4.4 Calculating Employee Contributions – Incorporated Physicians

This section contains administrative guidance for members who are incorporated physicians, including information about the calculation of their employee contributions and contributory service in respect of active employment with their Medicine Professional Corporation (MPC). Except as modified by this section, all other guidance provided in this manual applies to incorporated physicians.

For purposes of HOOPP, an incorporated physician is a medical doctor licensed to practice medicine in Ontario, who is a voting shareholder and employee of a medicine professional corporation (MPC). An incorporated physician who is identified as participating in the Plan within their MPC’s HOOPP participation agreement is deemed to be a full-time employee of their MPC for the duration of their membership and will join the Plan as of the MPC participation date or the effective date that the participation agreement is amended to provide for their participation.

The following concepts apply to members who are incorporated physicians, as illustrated below:

• Baseline earnings are the pensionable earnings an incorporated physician is expected to receive in a calendar year, expressed on an annualized basis. Baseline earnings for their first year of membership are irrevocably established in their MPC’s HOOPP participation agreement. In each subsequent year, they will have a new baseline earnings amount based on their annualized earnings from the MPC in the previous year.

• The earnings limit adjustment is the amount that establishes an incorporated physician’s upper earnings limit and lower earnings limit. It is determined in each calendar year as their baseline earnings multiplied by the previous year’s rate of increase in the Consumer Price Index (CPI) plus 1%.

• The lower earnings limit is the minimum pensionable earnings, expressed on an annualized basis, on which an incorporated physician can build benefits without an adjustment to their contributory service. This limit is determined in each calendar year as the member’s baseline earnings minus their earnings limit adjustment. Where their pensionable earnings, expressed on an annualized basis, are less than their lower earnings limit, their contributory service is adjusted proportionally.

• The upper earnings limit is the maximum pensionable earnings, expressed on an annualized basis, on which an incorporated physician can contribute and build benefits. This limit is determined in each calendar year as the member’s baseline earnings plus their earnings limit adjustment.

Earnings for Contribution Purposes
As noted in section 4.2 Pensionable Earnings, an incorporated physician’s pensionable earnings must be employment earnings from their MPC. Other forms of income an incorporated physician may receive, such as dividend income from the MPC, are not pensionable earnings.
An incorporated physician’s annualized earnings for contribution purposes are their pensionable earnings expressed on an annualized basis, but no greater than their upper earnings limit and no less than their lower earnings limit in a calendar year.

• Where their annualized pensionable earnings are greater than their upper earnings limit, their annualized earnings for contribution purposes will be their upper earnings limit. Contributions are not permitted on any portion of their annualized pensionable earnings above their upper earnings limit; and

• Where their annualized pensionable earnings are less than their lower earnings limit, their annualized earnings for contribution purposes will be their lower earnings limit, and the member’s contributory service will be adjusted by the ratio of their annualized pensionable earnings to their lower earnings limit. This adjustment does not create an eligible period of past service for purchase.

Whether an incorporated physician’s monthly pensionable earnings are stable or variable month-to-month in a calendar year, the employee contributions remitted for the full year must ultimately reflect their annualized earnings for contribution purposes, as described above.

Physician Calculator Tool
HOOPP has developed a Physician Calculator tool. Please refer to the Employer Learning Centre for guidance on accessing the tool.

Examples
The examples below illustrate the calculation of an incorporated physician’s employee contributions and contributory service on a monthly basis using the Universal Payroll Deduction Method. For purposes of reflecting annual limits on earnings and contributions, they assume that the physician member works the full calendar year and contributes on the same amount of pensionable earnings each month, beginning in January.

The examples use an earnings limit adjustment of $3,000 which is based on an assumption of a 2% CPI increase in 2024, plus 1%, multiplied by baseline earnings of $100,000.

The following examples are provided below:

1. Incorporated physician with employment earnings between their upper and lower earnings limits

2. Incorporated physician with employment earnings above their upper earnings limit

3. Incorporated physician with employment earnings below their lower earnings limit

Example 1: Incorporated physician with employment earnings between their upper and lower earnings limits

The member in this example works a full year and draws monthly employment earnings from their MPC. The member's baseline earnings for the year are $100,000. Their earnings limit adjustment for the year is $3,000, so their lower earnings limit is $97,000 and their upper earnings limit is $103,000. The member’s monthly rate of employment earnings for the full year, beginning in January, is $8,500. The example uses the 2025 contribution rates and the 2025 YMPE of $71,300.

