In British Columbia (BC) public health insurance is called the Medical Services Plan – or MSP. Residents of BC are required to enrol in the Medical Services Plan and contribute premium towards the costs of the health care system. MSP covers the cost of medically-necessary hospital and physician services. BC is the only province left in Canada which requires residents to pay a monthly premium for provincial healthcare coverage.
The MSP premiums are complex and expensive for businesses and the government to administer. As such, the BC Government is planning to eliminate MSP premiums as of January 1st, 2020. To make up for the lost revenues, the province will implement an Employer Health Tax on January 1st, 2019. Several provinces such as Manitoba, Ontario, and Quebec already implement a similar payroll tax. Each province varies in the payroll range and tax rates.
The percentage of tax BC employers will be required to pay depends on the company’s total annual payroll. Businesses with an annual payroll of $500,000 or less will be exempt from the tax, while those with an annual payroll over $500,000 will pay 0.98% tax. The tax then increases incrementally every $250,000 to maximum of 1.95% for payroll exceeding $1,500,000 per year. The table below shows the tax rates the government is considering:
|
Annual Payroll |
Proposed Annual Tax | Proposed Tax as a percent of Payroll |
|
$500,000 or less |
$0 | 0.00% |
|
$750,000 |
$7,313 |
0.98% |
|
$1,000,000 |
$14,625 |
1.46% |
|
$1,250,000 |
$21,938 |
1.76% |
| $1,500,000 | $29,950 |
1.95% |
| over $1,500,000 | $29,250 plus 1.95% of payroll
over $1.5 million |
1.95% |
For more information please visit: Eliminating MSP Premiums – Ministry of Finance
Renee Buchwald / Benefits Specialist / PEO Canada