Insurance for holistic healthcare practitioners

Time to read: 4 minutes

Self-employed holistic healthcare practitioners like Naturopathic Doctors, acupuncturists, and massage therapists have unique insurance needs. There’s different types of insurance, mandatory and optional, and differing tax implications.

We’re here to give you an overview of the different types of insurance and what it means for you.

1. Business insurance (Professional liability & commercial general liability)

This is the most common type of insurance practitioners will encounter. Professional liability insurance (aka errors & omissions or malpractice) is mandatory for most regulated practitioners. It covers you if something happens to a patient directly related to the care you’re providing.

Commercial general liability (CGL) is broader and covers more general areas like non-care-related injuries or property damage. For example, if someone slipped in your reception area, CGL would come into play.

Tax tip: Professional liability and CGL insurance premiums are fully deductible.

2. Private Health Services Plan (PHSP)

A Private Health Services Plan covers routine medical expenses like prescriptions, extended health services (including to other holistic healthcare practitioners), and dental work. These insurance plans are typically custom tailored to the individual and are sold by traditional insurance firms like Manulife and Sun Life.

This is an optional plan, but might be worth it for individuals with above-average medical expenses.

Tax tip: Most people are able to deduct the PHSP premiums as part of the medical expenses tax credit. But self-employed people can deduct the premiums as a business expense in some situations. That’s better because the tax deduction can be at a higher rate and there’s no minimum threshold, like with the medical expenses tax credit.

Only qualifying PHSP plans are eligible for this tax treatment, so be sure to check with the underwriter first.

3. Critical illness and disability insurance

Imagine you’re suddenly unable to work because of an injury, heart attack, cancer or any other terrible thing. On top of the stress of dealing with that, you’d also have to think about how to pay for groceries, business expenses, and any debt.

That’s where critical illness and disability insurance comes in. It’s a financial safety net to cover personal or business costs during recovery. In our experience, not many holistic healthcare practitioners have this type of coverage and that’s a huge blind spot.

Tax tip: The premiums you pay for critical illness and disability insurance aren’t deductible, unfortunately. But any benefit you receive would be tax-free.

4. Life insurance

Life insurance is meant to pay a benefit to your estate upon your death. It can be used for paying funeral expenses, providing funds to your loved ones, or even to buy out shares of your business if you have other business partners.

Life insurance comes in two broad forms: term and permanent. Term insurance covers you for a specified period, like ten years. At the end of the ten years, you’ll no longer have coverage unless you renew.

Permanent life insurance covers you until your death. This type of insurance comes in many varieties and is mainly used as part of broader financial estate planning. Although there are some tax benefits to permanent life insurance, many studies show the increased fees aren’t worth it for many individuals.

Tax tip: The premiums paid generally aren’t deductible, but the benefit payout is tax-free. If structured properly, life insurance paid through a corporation doesn’t result in any taxable benefit to the individual, meaning you can pay the premiums with (lower taxed) corporate funds instead of (higher taxed) personal funds.