A Private Health Services Plan in Canada is Health and/or Dental Care, as part of an insured Group Insurance Plan or a self-insured plan, such as a Health Spending Account, Cost-Plus Plan or one of the three options under a Health and Welfare Trust. Overview Health and Welfare Trusts are divided into three sections, one of which is a Private Health Services Plan. Private Health Services Plans can be Insured (by an Insurance Company) or Self-insured (through an Insurer or Administrator). Self-insured Private Health Services Plans are often referred to as Health Spending Accounts. The Canada Revenue Agency states that Self-insured Private Health Services Plans (Health Spending Accounts) are NOT AVAILABLE to any self-employed unincorporated employers without arms-length employees. Their only option is an Insured Plan with an Insurer. This can be confirmed by contacting CRA. In 1986, the Canada Revenue Agency introduced an interpretation bulletin entitled IT-85R2 - Health & Welfare Trusts for Employees. This bulletin provided the basics for what would be known as a Health Spending Account or HSA to most Canadians. The original 1986 bulletin provided a tax-free vehicle for incorporated professionals and companies. Three years later in 1989, after pressure from non-incorporated entities, Canada Revenue Agency released another bulletin, IT-339R2 (Meaning of Private Health Services Plan), providing details on the concept of a Private Health Services Plan or PHSP for non-incorporated businesses in Canada. The Canada Revenue Agency, in the annual Guides it publishes for those reporting self-employment income from a business or a profession, or from farming, provides instructions for deducting Private Health Services Plan premiums. Confusion and controversy There is no confusion or controversy, just a lack of understanding of the CRA IT Bulletins. The funds in a PHSP, as outlined in the guidelines set in interpretation bulletin IT-339R2, CANNOT revert to the employer. Canada Revenue Agency released another bulletin in 1998 indicating that the funds could revert to the employer but ONLY in the case of a notional credit program tied to a flex benefits or cafeteria style plan. The "notional credit" model, outlined in the Canada Revenue Agency IT-bulletin entitled IT-529 was designed to allow companies to add an HSA to a Flex Benefits Plan as an additional benefit for items not covered under the traditional group benefits plan. The bulletin provided the accounting rules for flex benefit programs and using notional credits for the employer. Today, the major insurers offer