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Private Health Plan Premiums -
Extended Health Benefit Costs
Premiums paid to a private health services plan, such as extended
health benefits or a dental plan, other than those fees paid by an
employer, qualify as medical expenses for purposes of the medical
expense tax credit. Fees paid for a provincial health care plan (such
as BC Medical Services Plan premiums, which
have been discontinued) do not
qualify. Many employees pay all or a portion of the premiums for
their extended health benefits, with the premiums being deducted from their pay.
When the employer pays the premiums for provincial health care plan, this is
considered a taxable benefit to the employee.
Often, the income of the person paying the premiums
is high enough that they are not able to claim medical expenses, because it is
only the expenses in excess of 3% of net income that can be claimed. If
there is a lower income spouse, it may be beneficial to claim
all the costs on the tax return of that spouse.
If a person is self employed, the premiums paid for
a private health services plan can be deducted from self employment
income, instead of being claimed as a medical expense. This
would result in greater (or at least equal) tax savings, and is a way to
provide a tax-free benefit to employees of a small business. See our
article on private health
services plans.
Tax Tip: Make sure you
include private health plan premiums when calculating your total medical
expenses.
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