Under a "cost-plus" plan offered to company executives, they are reimbursed for health expenses not otherwise reimbursed by their group insurance, such as eyeglasses or dental expenses, up to a specified amount per year, with the executive being able to carry forward the unused balance from that year to the following year (but with the maximum amount that can be so carried forward not exceeding the allowable rebate amount for a year.)
In commenting as to whether the plan qualified as a PHSP having regard to the “reasonable risk” condition in IT-339R2, CRA stated:
[A] plan carries a reasonable degree of risk if there is a risk that the maximum annual amount allocated to the employee may not be fully reimbursed one day. …
[A] plan has a reasonable degree of risk if it allows the unused limit for a year to be carried forward for up to 12 months.
… [A] plan does not involve a reasonable degree of risk where, for example, the employer can unilaterally revoke the plan, where the unused annual allocation can be refunded, or where the unused limit in one year and the unclaimed medical expenses in one year are both transferable to a later year.