BC Eliminating MSP Premiums

 In General News, Group Insurance & Benefits

New Payroll Tax

The BC Government announced earlier this year that it will be eliminating Medical Services Plan (MSP) premiums effective January 1, 2020.

To replace the lost MSP premium revenues the Province will be introducing an Employer Health Tax. While many organizations already pay MSP premiums on behalf of their employees those organizations which do not pay the premiums for their employees will now be facing a new expense. The full rate of the tax is 1.95% of total payroll as shown below:

Annual BC Payroll Annual Tax ($) Tax As % Of Payroll
$500,000 or less $0 0.0%
$750,000 $7,313 0.98%
$1,000,000 $14,625 1.46%
$1,250,000 $21,938 1.76%
$1,500,000 $29,250 1.95%
Over $1,500,000 $29,250 + 1.95% of payroll over $1.5M 1.95%

For charitable and non-profit employers with BC payroll, the Employer Health Tax will be calculated for each location. The Employer Health Tax with respect to locations having payroll of $1,500,000 or less will be zero.

This new payroll tax will come into effective January 1, 2019. Therefore, those employers which currently pay MSP premiums will pay both those premiums and the Employer Health Tax in 2019.

Please see the Ministry of Finance’s Employer Health Tax Overview for more information on the implications for your organization.

Related WCBC Survey Products

With rising costs and changing demographics, employers need to pay close attention to the group insurance, retirement benefits and total rewards components of the total compensation package. These WCBC published surveys can be a useful tool for employers.

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