agreed consideration,

(d) from a loss or liability in respect of an event,

(e) the happening of which is uncertain.

Paragraphs 6 and 7 of this bulletin elaborate on the Department's position in cases where the health care coverage is insured with a third party under a "cost plus" contract and where the coverage is by the employer (commonly referred to as a "self-insured" plan).

24(1)

As indicated to you by telephone, should you wish to submit an advance ruling request in respect of a proposed flexible benefit plan, we would be pleased to review same.

We trust our comments will be of assistance to you.

Yours truly,

for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch