Funding
While Ontario receives transfer payments from the federal government of Canada to partially fund health care, OHIP is also supported by general provincial tax revenues and premiums (taxes) paid by employers and individuals. Employers are charged a payroll health care tax (with an exemption for small businesses) and residents of the province pay a health premium (introduced in 2004) as part of their income taxes.
The Ontario Health Premium (OHP) is a component of Ontario's Personal Income Tax system. The OHP is based on taxable income for a taxation year. As of May 2010, an Ontario resident with taxable income (i.e. income after subtracting allowable deductions) of $21,000 pays $60 per year. With taxable income of $22,000, the premium doubles to $120; with taxable income of $23,000, the premium is $180; with taxable income of $24,000, the premium is $240. The premium increases at a decreasing rate thereafter for taxable incomes up to $200,600, at which point the maximum premium of $900 is reached. Economists would classify the Ontario Health Premium as a regressive tax for those above the $20,000 taxable income threshold.
Read more about this topic: Ontario Health Insurance Plan