Step 1: Calculate annualized earnings
Annualized earnings = monthly earnings rate x 12 months, subject to the following:
If the result is greater than their upper earnings limit for the year, their annualized earnings are the upper earnings limit.
If the result is less than their lower earnings limit for the year, their annualized earnings are the lower earnings limit.

The member’s annualized earnings are:
$8,500 × 12 = $102,000, or $103,000 (if the result is higher) or $97,000 (if the result is lower)
The member’s annualized earnings for contribution purposes are $102,000 since their employment earnings, expressed on an annualized basis, are $102,000 which is between their upper earnings limit of $103,000 and lower earnings limit of $97,000.

Step 2: Calculate pensionable earnings per pay
Pensionable earnings per pay = their monthly earnings rate or their maximum monthly

pensionable earnings per pay based on their upper earnings limit ($103,000 ÷ 12 = $8,583.33), if lower.
The member has monthly employment earnings of $8,500. For HOOPP purposes, their pensionable earnings for the monthly pay period are:
$8,500 or $103,000 ÷ 12 = $8,583.33 (if lower)
For HOOPP purposes, the member’s pensionable earnings for the monthly pay period are $8,500 since their monthly employment earnings of $8,500 are less than their maximum monthly pensionable earnings per pay of $8,583.33.

Step 3: Calculate contributions at the low rate
Contributions at the low rate are calculated as follows:
Contributions at 6.9% = [pensionable earnings per pay × (YMPE* × 6.9%)] ÷ annualized earnings
*Use the lesser of the member's annualized earnings or the YMPE.
Therefore, the monthly contributions at the low rate are:
[$8,500 × ($71,300 × .069)] ÷ $102,000 = $409.98
*The 2025 YMPE ($71,300) is used here because it is less than the member's annualized earnings ($102,000).
Note: There is a maximum amount of low contributions that can be made within the year.
This can be calculated by:
Maximum low contribution rate for 52 weeks = (6.9% × YMPE)
= (0.069 × $71,300) = $4,919.70 per year

Step 4: Calculate contributions at the high rate
A member must contribute at the high employee contribution rate on the portion of their annualized pensionable earnings per pay that exceeds the YMPE. Contributions at the high rate are calculated as follows:
Contribution at 9.2% = [pensionable earnings per pay × (annualized earnings - YMPE*) × 9.2%] ÷ annualized earnings
*If the member's annualized earnings are less than the YMPE, they would make no contributions at the high rate. However, because the member's annualized earnings in this example are greater than the YMPE, the member must contribute 9.2% on the portion that exceeds the YMPE.

Therefore, the monthly contributions at the high rate are:
[$8,500 × ($102,000 - $71,300) × .092] ÷ $102,000 = $235.37

Step 5: Calculate total HOOPP contributions
To calculate total HOOPP contributions for the pay period, add the contributions at the low and high rates.
Total contributions = low rate + high rate
Because the member makes contributions at both the low and high rates, the total HOOPP contributions for the monthly pay period are:
$409.98 (the low) + $235.37 (the high) = $645.35

Step 6: Calculate contributory service
A member's pensionable earnings per pay and annualized earnings are used to calculate contributory service - the length of time, measured in weeks, that the member has contributed to HOOPP, adjusted for such things as non-contributory leaves or employment earnings below an incorporated physician’s lower earnings limit.
The figure is calculated by converting pay into weeks.
Contributory service = [pensionable earnings per pay × 52 weeks in a year] ÷ annualized earnings = [$8,500 × 52 weeks] ÷ $102,000 = 4.333 weeks
In this example, the member worked during the full monthly pay period and had employment earnings that, when expressed on an annualized basis, are between their upper and lower earnings limit. Therefore, the contributory service is not subject to proration.

