Many physicians pay medical, dental, prescription, optical, and similar expenses personally, and then try to claim them on their personal income tax return.

That is often not the best result.

The medical expense tax credit has a threshold. For example, if net income is $50,000, the first 3%, or $1,500, of medical expenses does not produce any tax relief. Only expenses above that threshold may qualify, and even then, the tax relief is limited.

Where a properly structured Private Health Services Plan, or PHSP, is in place, the better approach is to have eligible health and dental expenses processed through your professional corporation in accordance with your MPC’s internal policy for health and dental claims set out in your corporation’s minute book.

For more background, see our related article: Health and Dental Plans in a Professional Corporation: When Are They Deductible?

Why use Brock Health?

To have these expenses processed through your corporation, a third-party administrator is required to satisfy the CRA. Brock Health, for example, performs that role.

The idea is simple:

1. You personally pay the eligible health or dental expense.
2. You submit the claim to Brock Health.
3. Your professional corporation pays Brock Health.
4. Brock Health reimburses you personally.
5. Your corporation records the cost and claims a deduction for some or all of the claim.

Start with your regular insurance first

If you already have health and dental coverage through, say, Manulife, or another insurance provider, that plan should usually be used first.

For example, suppose you go to the dentist and the bill is $300. Your regular insurance covers $240. You are left paying $60 personally. That remaining $60 is the amount you would consider submitting through Brock Health.

Do not include the wrong expenses

This is important.

Do not submit as part of your claim any of the following premiums:

• life insurance;
• long-term disability insurance;
• critical illness insurance;
• any other non-health or non-dental coverage.

If you are with OMA Insurance, be careful. Your monthly statement from the OMA may include several types of coverage bundled together. Only the health and dental portion should be considered for Brock Health claim purposes.

What expenses are you looking for?

You are generally looking for eligible out-of-pocket health and dental costs, such as:

• prescriptions;
• dental expenses;
• optical expenses;
• glasses;
• contact lenses;
• health and dental premiums, but only the eligible health and dental portion.

Keep two copies of each receipt

When you visit the dentist, pharmacy, optometrist, or other healthcare provider, ask for two copies of your receipt.

Use them this way:

Copy 1: Keep with your normal monthly credit card receipts.

This supports the charge on your credit card statement if CRA ever asks.

Copy 2: Keep for your Brock Health claim.

This is the copy you will submit with the Brock claim form.

For more on tracking receipts and expenses, see our webinar: Residents, Fellows and New-to-Practice Physicians: Learn Best Practices for Tracking Tax-Related Expenses in 20 Minutes. The webinar is listed in the Tucker Professional Corporation Resource Hub, which includes practical resources for medical professionals.

Use a simple envelope system

Keep one envelope at home for health and dental receipts.

It can be on your kitchen table, in your office, or wherever you will actually use it. When you pay for a prescription, dental visit, glasses, contact lenses, or other eligible medical expense, put the receipt in the envelope. Do not prepare a Brock claim every time you have one small receipt. Instead, collect the receipts and prepare a claim periodically, say, once a year.

Where to find the Brock Health claim form

You can find Brock Health’s forms here: Brock Health Forms.

The Pay-As-You-Go manual claim form is here: Brock Health Pay-As-You-Go Claim Form.

Step-by-step instructions for preparing the claim

Step 1: Gather your receipts

Collect the receipts from your health and dental envelope.

Step 2: Remove anything that does not belong

Take out anything related to life insurance, long-term disability, critical illness, or other non-health and non-dental coverage.

Step 3: Check whether another insurer has already paid

If Manulife, OMA Insurance, or another plan has already reimbursed you for part of the cost, do not claim the full amount again. Only claim the portion you paid personally.

Step 4: List the eligible expenses on the Brock form

Enter each eligible out-of-pocket expense on the Brock claim form.

Step 5: Total the claim

Add up the eligible expenses. For example, assume your eligible receipts total $1,000.

Step 6: Add Brock’s administration fee

Brock’s charge is 5% plus applicable tax. On a $1,000 claim, the 5% fee is $50. If HST applies at 13%, the HST on the $50 fee is $6.50. The total cheque from your professional corporation would be:

$1,000 + $50 + $6.50 = $1,056.50

Step 7: Write the cheque from your professional corporation

Step 8: Submit the package to Brock Health

Send Brock:

• • the completed claim form;
  • the supporting receipts;
  • the corporate cheque.

Step 9: Brock reimburses you personally

Brock processes the claim and reimburses you personally for the eligible claim amount. In the example above, Brock would reimburse you personally for $1,000.

Your corporation would record the full cost of $1,056.50.

Why this matters

The purpose of this process is to turn eligible health and dental expenses into a properly processed corporate expense, deductible against your MPC’s income, instead of leaving you with a limited personal medical expense tax credit.

• The key is to keep the process clean.
• Claim only eligible health and dental expenses.
• Keep the receipts.
• Do not include life insurance, long-term disability, or critical illness.
• Use the Brock form properly.
• Pay Brock from the corporation.
• Keep the support in case the CRA should ever ask.

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Disclaimer

This article is intended for general information purposes only and should not be relied upon as legal, tax, insurance, accounting, or financial advice. Readers should obtain independent legal, tax, accounting, and insurance advice before implementing any strategy discussed herein. Tucker Professional Corporation accepts no responsibility for reliance placed upon this article without obtaining appropriate professional advice.