Finance Minister Carole James presents the audited public accounts at the B.C. legislature, July 18, 2019.The province’s surplus has dwindled to an estimated $148 million for the current fiscal year, and unpaid medical premiums total more than three times that amount. (Tom Fletcher/Black Press)

B.C. residents still owe $422 million in medical premiums

Canada Revenue Agency sending out tax collection letters

B.C.’s long experiment with charging Medical Services Plan fees to help pay for health care is far from over, with a mountain of overdue bills remaining after the final ones were sent out in December.

The B.C. finance ministry says that as of Dec. 31, individuals and businesses still owe $422 million in overdue MSP fees, accumulated over years of government struggles to track and enforce the payments. That’s more than three times the total revenue the province expects from the entire forest industry this year.

“This is similar to the amount in previous years, as it is the historical outstanding debt, not necessarily debt owed from the latest fiscal years,” the ministry said in a statement to Black Press. “MSP premiums, billed to individuals and businesses, have always been difficult to administer across the province, which can lead to high arrears.”

Besides using private management contractors and collection agencies, the province calls on the Canada Revenue Agency to collect its MSP debts. The federal tax agency is currently sending out letters to B.C. residents and businesses warning them to pay the province or have the overdue amount deducted from tax credits or refunds they may be eligible for.

“[Revenue Services of B.C.] has asked the Canada Revenue Agency to apply your tax refunds and certain tax credits against a debt you owe them,” the form letter states. “This is allowed under subsection 164(2) of the Income Tax Act.”

B.C.’s premium assistance program is still in effect, with retroactive assistance available for people whose income is low enough for reduced rates to apply. The MSP bureaucracy has been criticized over the years for continuing to charge people the full rate after they lose their jobs, basing the charge on their income from the previous year.

RELATED: Full weight of B.C. employer health tax to be felt in 2020

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The B.C. finance ministry says the income tax collection policy has been in place since 1999. Five years after the NDP government of Glen Clark started using the tax system for collections, the B.C. Liberal government of Gordon Campbell contracted out the struggling MSP bureaucracy to a U.S. back-office company called Maximus Corp.

The 10-year contract with Maximus cost taxpayers $324 million, and started with fines and penalties to the company for failing to immediately fix the chronic problems of slow customer response from the B.C. government department it replaced. The contract required Maximus to answer phone calls in three minutes or less and process new applications within 22 days of receiving them, employing the same unionized staff who transferred from the province to Maximus in 2004.

The contract is currently held by Victoria-based Advanced Solutions, which started in 2004 as a subsidiary of U.S. billionaire H. Ross Perot’s company, Electronic Data Systems, to provide services to the B.C. government.

During the 2017 election campaign, both the B.C. Liberals and NDP promised to eliminate MSP, the last such fee in Canada, starting with an immediate 50 per cent reduction. The NDP minority government delivered on that promise in 2018, and introduced the Employer Health Tax on business and local government payrolls above $500,000 to make up the revenue, estimated at $1.9 billion for the current year.

About half of MSP has been paid by employers on behalf of their staff, and those employers are on the hook to pay both the reduced MSP and the new payroll tax for 2019. The remainder is paid directly by individuals, if they can be located and persuaded to pay.


@tomfletcherbc
tfletcher@blackpress.ca

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