Example 2: Incorporated physician with employment earnings above their upper earnings limit

The member in this example works a full year and draws monthly employment earnings from their MPC. The member's baseline earnings for the year are $100,000. Their earnings limit adjustment for the year is $3,000, so their lower earnings limit is $97,000 and their upper earnings limit is $103,000. The member’s monthly rate of employment earnings for the full year, beginning in January, is $9,000. The example uses the 2025 contribution rates and the 2025 YMPE of $71,300.

Step 1: Calculate annualized earnings
Annualized earnings = monthly earnings rate x 12 months, subject to the following:
If the result is greater than their upper earnings limit for the year, their annualized earnings are the upper earnings limit.
If the result is less than their lower earnings limit for the year, their annualized earnings are the lower earnings limit.

The member’s annualized earnings are:
$9,000 x 12 = $108,000, or $103,000 (if the result is higher) or $97,000 (if the result is lower)
The member’s annualized earnings for contribution purposes are their upper earnings limit of $103,000 since their employment earnings, expressed on an annualized basis, are $108,000 which is greater than their upper earnings limit of $103,000. As such, the member can only contribute on their employment earning up to the upper earnings limit.

Step 2: Calculate pensionable earnings per pay
Pensionable earnings per pay = their monthly earnings rate or their maximum monthly pensionable earnings per pay based on their upper earnings limit ($103,000 ÷ 12 = $8,583.33), if lower.
The member has monthly employment earnings of $9,000. For HOOPP purposes, their pensionable earnings for the monthly pay period are:
$9,000 or $103,000 ÷ 12 = $8,583.33 (if lower)
The member’s pensionable earnings for the monthly pay period are $8,583.33 since their monthly employment earnings of $9,000 are greater than their maximum monthly pensionable earnings per pay of $8,583.33 based on their upper earnings limit. Assuming steady monthly employment earnings for the full year, this application of maximum monthly pensionable earnings reflects that the total employee contributions for the year are subject to the upper earnings limit.

Step 3: Calculate contributions at the low rate
Contributions at the low rate are calculated as follows:
Contributions at 6.9% = [pensionable earnings per pay × (YMPE* × 6.9%)] ÷ annualized earnings
*Use the lesser of the member's annualized earnings or the YMPE.
Therefore, the monthly contributions at the low rate are:
[$8,583.33 × ($71,300 × .069)] ÷ $103,000 = $409.98
*The 2025 YMPE ($71,300) is used here because it is less than the member's annualized earnings ($103,000).

Step 4: Calculate contributions at the high rate
A member must contribute at the high employee contribution rate on the portion of their annualized pensionable earnings per pay that exceeds the YMPE. Contributions at the high rate are calculated as follows:
Contribution at 9.2% = [pensionable earnings per pay × (annualized earnings - YMPE*) × 9.2%] ÷ annualized earnings

*If the member's annualized earnings are less than the YMPE, they would make no contributions at the high rate. However, because the member's annualized earnings in this example are greater than the YMPE, the member must contribute 9.2% on the portion that exceeds the YMPE.
Therefore, the monthly contributions at the high rate are:
[$8,583.33 × ($103,000 - $71,300) × .092] ÷ $103,000 = $243.03

Step 5: Calculate total HOOPP contributions
The formula is:
$409.98 (the low) + $243.03 (the high) = $653.01

Step 6: Calculate contributory service
A member's pensionable earnings per pay and annualized earnings are used to calculate contributory service - the length of time, measured in weeks, that the member has contributed to HOOPP, adjusted for such things as non-contributory leaves or employment earnings below an incorporated physician’s lower earnings limit.
The figure is calculated by converting pay into weeks.
Contributory service = [pensionable earnings per pay × 52 weeks in a year] ÷ annualized earnings = [8,583.33 × 52 weeks] ÷ $103.000 = 4.333 weeks
In this example, the member worked during the full monthly pay period and had employment earnings that, when expressed on an annualized basis, are equal to or greater than their lower earnings limit. Therefore, the contributory service credit is not subject to proration.

