The ARTA Health Benefits Committee often receives requests for consideration for coverage of certain medical aids, devices, or services under the ARTA Retiree Benefits Plan. Which is great — the committee always appreciates hearing suggestions from ARTA members for coverage ideas to best suit their needs and the benefit coverage needs of all ARTA members — keep the requests coming! There are certain rules, however, that dictate what may be allowed to be covered under a Private Health Services Plan (PHSP) like ARTA’s.

To nobody’s surprise, it’s the federal government that decides what medical aids, devices, and services may be covered by a PHSP, via Canada’s Income Tax Act. Incidentally, the government also determines what constitutes a PHSP, but that’s an article for another day.

Prior to 2015, the Canada Revenue Agency (CRA) determined that all medical expenses covered by a PHSP had to be considered medical expenses eligible for the medical expense tax credits (METC). The list of medical aids, devices, and services eligible for the tax credit is included in the Income Tax Act Section 118.2(2) and further clarified in CRA Income Tax Folio S1-F1-C1.

The METC itself is a non-refundable tax credit that may be used to reduce the tax liability of a taxpayer who has significant medical expenses that have not been reimbursed elsewhere (for example, through a PHSP). A person can claim their own medical expenses or the expenses incurred by their spouse or partner or by dependent children. There are also provisions to allow you to claim a portion of the expenses you paid that were incurred by your over-age dependent children, grandchildren, parents, grandparents, brothers, sisters, uncles, aunts, nephews, or nieces, as long as they were residents of Canada during the tax year.

Beginning January 1, 2015, CRA’s position changed to allow PHSPs to cover other medical expenses as long as “all or substantially all of the premiums paid under the plan related to medical expenses that are eligible for the medical expense tax credit.” CRA further clarified that “all or substantially all” generally means ninety per cent or more. As such, ninety per cent or more of the premiums paid under a PHSP have to be used to cover medical expenses that are eligible for the METC.

In October 2018, CRA issued further guidance on benefits that may be provided through a PHSP. CRA indicated that the ten per cent of the “other” benefits must be a hospital expense or an expense that is incurred in connection with a medical or hospital expense. As there is no specific list of what would qualify as a connected expense within ten per cent of other benefits, ARTA has applied its discretion to ensure that the ARTA Retiree Benefits Plan remains onside with the Income Tax Act and the plan continues to be considered a PHSP.

This means that ARTA will continue to include in the annual Premiums and Claims Statement the premiums paid for those items covered by the Emergency Travel component of the Total Health and Ultimate Health plans, which may not be considered eligible expenses for the METC (such as vehicle return and pet return), so ARTA members can claim one hundred per cent of the premiums paid for the health plan on their annual tax return. Prior to 2015, the premiums reported on the Premiums and Claims Statement were reduced by twenty-five per cent to take into account that some covered items were not eligible expenses under the METC.

CRA’s ruling further confirms that those items not eligible for inclusion under the list of METC eligible items will continue to not be covered by the ARTA Retiree Plan, as they are not permitted to be covered under a PHSP. Items that the plan is not allowed to cover include gym memberships, vitamins and other non-life-sustaining over-the-counter medications, and medical practitioners not recognized by CRA, such as certain natural health practitioners.

The ARTA Retiree Benefits Plan also does not include a Health Care Spending Account (HCSA) component because these types of plans only work in an employer-sponsored group benefit plan environment, where a plan sponsor can use an HCSA to provide tax-effective remuneration to their covered employees. In a voluntary, member-paid plan like ARTA’s, the tax advantages of having an HCSA are not attainable, since all premiums are already paid for by covered members with after-tax dollars, with no premium cost-sharing being provided by an employer. You are better off to claim the expenses associated with the purchase of eligible medical expenses (such as your eligible medical expenses not reimbursed by the ARTA plan and the premiums you pay for the ARTA plan coverage) when completing your annual tax return, which, as mentioned above, is permitted according to the Income Tax Act.

ARTA and the ARTA Health Benefits Committee will continue to review plan members’ suggestions for new or additional coverage of medical aids, devices, and services that would benefit other plan members in order to ensure that ARTA continues to offer the best group benefit plan. If you wish to make a suggestion, please do so by sending a letter to the chair of the ARTA Health Benefits Committee, care of the ARTA office, or via email to [email protected].