You Could Be At Risk Of Losing Your Health Benefits

Jan 18, 2017

CG1CThe Liberal government will be looking more closely at the taxation of private health and dental plans, as part of the federal government’s sweeping tax review for 2017.  Evidently, the expert panel that the government asked to review Canada’s tax system also looked at employer sponsored health and dental benefits as a possible source of tax reform and thinks the government might uncover as much as $2.9 billion.

As we’ve said in another article, the Feds have tried this before, and after a ‘revolt’ of sorts, cancelled plans for the taxation of private health premiums. A group of health and industry associations are hoping another revolt, very much in the polite, respectful style we Canadians are known for. The group, which includes the Canadian Dental Association, associations representing optometrists, psychologists, occupational therapists and audiologists, warns of a significant impact to our health as employers and Canadians reduce their spending on health care.  That’s what happened in Quebec when it brought in a provincial tax on health benefits in the early 1990’s. Over 20% of employers in that province, reduced or dropped private health coverage entirely for all Quebec residents.

The average Canadian could be forgiven for seeing all this as just a tax issue impacting private business and the business model of an entire industry – it’s not.

Employers and plan sponsors, through their sponsorship of private health plans, have become first-payer in a public health system that has shifted cost and benefits to the private sector over the last 20 years. The average Canadian tax payer should be concerned because employers and union organizations have picked up the added cost for years to ensure private plan members remained healthy productive employees. These industry associations believe employers will be reluctant to absorb another payroll tax associated with what are already significant health premiums.

Parliamentary Secretary to the Ministry of Finance, François-Philippe Champagne, has downplayed the tax on benefits as “something the government has not decided on” and said it’s only part of a “comprehensive tax review”.

While we don’t want to presume anything at this stage, we believe the prospect of raising $2.9 billion might be too enticing. The federal budget is due to be tabled in March and that doesn’t leave a lot of time to politely remind the government that this is just not a good way to raise tax revenue.

What we do believe is that such a tax will cause employers to reduce or drop some plans completely, or possibly pass along increased costs to plan members and their families. It will be difficult for many Canadians to afford good health, which will have negative consequences to the public health system.

At a time when mental health is the top ranked cause of absenteeism and disability in Canada, this is the wrong message for the government to be sending.

Private health plans are a key component of Canada’s ‘universal’ health care system and Canadians have come to depend on them to fill what are now large gaps in the public system. There is a strong economic case for encouraging employers to sponsor health coverage for their employees and we want the government to think about this in the proper context. 

It’s time for all Canadians to be heard and you can visit Don't Tax My Health Benefits to make yourselves be heard very clearly. Tell your MP you don’t support this tax.

blog rss subscribe button


Jump to:

Place content block here for staff contact info
Place content block here for social media links


A Quick Guide to the Latest CPP Enhancements for Millennials

By Greg Pallone on September 26, 2016



Place content block here. Add accent and heading in editor.

5 Things You Don’t Know About Retirement

By Greg Pallone on January 20, 2015

Reforming Pension Reform

By Greg Pallone on June 30, 2014

What’s a MER and Why Do I Care?

By Greg Pallone on March 31, 2014

Movember – For Men’s Health

By Greg Pallone on November 5, 2013

Re-thinking Retirement – Part II

By Greg Pallone on September 10, 2013

Re-thinking Retirement (Part 1)

By Greg Pallone on July 15, 2013

CAP Guidelines Do Matter

By Greg Pallone on March 12, 2012

Benefits, pension plans face sustainability issues

By Greg Pallone on January 21, 2012


Learn how Greg can help with your group benefits.

Phone 604.714.4442, email or send a message.

Message for Greg