Applying HST to Massage Therapy for Automobile Incidents (MVA, MVC, MVI) Health Claims

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It comes up every now and then that a misinformed Auto Insurance Company (Adjustor) will try to not pay the HST (GST for some Provinces) portion of billings made by an HST registered RMT. This causes many headaches for the RMT who is now forced to try and get the Insurance Company to understand that the HST is to be paid over-and-above the Fee approved by the FSCO. Many times an RMT feels they must “factor out” the HST from the amount they were paid by the Auto Insurance Company as an only option when the Adjustor never pays. This is wrong, in so many ways. It must be stopped.

“It’s not in the SABS”

This is a common go-to reason by Adjustors to supply a reason for not applying HST above the FSCO Fee. The Adjustor will hide behind this Ontario Act as a reason for non-payment of the tax. It will be indicated that “the language of the SABS does not allow for HST to be paid beyond the Fee Schedule”, or some form of that wording. They will then inform the RMT that they legally do not need to pay the HST beyond the fee as the Act protects their interest in not paying.

This is not acceptable. They take advantage of an RMT’s lack of knowledge with Acts to manipulate the situation. They force RMTs to back down and think there is no way to fight them on the issue.

The fact is; the Ontario SABS (Statutory Accident Benefits Schedule, under the Insurance Act, R.S.O. 1990, c. I.8) has nothing to do with determining the application of HST, in any way-shape-or-form. Instead the Act is superseded by The Excise Tax Act (R.C.S., 1985, c. E-15.) of Canada, which is what determines the application of GST/HST. It should not be confused with the Income Tax Act (Canada). 2014, c. 7, Sched. 14, s. 1., which does not determine the application of GST/HST. This is mentioned, as the Insurance Act references the Income Tax Act and that Insurance does not pay for it as a separate item for their clients (when claiming income loss).

“But Physiotherapists do not collect it”

Another cop-out statement. Our profession did not determine the application of the tax. It is not something we chose to do over any profession that does not collect it. It is actually a sore spot that we are even expected to collect a “service” tax for a medically recognized intervention. But, until we have 5 Provinces recognizing Massage Therapy as a medical profession, allowing us to even apply for exemption, we are stuck collecting it for the Government.

Another cop-out is when they state that other RMT’s do not charge it, or that you didn’t charge it before. This, again, has been determined by the Excise Tax Act. One who operates a Small Business (like Massage Therapy) is not required to collect the tax until such time that their revenue from sales in 4 consecutive Quarters is $30,000 or more (more on that here). So, not all RMT’s collect it, because it is not a blanket requirement by our profession as a whole, it is a requirement of the Government applied on a case-by-case determination.

Backed up by the FSCO

The Financial Standards Commission of Ontario (FSCO) is a representative of the Ontario Government through the Ministry of Finance, which means they have been granted power to speak for the Ontario Government (http://www.fsco.gov.on.ca/en/About/Pages/default.aspx). They also happen to be the branch of Government that regulates the Auto Insurance Industry.

Their stance has been previously published several times on the matter of HST being applied to Auto Insurance Fee payouts. This has been done through The Professional Services Guideline (Superintendent’s Guideline No. 03/14);

“The applicability of the HST to the services of any health care professionals or health care providers listed in this Guideline falls under the jurisdiction of the Canada Revenue Agency (CRA). If the HST is considered by the CRA to be applicable to any of the services or fees listed in this Guideline, then the HST is payable by an insurer in addition to the fees as set out in this Guideline.”

It has also been specifically published in a Bulletin released by the FSCO, on their website, in regards to the above Fee Guideline:

“Insurers are reminded that in the absence of such wording in the SABS or other such Guidelines (e.g., Minor Injury Guideline), the direction remains the same.

FSCO expects that insurers will apply the HST legislation correctly in accordance with any direction from CRA. The HST is a tax and is not part of the benefit limits set out in the SABS.” https://www.fsco.gov.on.ca/en/auto/autobulletins/2015a/Pages/a-04-15.aspx

It says it right there; they fully “expect” compliance from an Insurance Company to pay the HST on top of any fee’s that are charged to the Company that requires it. No other option.

 

Conclusion

In the application of the tax, it does not matter whether the Insurance company agrees with it, or if it is mentioned in the SABS, or even under the Insurance Act. What matters is that the Canadian Government has determined that services that have not been granted exempt status must add GST (HST in specific Provinces) as a percentage of any fee that is charged.

In short this means: On top of any fee amount that has been determined.

 

 

 

Pre-Written Form Letter:

Dear [insert adjustors name]

Re: Refusal to pay HST in regards to [INSERT FILE/CLAIM NUMBER]

I have received notification from you on [INSERT DATE] that your company, through you, refuses to pay the HST portion in addition to the fees that were invoiced for services rendered to [INSERT PATIENT NAME, FILE/CLAIM NUMBER], following and approved OCF 23 or 18 for whatever reason.

