--- title: πŸ₯ Private Health Insurance Plans in Canada description: Learn when private health insurance premiums qualify as a medical expense for tax purposes and how proper structuring can maximize your tax benefits. image: https://toroaccounting.ca/hubfs/Untitled%20design%20(12).png --- [Skip to content](https://toroaccounting.ca/blog/private-health-insurance-plans-in-canada#main-content) - [English](https://toroaccounting.ca/blog/private-health-insurance-plans-in-canada) - [Spanish](https://toroaccounting.ca/es/blog/private-health-insurance-plans-in-canada) English Show submenu for translations [![Toro Financial Inc. dba Toro Accounting](https://toroaccounting.ca/hs-fs/hubfs/Logo-Square%20(500%20x%20200%20px)-1.png?width=450&height=150&name=Logo-Square%20(500%20x%20200%20px)-1.png)](https://toroaccounting.ca/en?hsLang=en) - [Home](https://toroaccounting.ca/en/) - [Taxes](https://toroaccounting.ca/en/tax-filing-services) Show submenu for Taxes - [1st Tax Filing](https://toroaccounting.ca/en/steps-for-filing-t1) - [Bookkeeping](https://toroaccounting.ca/en/bookkeeping) - [Business Plans](https://toroaccounting.ca/en/create-my-business-plan) - [Blog](https://toroaccounting.ca/blog) Open main navigation Close main navigation - [Home](https://toroaccounting.ca/en/) - [Taxes](https://toroaccounting.ca/en/tax-filing-services) Show submenu for Taxes - [1st Tax Filing](https://toroaccounting.ca/en/steps-for-filing-t1) - [Bookkeeping](https://toroaccounting.ca/en/bookkeeping) - [Business Plans](https://toroaccounting.ca/en/create-my-business-plan) - [Blog](https://toroaccounting.ca/blog) - - [English](https://toroaccounting.ca/blog/private-health-insurance-plans-in-canada) - [Spanish](https://toroaccounting.ca/es/blog/private-health-insurance-plans-in-canada) English Show submenu for translations - [Book a Free Consultation](https://toroaccounting.ca/en/book-consultation) [Book a Free Consultation](https://toroaccounting.ca/en/book-consultation?hsLang=en) Feb 22, 2026, 11:23:37β€―PM # πŸ₯ Private Health Insurance Plans in Canada [Camilo Toro](https://toroaccounting.ca/blog/author/camilo-toro) Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://toroaccounting.ca/blog/private-health-insurance-plans-in-canada) [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://toroaccounting.ca/blog/private-health-insurance-plans-in-canada) [Twitter icon](https://twitter.com/intent/tweet?url=https://toroaccounting.ca/blog/private-health-insurance-plans-in-canada) [pinterest-p icon](http://pinterest.com/pin/create/link/?url=https://toroaccounting.ca/blog/private-health-insurance-plans-in-canada) [envelope icon](mailto:?body=https://toroaccounting.ca/blog/private-health-insurance-plans-in-canada) ## When Do They Qualify as a Medical Expense? Many Canadians pay for private health and dental insurance β€” especially self-employed individuals, employees without full coverage, and business owners. But not everyone knows when those premiums qualify as an eligible medical expense for tax purposes. At **Toro Accounting**, we regularly review health insurance plans to ensure they meet CRA requirements before claiming them on a personal or corporate tax return. Here’s what you need to know. ![Untitled design (12)](https://toroaccounting.ca/hs-fs/hubfs/Untitled%20design%20(12).png?width=669&height=468&name=Untitled%20design%20(12).png) --- # πŸ”Ή What Is a Private Health Insurance Plan? A private health insurance plan is coverage purchased from an insurer (or structured through a business) that provides reimbursement for eligible medical expenses. Examples include: βœ” Extended health coverage (prescription drugs, paramedical services) βœ” Dental insurance βœ” Vision coverage βœ” Certain travel medical coverage βœ” Private Health Services Plans (PHSP) The eligibility rules are governed by the **Canada Revenue Agency (CRA)**. --- # πŸ”Ή When Do Premiums Qualify as a Medical Expense? Premiums paid to a **Private Health Services Plan (PHSP)** may qualify for the **Medical Expense Tax Credit (METC)** if: βœ” The plan qualifies as a PHSP under CRA rules βœ” The coverage is limited to eligible medical expenses βœ” The premiums were paid and not reimbursed βœ” The plan is structured as insurance (risk pooling + reimbursement) If eligible, the premiums can be included as part of your medical expenses on your T1 return. --- # πŸ”Ή How Is It Handled on a Personal Tax Return? If you personally pay premiums to an eligible PHSP: βœ” The premiums are included in your total medical expenses βœ” They are subject to the medical expense threshold (3% of net income or the annual CRA maximum, whichever is less) βœ” The federal credit is generally 15%, plus the applicable provincial credit The credit is non-refundable β€” meaning it reduces taxes payable but does not generate a refund by itself. --- # πŸ”Ή What If the Plan Is Partially Paid by the Employer? This is very common β€” and the treatment depends on who actually paid the premium. ### Scenario 1️⃣: Employer Pays 100% If your employer pays the full premium: βœ” It is generally **not taxable to you** (if it qualifies as a PHSP) βœ” You **cannot claim** those premiums as a medical expense βœ” Only unreimbursed out-of-pocket medical expenses can be claimed You cannot claim something you did not personally pay. --- ### Scenario 2️⃣: Employer Pays Part / Employee Pays Part (Payroll Deduction) If: - The employer pays a portion - The employee pays a portion via payroll deduction Then: βœ” Only the portion **you paid personally** can be claimed as a medical expense βœ” The employer-paid portion cannot be claimed βœ” You must verify the total amount deducted from your pay Your T4 does not always break this out clearly β€” so reviewing pay stubs or the benefits summary is important. --- ### Important Note If the employer-paid portion is treated as a **taxable benefit** (rare for PHSPs but possible for certain plans), the analysis changes and professional review is recommended. --- # πŸ”Ή Special Rules for Self-Employed Individuals If you are self-employed: βœ” Premiums may be deductible as a business expense βœ” You may claim them under self-employed health insurance deduction rules βœ” Income-based limits may apply In some cases, this provides greater tax savings than claiming the medical expense tax credit. --- # πŸ”Ή Corporate Planning Considerations If a corporation pays health insurance premiums for a shareholder: βœ” The corporation may deduct the premiums βœ” It may not create a taxable benefit if structured properly βœ” The plan must qualify as a PHSP Incorrect structuring may result in shareholder benefit issues. --- # πŸ”Ή When Premiums Do NOT Qualify Premiums may not qualify if: ❌ The plan includes non-medical benefits ❌ It operates like a savings account ❌ It reimburses ineligible expenses ❌ It does not meet PHSP requirements The CRA carefully reviews PHSP arrangements, particularly for incorporated professionals. --- # πŸ”Ή Why Proper Structuring Matters With proper planning, private health insurance can: βœ” Reduce personal taxes βœ” Provide corporate deductions βœ” Avoid shareholder benefit problems βœ” Maximize overall family tax efficiency Improper handling can eliminate the tax advantage. --- # πŸ’Ό How Toro Accounting Can Help At **Toro Accounting**, we: βœ” Confirm whether your plan qualifies as a PHSP βœ” Determine whether to deduct personally or corporately βœ” Review payroll deductions properly βœ” Structure plans for incorporated professionals βœ” Reduce CRA reassessment risk Health insurance is important β€” but structuring it properly makes the difference. --- # πŸ“ž Book a Consultation If your health insurance is partially paid by your employer or you’re unsure how to claim it properly: πŸ‘‰ [Book your appointment here](https://toroaccounting.ca/en/book-a-free-call?hsLang=en) [CRA](https://toroaccounting.ca/blog/tag/cra), [Tax Credits](https://toroaccounting.ca/blog/tag/tax-credits) ## Related posts [![](https://toroaccounting.ca/hs-fs/hubfs/Imported_Blog_Media/1707861618377.jpeg?height=200&name=1707861618377.jpeg)](https://toroaccounting.ca/blog/understanding-profit-business-income-and-trade-nature-in-canadian-tax-law?hsLang=en) ## [Understanding Profit, Business Income, and Trade Nature in Canadian Tax Law](https://toroaccounting.ca/blog/understanding-profit-business-income-and-trade-nature-in-canadian-tax-law?hsLang=en) [Camilo Toro](https://toroaccounting.ca/blog/author/camilo-toro) Feb 13, 2024, 12:00:00β€―AM Since Capital Gains in Canada have a Tax inclusion rate of 50% (meaning that only 50% of the... [Read more](https://toroaccounting.ca/blog/understanding-profit-business-income-and-trade-nature-in-canadian-tax-law?hsLang=en) [![](https://toroaccounting.ca/hs-fs/hubfs/Imported_Blog_Media/1692936525448.jpeg?height=200&name=1692936525448.jpeg)](https://toroaccounting.ca/blog/tax-planning-strategies-for-small-business-owners-in-canada?hsLang=en) ## [Tax Planning Strategies for Small Business Owners in Canada](https://toroaccounting.ca/blog/tax-planning-strategies-for-small-business-owners-in-canada?hsLang=en) [Camilo Toro](https://toroaccounting.ca/blog/author/camilo-toro) May 11, 2023, 10:32:04β€―AM Running a small business in Canada comes with many benefits, but it also means navigating the... [Read more](https://toroaccounting.ca/blog/tax-planning-strategies-for-small-business-owners-in-canada?hsLang=en) [![](https://images.squarespace-cdn.com/content/v1/646038aa3c92da64e9777bf5/1710104284598-2YVJV04BIJ108S8JDOEC/image-asset.jpeg)](https://toroaccounting.ca/blog/personal-service-business-tax-pitfalls-for-incorporated-individuals?hsLang=en) [Tax](https://toroaccounting.ca/blog/tag/tax), [Corporation](https://toroaccounting.ca/blog/tag/corporation) ## [Personal Service Business - Tax Pitfalls for Incorporated Individuals](https://toroaccounting.ca/blog/personal-service-business-tax-pitfalls-for-incorporated-individuals?hsLang=en) [Camilo Toro](https://toroaccounting.ca/blog/author/camilo-toro) Jul 8, 2024, 5:51:00β€―PM In Canada, if your business is labeled as a personal services business, it loses out on many tax... 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