For most Canadians, employer-paid health and dental premiums are a tax-free benefit. CRA does not require employees to include private health services plan premiums in their income, but Quebec takes a different approach and taxes these benefits provincially. This guide is part of the taxable benefits directory, which covers each employer benefit on its own page.
Federal Rule: Not Taxable
| Rule | Details |
|---|---|
| Federal treatment | ❌ Not a taxable benefit |
| T4 box 40 | Employer-paid PHSP premiums do not appear here |
| CRA authority | IT-339R2 (IT Bulletin); Folio S2-F3-C2 |
| Applies to | Extended health, dental, vision, prescription drugs, paramedical services |
| Condition | Must be a qualifying private health services plan (PHSP) |
Box 40 is where most other employer perks land on your T4; the guide to what taxable benefits are explains how an amount there is added to your income.
Quebec: Taxable Provincially
| Rule | Details |
|---|---|
| Quebec treatment | ✅ Taxable benefit on provincial return |
| RL-1 box J | Employer-paid PHSP premiums appear in box J of RL-1 |
| Federal treatment | Still not taxable federally (no T4 box 40 amount) |
| Quebec only | Only applies to Quebec provincial income tax |
| Impact | Employees pay Quebec provincial tax on the premium value |
Types of Employer-Paid Benefits and Tax Treatment
| Benefit type | Federal | Quebec provincial |
|---|---|---|
| Extended health premiums | ❌ Not taxable | ✅ Taxable |
| Dental premiums | ❌ Not taxable | ✅ Taxable |
| Prescription drug premiums | ❌ Not taxable | ✅ Taxable |
| Vision care premiums | ❌ Not taxable | ✅ Taxable |
| LTD / STD premiums | ❌ Not taxable | ❌ Not taxable (generally) |
| Group life insurance premiums | ✅ Taxable | ✅ Taxable |
| AD&D premiums | ✅ Taxable | ✅ Taxable |
| Employee assistance program (EAP) | ❌ Not taxable | ❌ Not taxable |
| Critical illness (employer-paid) | Depends | Depends |
The life insurance rows work the other way from health and dental: the guide to group life insurance premiums shows how that benefit is calculated.
What Is a Qualifying Private Health Services Plan (PHSP)?
| Criterion | Details |
|---|---|
| Must cover | Eligible medical expenses under the Income Tax Act |
| Cannot be | A plan that pays wages in lieu of salary |
| Primary purpose | Reimbursement of medical / dental / drug expenses |
| Common examples | Blue Cross, SunLife, Manulife group benefits plans |
| CRA reference | IT-339R2; must qualify as PHSP to receive tax-free treatment |
If a plan does not qualify as a PHSP (for example, if it pays cash directly or covers non-medical expenses), the premiums may lose the non-taxable status.
Claiming Premiums You Pay Yourself
Premiums you pay for a health or dental plan can count toward the medical expense tax credit, which has the full list of eligible expenses and the claim threshold. How it applies to plan premiums:
| Situation | Claimable as a medical expense? |
|---|---|
| Employer paid the premium (non-taxable to you) | ❌ No: cannot claim someone else’s payment |
| You paid via payroll deduction (your after-tax dollars) | ✅ Yes: eligible medical expense |
| You pay the full premium directly | ✅ Yes: eligible medical expense |
| Premium included in your income as a taxable benefit (e.g., some cases) | ✅ Yes if included in your income |
Disability Coverage Follows a Different Rule
Employer-paid disability premiums are not a taxable benefit, but the disability benefits are taxable if you ever claim; when you pay the premium yourself, the benefits are tax-free. The guide to whether long-term disability income is taxable works through that trade-off and cost-shared plans.
Quebec RL-1 vs Federal T4
| Slip | Box | What appears |
|---|---|---|
| T4 (federal) | Box 40 | Life insurance premiums, company car, parking, etc. NOT health/dental |
| RL-1 (Quebec) | Box J | Health, dental, vision, drug premiums paid by employer |
| Quebec employee | Files both federal and provincial returns | Adjusts for provincial taxable benefit |
Outside Quebec, an employer can provide health and dental coverage with no tax cost to the employee. In Quebec, these premiums appear on the RL-1 and are subject to provincial income tax.
If You Have No Workplace Dental Plan
The federal Canadian Dental Care Plan, which began taking applications in December 2023, provides government-funded dental coverage for uninsured Canadians with a family income below $90,000; it is separate from employer-provided dental insurance and does not create a taxable benefit. The guide to the Canadian Dental Care Plan covers eligibility and how to apply.
Sources
The figures and rules on this page come from these sources, last checked against them on September 25, 2026. How we check facts.
- Government of Canada: Making dental care more affordable in Canada