An Important Message about Potential Changes to the Tax Status of Health Benefits

Prime Minister Justin Trudeau says that his government has no plans to tax Canadians on  employer-provided health benefits, according to a Toronto Star article published on February 2, 2017. 

What you need to know

In Canada, health and dental benefits are currently not included as taxable income outside of Quebec.

The federal government is reportedly reviewing the inclusion of employer-paid health and dental premiums as taxable income in conjunction with a broader tax system evaluation. Full details of the proposal have yet to emerge, but it is estimated that such a move could result in $2.9 billion of additional taxation.[1]

Private benefits plans cover nearly $30 billion annually in healthcare costs for up to 22 million Canadians and their families—nearly a third of all national health-related spending. Proponents of taxing health and dental benefits argue that Canadians who are not covered under private health plans are subsidizing those with employee-sponsored coverage.

What could this mean to you?

Employer-paid health and dental insurance premiums would be reported on an employee’s T4 slip and would be considered taxable income for the employee. This would be in addition to any employer-paid premiums for Basic Life, AD&D and Dependent Life insurance, which are already considered as taxable income.

A tax on private benefit plans could have far-reaching implications for employers and for Canadians covered under a group health benefits plan, including:

  • Loss of benefit coverage for millions of working middle-class and lower-income Canadians who rely on employer-sponsored benefits plans to sustain their health
  • Additional expenditures for Canadians on essential and preventative healthcare needs not covered by Canada’s public healthcare system 
  • A trickle-down effect, leading to additional strain on our healthcare system  and negative health outcomes for all Canadians

Making your voice heard while there’s still time

You can add your voice to the conversation in support of maintaining the tax-free status of employer-provided healthcare benefits.

Plans for a new tax have not yet been confirmed, but the window of opportunity to make your voice heard is closing—proposed changes could come as soon as the upcoming 2017 spring budget, scheduled to be tabled at the end of February.

Organizations concerned about the potential implications of this tax are sponsoring campaigns to raise public awareness. For example:, sponsored by a number of healthcare associations including the Canadian Life and Health Insurance Association, gives Canadians an opportunity to lobby their local MP and add their voice to the conversation.

If you have any questions or comments about this issue, please contact your Cowan Insurance Group representative directly.