PROVINCIAL HOSPITAL OR HEALTH CARE PLAN PREMIUMS
Provincial hospital or health care plan premiums are contributions made toward provincial or territorial health insurance plans. The CRA has specific guidelines for how these premiums are treated for tax purposes.
Employer-Paid Premiums
- Taxable Benefit: If an employer pays premiums for a provincial or territorial health care plan on behalf of an employee, the premiums are considered a taxable benefit.
- Reporting Obligations: Employers must report the benefit on the employee's T4 slip under box 14 ("Employment income") and in the "Other information" section under code 40.
Employee-Paid Premiums
- Non-Deductible: Employees paying premiums directly to a provincial or territorial health plan cannot claim these amounts as a deduction or medical expense on their income tax returns.
Retired Employees
- Taxable Benefit: Employer contributions to health care plans for retired employees are also taxable benefits.
- Reporting Obligations: For retired employees, these premiums should be reported on the T4A slip under code 118 ("Medical premium benefits").
Payroll Deductions
- CPP Contributions: Taxable benefits arising from employer-paid premiums are pensionable, requiring CPP deductions.
- EI Contributions: If the benefit is provided in cash, it is insurable, and EI premiums apply. Non-cash benefits are not insurable.
Key Considerations
It's essential to distinguish provincial health care plan premiums from private health services plans (PHSPs). While PHSP premiums paid by employers are generally non-taxable, provincial plan premiums paid by employers are taxable.
