PHSP VS HEALTH & WELFARE
Private Health Services Plan (PHSP) vs. Health & Welfare Trust (HWT)
There is some confusion in the market about the differences between these two tax plans. It is important to understand that they are different tax vehicles – although a HWT can act as a PHSP if it follows PHSP rules.
In summary, HWT's require the business owner to predict his medical and dental expenses in advance whereas the PHSP/HSA allows the benefits costs to flow through as they are iincurred, not requiring pre-funding to accomplish this.