Plan Not Backed by an Insurance Contract

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If the group insurance plan (usually administered by an insurance corporation) provides coverage that is not backed by an insurance contract with an insurance corporation, the taxable benefit related to the coverage is equal to the result of the following calculation:

  • the value of an employee's coverage

minus

  • the total contribution paid by the employee to the plan during the year

Calculating the value of coverage

Use the following formula to calculate the value of the employee's coverage:

( A × B )C+ ( D × E )F

A = the total amount of benefits (including the related tax) paid in the year to all employees who have the same types of coverage and benefits as the employee (in the case of a private health services plan, click Services Insured by the RAMQ – Coverage Not Backed by an Insurance Contract)

B = the number of days in the year that the employee has the coverage and benefits concerned

C = the total number of days of coverage in the year for all employees who have the types of coverage and benefits concerned

D = expenses (including any related tax) incurred with respect to a third party, for the administration or management of the plan for the year, other than expenses associated with establishing or modifying the plan

E = the number of days in the year that the employee is covered under the plan

F = the total number of days of coverage in the year for all employees covered by the plan

If different types of coverage (such as individual, family or single-parent coverage) or optional benefits (such as medical, hospital or dental expenses) are provided under a plan, and the employees covered by the plan do not all have the same types of coverage or benefits, you must apply the formula (A x B) ÷ C  to each type of benefit the employee has.

In determining the value of an employee's coverage under a plan that does not distinguish between the types of coverage and benefits it provides, you cannot break down the amount of benefits paid by the plan according to the employees who do or do not have family coverage, or those who are or are not reimbursed for certain types of expenses.

For sample calculations of the value of the benefit related to a private health services plan, see guide IN-253-V, Taxable Benefits.

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