12 May 2015 External T.I. 2015-0574831E5 - CCC co-payments

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Are fees paid by a patient to a public hospital, that are required, by the Ontario Ministry of Health and Long-Term Care (the "Ministry") from patients in a hospital that are waiting for placement in a long-term care facility medical expenses for the purpose of the medical expense tax credit (METC)?

Position: Yes.

Reasons: The complex continuing care co-payment that is paid to a public hospital while the patient is receiving medical services is considered to be in respect of those medical services and may be claimed under paragraph 118.2(2)(a) of the Act as a medical expense.

XXXXXXXXXX
2015-057483
N. Shea-Farrow

May 12, 2015

Dear XXXXXXXXXX:

Re: Complex Continuing Care Co-Payments

We are replying to your letter dated January 7, 2015, to the Honourable Joe Oliver, Minister of Finance, regarding whether the fees paid by a patient to a public hospital are medical expenses for the purpose of the medical expense tax credit (METC). According to your letter, the fees are required by the Ontario Ministry of Health and Long-Term Care (the "Ministry") from patients in a hospital that are waiting for placement in a long-term care facility. In addition, if the amount is in respect of eligible medical expenses, you would like to know where and how to claim them on the Income Tax and Benefit Return.

It appears that you are referring to Complex Continuing Care Co-payments mandated by the Ministry and our response is based on this assumption. According to the Ministry's website, complex continuing care provides continuing, medically complex and specialized services to both young and old who have long term illnesses or disabilities usually requiring skilled, technology-based care. Additionally, the Ministry's website, explains that a "co-payment is charged to a patient whose doctor has determined that the patient requires complex continuing care and is more or less a permanent resident in a hospital or other institution. This includes some Alternative Level of Care (ALC) patients in a regular acute bed who are awaiting placement in a chronic care hospital/bed or long-term care facility. The co-payment applies once their doctor designates them as requiring complex continuing care."

The complex continuing care co-payment is $1,731.62 per month but may be reduced, and is not required in some situations. The website further explains that the same co-payment fee is charged to all patients in hospitals or residents in long-term care facilities that require complex continuing care. Co-payments made to hospitals are retained by the hospital.

While complex continuing care provides patients with accommodation and meals, it also provides medical care. However, according to the Ministry's website, the co-payment is the patient's contribution toward accommodation and meals.

Our Comments:

This technical interpretation provides general comments about the provisions of the Income Tax Act (the "Act") and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

Medical expenses of an individual that are eligible for the METC are limited to those described in subsection 118.2(2) of the Act that are paid by the individual and are in respect of the patient. The Canada Revenue Agency's (CRA) general views regarding the METC are contained in Income Tax Folio S1-F1-C1, Medical Expense Tax Credit (the "Folio") which is on the CRA website at www.cra-arc.gc.ca.

The patient refers to the individual, the individual's spouse or common-law partner, or to the individual's dependant. Generally, medical expenses must have been paid within any 12-month period ending in the taxation year. However, if the patient in respect of whom the expenses were paid died in the taxation year, the medical expenses must have been paid within any 24-month period that includes the day of death.

Pursuant to paragraph 118.2(2)(a) of the Act, an amount paid by an individual to a medical practitioner, a dentist or a nurse or to a public or private licensed hospital in respect of medical or dental services provided to a patient is a qualifying medical expense for the METC. Medical services are diagnostic, therapeutic or rehabilitative services that are performed by a medical practitioner acting within the scope of his or her professional training.

In our view, the complex continuing care co-payment paid to a public hospital, although identified as being for meals and accommodation while the patient is receiving medical services, can be considered to be in respect of medical services of the type offered at a hospital and therefore, would be eligible under paragraph 118.2(2)(a) of the Act as a medical expense. The amounts paid may be claimed on either line 330 or line 331 on Schedule 1 to the Income Tax and Benefit Return.

Additionally, if a claim is made for medical expenses paid to a public hospital in respect of an individual under paragraph 118.2(2)(a) of the Act for a tax year, a claim for a disability tax credit will not be denied solely by reason of a claim made under paragraph 118.2(2)(a). However, as explained in paragraph 1.35 of the Folio, where an amount in respect of remuneration for attendant care or for full-time care in a nursing home is claimed as an eligible medical expense for a tax year in respect of an eligible individual with a disability, the disability tax credit will be denied, except where the remuneration for attendant care is claimed under paragraph 118.2(2)(b.1) of the Act (which is a limited claim).

We trust our comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate