While the Medical Expense Tax Credit can significantly reduce your taxes, it is not always obvious which medical expenses are eligible. Payments of premiums for private health service plans may qualify if they meet certain criteria, while others are excluded. It is important to know if any of your payments are eligible towards this credit.
Payments of Premiums for Private Health Services Plans
As a rule, premiums that are paid to private health services plans including medical, dental and hospitalization plans are considered to be eligible medical expenses by the Canada Revenue Agency. Furthermore, any premium, contribution or other consideration — including sales and premium taxes — that you pay to a private health services plan for yourself, your spouse or your minor children, is an eligible medical expense.
However, the plan you make the payments to must qualify as an eligible private health services plan. When changes were made a few years back, the CRA adopted a less restrictive position regarding which plans are considered eligible. They now consider a plan to be eligible as long as all or substantially all of the premiums paid under the plan relate to medical expenses that are themselves eligible for the Medical Expense Tax Credit. The plan must also be an insurance plan, instead of another form of contract. To be considered as substantial, the CRA refers to approximately 90 percent or more.
Previously, the CRA’s position was that 100 percent of the premiums had to be paid to be considered as eligible medical expenses. The rule now means that plans that offer some non-eligible benefits can still be considered eligible, if these benefits are less than 10 percent of the total benefits.
To determine if your plan qualifies for the Medical Expense Tax Credit, you will need to analyze the coverage it provides you with and compare it to the list of eligible medical expenses from the CRA.
Plans that are paid by an employer and most mandatory provincial health plans are not eligible to be claimed as health expenses.
Reporting Payments on Your Tax Returns
To claim the payments of your health plan premium, include them with your other eligible medical expenses and claim the credit on line 33099 of your return.
If you are paying premiums under a plan managed by your employer, you will find the exact amount paid on your T4 Statement of Remuneration slip in Box 85 of the “other information” section. If you do not have the information on a T4 slip, keep your receipts to be able to prove the amounts you paid in the event of a CRA audit.
If you have retired or left a job where your employer still pays for your health plan premiums, you will receive a T4A Statement of Pension, Retirement, Annuity and Other Income slip with the amount shown in Box 135.
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