Please be advised that you are required, both by your registering body, the FSCO, and the Canadian Revenue Agency of Canada to pay the HST portion in addition to Fees that are published through the FSCO. Failure to pay the HST (which is calculated by a percentage based on the approved fee, not calculated into it) portion of the invoice (OCF 21) is in violation of the FSCO position, and Excise Tax Act (R.C.S., 1985, c. E-15.) (http://laws-lois.justice.gc.ca/eng/acts/e-15/) that the CRA enforces. This tax is required by the Government of Canada, and not by the massage therapy profession, to be paid. Further; be advised that HST, when required to collect, is applicable above and beyond not just the FSCO Guideline rate, but also any MIG Block Fees that have been published. Relative references regarding such are offered in the following quotes and the websites from which they were obtained:

“Insurers are reminded that in the absence of such wording in the SABS or other such Guidelines (e.g., Minor Injury Guideline), the direction remains the same.

FSCO expects that insurers will apply the HST legislation correctly in accordance with any direction from CRA. The HST is a tax and is not part of the benefit limits set out in the SABS.”

https://www.fsco.gov.on.ca/en/auto/autobulletins/2015a/Pages/a-04-15.aspx

“The RMTAO had contacted the Financial Services Commission of Ontario (FSCO) several months ago to clarify the application of HST on top of the customary fees applied for the services of massage therapy in the Minor Injury Guideline. We recently received a response from FSCO which they also published in a public bulletin.

The FSCO Professional Services Guideline states that “If the HST is considered by the CRA to be applicable to any of the services or fees listed in this Guideline then the HST is payable by an insurer in addition to the fees set out in this Guideline.”
https://secure.rmtao.com/default.asp?id=1151&article=55

“Harmonized Sales Tax (HST) The applicability of the HST to the services of any health care professionals or health care providers listed in this Guideline falls under the jurisdiction of the Canada Revenue Agency (CRA). If the HST is considered by the CRA to be applicable to any of the services or fees listed in this Guideline, then the HST is payable by an insurer in addition to the fees as set out in this Guideline.” https://www.fsco.gov.on.ca/en/auto/autobulletins/2014/Documents/a-08-14-1.pdf

“According to FSCO, the insurer must pay HST in addition to the amounts that are payable under the Statutory Accident Benefits Schedule (SABS) and the MIG. This means that the HST portion of the cost of massage therapy is not counted toward the MIG caps and must be paid in addition to these caps.”  http://www.massagetherapycanada.com/collaboration/hst-and-insurance-reimbursement-in-ontario-2224

In consideration of all the above; I am now restate the need for your company to pay the HST portion of the billing, which has not been delivered. If this is not delivered, or I have not heard from you with intent to deliver, within 15 business days, I will be left no option other than to issue a complaint of non-compliance with the FSCO and the CRA for refusal to pay the HST.

Thank you for your anticipated co-operation in this matter.

Regards,

 

[INSERT YOUR NAME AND REG #. and sign above]

Chris Semenuk

Chris Semenuk

Registered Massage Therapist at Chris Semenuk Massage Therapy - London, Ontario
Chris graduated from massage therapy school in London, Ontario, in 2000 and has been an RMT since January, 2001. Immediately, Chris gave back to the sport that got him into massage therapy by volunteering with the Western Mustangs Track & Field team, and a few years later becoming part of the Cross Country team too. He was given the role as Head of Massage Therapy, which he holds to this day. In 2015 Chris served as a Lead Medical Practitioner for the Toronto Pan Am Games. Since 2001, Chris has focused on the clinical side of Massage Therapy, and was also a professor from 2001 to 2012. The pinnacle of his education career has been building the Fanshawe College Massage Therapy program in the summers of 2011 & 2012.

In addition to supplying sports massage to the Mustangs programs, Chris has been an Assistant Coach since 2011.
Chris Semenuk

About Chris Semenuk

Chris graduated from massage therapy school in London, Ontario, in 2000 and has been an RMT since January, 2001. Immediately, Chris gave back to the sport that got him into massage therapy by volunteering with the Western Mustangs Track & Field team, and a few years later becoming part of the Cross Country team too. He was given the role as Head of Massage Therapy, which he holds to this day. In 2015 Chris served as a Lead Medical Practitioner for the Toronto Pan Am Games. Since 2001, Chris has focused on the clinical side of Massage Therapy, and was also a professor from 2001 to 2012. The pinnacle of his education career has been building the Fanshawe College Massage Therapy program in the summers of 2011 & 2012. In addition to supplying sports massage to the Mustangs programs, Chris has been an Assistant Coach since 2011.