Introduction
Canada’s Parent and Grandparent Super Visa program allows extended visits for eligible parents and grandparents of Canadian citizens or permanent residents. A key requirement is having qualifying Parent Super Visa Insurance that meets certain medical coverage requirements specified by Immigration, Refugees and Citizenship Canada (IRCC). With insurance premiums often costing thousands of dollars due to the minimum coverage periods and levels, what are the tax implications of these mandatory policies for supervision visa applicants and their families? This article explores some key considerations.
Background on the Parent Super Visa Program
Canada introduced the Parent and Grandparent Super Visa in 2011 to facilitate longer visits for parents and grandparents while addressing immigration backlogs. Instead of permanent residency, it grants long-term visitor visas valid for up to 2 years. Visits can span from a few months to the entire 2-year validity period.
A core requirement is to obtain Parent Super Visa Insurance that covers health care, hospitalisation and related medical expenses in Canada. Minimum coverage duration of 1 year is required, with the ability to buy policies lasting many years. Industry experts recommend getting coverage for the entire intended visit duration.
Insurance Premium Costs
Parent Super Visa Insurance plans must provide minimum medical and hospital coverage of $100,000 per person per incident. However, experts strongly advise substantially higher limits. Given the higher ages of applicants and the likelihood of requiring significant medical treatments, coverage of $300,000 or more is recommended. With minimum duration periods and higher advisable policy limits, costs for Parent Super Visa Insurance range from around $1,500 per year to over $10,000 for multi-year policies.
Premium Affordability Concerns
With premiums in the thousands of dollars, many families are concerned about the affordability and costs associated with meeting Canada’s Parent Super Visa Insurance requirements, especially for longer multi-year stays. Tax relief related to premium costs may help offset expenses for supervision visa holders and their sponsoring families.
Tax Treatment for Sponsoring Families
There is often confusion around whether sponsoring children or grandchildren of Parent Super Visa holders can claim any tax deductions or credits related to expensive medical insurance premiums required for their parents. Unfortunately, CRA guidelines clearly specify that these types of visitor medical insurance premiums do not qualify for personal tax credits or deductions for the sponsors. The premiums are not considered equivalent to personal medical expenses.
However, if sponsors incur and directly pay eligible medical expenses for their Parent Super Visa holder family members while visiting Canada, those expenditures are usually qualifying medical expenses that sponsors can claim as non-refundable tax credits on personal tax returns. This provides some level of financial offset for medical costs during relatives’ stay.
Financial Options for Premium Payments
Given the significant premium costs of the mandatory Parent Super Visa Insurance policies, sponsors and applicants should explore all financial options and alternatives. Smart planning regarding insurance payments can help ease budget burdens.
Consider Multiyear Policy Financing
As mentioned previously, while the minimum Parent Super Visa Insurance policy duration is one year, options to prepay policies for the full duration of intended stays up to two years are available in the marketplace. This avoids paying costly premiums each renewal year. Many insurers offer financed payment plans at low interest rates to spread out costs over 6, 12, or 24 months. Using financing to purchase a maximum 2-year multiyear policy can both lock-in long-term coverage and reduce immediate cash outlays through a gradual pay-down that aligns with payment budget abilities.
Leverage Group Coverage Discounts
Another cost reduction tactic is opting for group visitor medical insurance plans from providers specializing in supervision visa coverage products. Under a single group policy, multiple individuals – perhaps several sets of parents within an extended family — can be covered. Insurers provide discounts for group plans, reducing per —person rates by hundreds of dollars in some cases. Group plans with bundled multiyear financing may offer the easiest affordability.
Evaluate Alternative Individual Options
Group plans may not work for some families, so reviewing all individual policy options across insurance carriers is wise. Comparing policy term lengths, deductible options, and loyalty discounts can reveal offerings that match specific budget needs. A bit of shopping comparison upfront prevents overpaying. Having quotes in-hand also helps determine true out-of-pocket costs after exploring any tax relief credits and rebates down the road.
Make Temporary Coverage Work
If upfront premium costs remain beyond reach, starting coverage at minimum durations still allows Super Visa approval for initial entries. Temporary coverage lets parents visit grandchildren or explore Canadian communities. Supplementary policies to extend coverage can be purchased later by visiting parents or grandparents themselves once they activate income earning options like Canadian bank accounts, investment dividends, and pension streams, or even qualify for Ontario healthcare coverage after waiting periods. Temporary coverage gets your loved ones here now, buying you time to optimize more permanent solutions.
Tax Relief for Visitor Policy Holders
While sponsors can’t directly get tax offsets for paying the premiums for Parent Super Visa Insurance purchased, the visiting parents or grandparents, as the actual policy holders and beneficiaries, may qualify in certain situations.
There are two potential options to explore:
Medical Expense Tax Credit: Policy holders who have past or current year Canadian tax filings may be able to claim qualifying medical insurance premiums related to the policy against their taxable income using the Medical Expense Tax Credit (METD). Certain conditions beyond just having a return filed may apply.
Non-Resident Rebate: For visiting parents or grandparents who are non-residents for Canadian tax purposes, even if no Canadian tax return is filed, it may be possible to file for a Non-Resident Rebate to recover a portion of sales taxes embedded in the insurance premiums purchased before or after entering Canada. Generally 25% of premiums can be rebated, providing some financial relief.
Professional Guidance Recommended
Determining eligibility and claiming tax credits related to Parent Super Visa Insurance can be confusing. Situations depend greatly on individual immigration status, residency designations, and other factors. Given potential complexities, consulting with a licensed tax expert or CRA representative is wise for both premium sponsors and policyholders to evaluate tax relief options.
Plan Ahead to Reduce Expenses
The key takeaway is that while options to offset medical insurance costs through tax savings mechanisms may be limited for sponsors, some relief for visiting parents holding the required policies can potentially be achieved. Those considering sponsoring Parent Super Visa applications should discuss tax implications with professionals when estimating budgets and sources of funds. Proper planning ahead for significant premium expenses can prevent financial hardship.
Contact Parentsupervisa.ca to explore tax mitigation for your parent visa insurance
Navigating taxes for expensive, mandatory Parent Super Visa insurance can be confusing. But there may be ways to reduce costs. As your immigration and insurance advisor, we can clarify how to claim medical expense credits, non-resident rebates, and other tax relief options related to hefty premiums that provide essential medical visit coverage. Don’t leave money on the table or miss deadlines. Schedule a consultation today with our experts and we’ll customize a tax strategy minimizing overall financial burdens associated with sponsoring your loved ones. Reduce uncertainties and maximize savings through proper planning. Contact us at Parentsupervisa.ca to explore tax mitigation for your Parent Visa insurance.