Example 3: Incorporated physician with employment earnings below their lower earnings limit

The member in this example works a full year and draws monthly employment earnings from their MPC. The member's baseline earnings for the year are $100,000. Their earnings limit adjustment for the year is $3,000, so their lower earnings limit is $97,000 and their upper earnings limit is $103,000. The member’s monthly rate of employment earnings for the full year, beginning in January, is $7,500. The example uses the 2025 contribution rates and the 2025 YMPE of $71,300.

Step 1: Calculate annualized earnings
Annualized earnings = monthly earnings rate x 12 months, subject to the following:
If the result is greater than their upper earnings limit for the year, their annualized earnings are the upper earnings limit.
If the result is less than their lower earnings limit for the year, their annualized earnings are the lower earnings limit.

The member’s annualized earnings are:
$7,500 x 12 = $90,000, or $103,000 (if the result is higher) or $97,000 (if the result is lower)
The member’s annualized earnings for contribution purposes are their lower earnings limit of $97,000 since their employment earnings, expressed on an annualized basis, are $90,000 which is less than their lower earnings limit of $97,000. As such, the rate at which they contribute must be based on their lower earnings limit and their contributory service for the year will be prorated, as illustrated in Step 6.

Step 2: Calculate pensionable earnings per pay
Pensionable earnings per pay = their monthly earnings rate or their maximum pensionable earnings per pay based on their upper earnings limit ($103,000 ÷ 12 = $8,583.33), if lower.
The member has monthly employment earnings of $7,500. For HOOPP purposes, their pensionable earnings for the monthly pay period are:
$7,500 or $103,000 ÷ 12 = $8,583.33 (if lower)
For HOOPP purposes, the member’s pensionable earnings for the monthly pay period are $7,500 since their monthly employment earnings of $7,500 are less than their maximum monthly pensionable earnings per pay of $8,583.33.

Step 3: Calculate contributions at the low rate
Contributions at the low rate are calculated as follows:
Contributions at 6.9% = [pensionable earnings per pay × (YMPE* × 6.9%)] ÷ annualized earnings
*Use the lesser of the member's annualized earnings or the YMPE.
Therefore, the monthly contributions at the low rate are:
[$7,500 × ($71,300 × .069)] ÷ $97,000 = $380.39
*The 2025 YMPE ($71,300) is used here because it is less than the member's annualized earnings ($97,000).

Step 4: Calculate contributions at the high rate
A member must contribute at the high employee contribution rate on the portion of their annualized pensionable earnings per pay that exceeds the YMPE.
Contributions at the high rate are calculated as follows: Contributions at 9.2% = [pensionable earnings per pay × (annualized earnings - YMPE*) × 9.2%] ÷ annualized earnings
*If the member's annualized earnings are less than the YMPE, they would make no contributions at the high rate. However, because the member's annualized earnings in this example are greater than the YMPE, the member must contribute 9.2% on the portion that exceeds the YMPE.
Therefore, the monthly contributions at the high rate are:
[$7,500 × ($97,000 - $71,300) × .092] ÷ $97,000 = $182.81

Step 5: Calculate total HOOPP contributions
The formula is:
$380.39 (the low) + $182.81 (the high) = $563.20

Step 6: Calculate contributory service
A member's pensionable earnings per pay and annualized earnings are used to calculate contributory service - the length of time, measured in weeks, that the member has contributed to HOOPP, adjusted for such things as non-contributory leaves or employment earnings below an incorporated physician’s lower earnings limit.
The figure is calculated by converting pay into weeks.
Contributory service = [pensionable earnings per pay × 52 weeks in a year] ÷ annualized earnings = [$7,500 × 52] ÷ $97,000 = 4.02 weeks
In this example, the member worked during the full monthly pay period but had employment earnings that, when expressed on an annualized basis, are less than their lower earnings limit. Therefore, the contributory service credit reflects a proration of the maximum contributory service (that would otherwise have been credited) to the ratio of the member’s employment earnings, expressed on annualized basis, to their lower earnings limit.
The proration is reflected in the contributory service credit of 4.02 weeks. No further calculation is necessary.
For illustrative purposes only, this proration can be expressed as:
Prorated contributory service = maximum contributory service x [employment earnings expressed on an annualized basis ÷ lower earnings limit]
= 4.333 weeks x ($90,000 ÷ $97,000) = 4.02 weeks