Is health insurance tax deductible in Canada?

Tax season is around the corner, and if you’re like many Canadians, you may be overlooking a valuable opportunity to reduce your tax bill. Did you know that many health-related expenses—including some health insurance premiums—may be eligible for a tax credit? Understanding what medical costs you can claim can help you lower your taxable income and put money back in your pocket.

Let’s break down which health expenses qualify and how you can take advantage of this tax benefit.

Healthcare in Canada

In Canada, healthcare coverage comes from two sources: public health insurance and private health insurance, which work together to meet different medical needs.

Public health insurance (Medicare)

Canada’s public healthcare system, Medicare, provides universal healthcare to all Canadian citizens and permanent residents. It’s funded through taxes and managed by each province and territory.

Medicare covers a wide range of essential medical services, including:

• Doctor’s visits – Check-ups and consultations with family doctors or walk-in clinics.
• Hospital services – Emergency care, hospital stays, and surgeries.
• Specialist care – Appointments and care from specialists like oncologists or cardiologists.
• Diagnostic tests – Lab work, X-rays, MRIs, CT scans, and biopsies.
  
  

Private health insurance fills the gaps

Despite the broad coverage provided by Medicare, not everything is included. Prescription drugs, dental care, vision care, and paramedical services (like physiotherapy, chiropractic care, nutrition counseling, and psychotherapy) are not covered under public health plans. This is where private health insurance comes in, helping to cover these additional costs.

How claims work

• Public health claims: No action is required. Hospitals and doctors bill the government directly.
• Private health claims: These are handled in two ways:
  • • Pay first, get reimbursed – You cover the cost upfront and submit a claim to your insurer for reimbursement
    • Direct billing – The insurance company pays the service provider directly, so you don’t have to pay out-of-pocket.

By combining public and private coverage, Canadians can ensure they have comprehensive healthcare protection that meets all their medical needs.

What about group insurance?

Many Canadians receive private health insurance through their employer’s benefits package, also known as group insurance. These packages typically include health, dental, and life insurance, offering a convenient way to get coverage at a lower cost than purchasing it on your own.

Having extra health insurance ensures you’re always covered—whether you stay with your employer’s insurance or need a personalized health plan that meets your specific needs. 

Also read: A guide to health insurance in Canada.

What healthcare expenses can you claim in Canada?

The Government of Canada provides a comprehensive list of all the medical expenses you can claim on their website with a search feature to help you quickly find a specific medical expense. 

Eligible medical expenses include:

• Medical supplies, such as prescription medications and hearing aids
• Dental care, including cleanings, fillings, and orthodontic treatments
• Travel costs for medical treatment, such as transportation and accommodations

How to claim medical expenses

The Medical Expense Tax Credit provides tax relief for individuals who have significant medical expenses for themselves or certain dependents. You can claim eligible medical expenses on your tax return if you or your spouse or common-law partner:

• paid for the medical expenses in any 12-month period ending in the previous tax year (e.g., June 1-2023-May 31, 2024 for a 2024 tax return)
• did not claim them in an earlier tax year

The Federal government gives this credit at the lowest marginal tax rate, which is 15%, but additional provincial tax rates vary. For example, in Ontario, the lowest rate is 5.05%. When you add this to the federal rate, the lowest marginal tax rate in Ontario is 20.05%. 

An entire family’s medical expenses can be added together and used for this credit, even expenses paid outside of Canada. In most cases, the lowest earning spouse should claim the credit because their income threshold will be lower.

To claim your health plan premium payments, include them with your other eligible medical expenses and enter the total on line 33099 of your tax return.

If your premiums are paid through an employer-managed plan, you can find the exact amount on your T4 Statement of Remuneration in Box 85 under the “other information” section. If this information isn’t listed on a T4 slip, be sure to keep your receipts as proof in case of a CRA audit.

If you have retired or left a job where your former employer continues to cover your health plan premiums, the amount will be recorded on your T4A Statement of Pension, Retirement, Annuity, and Other Income in Box 135.

Making a claim for yourself, your spouse, or your children under 18

You can claim eligible medical expenses paid for:

• Yourself
• Your spouse or common-law partner
• Your or your spouse’s or common-law partner’s children under 18

Sample calculation for Ontario: 

• A family has $13,200 in medical expenses, but their insurance reimburses them $6,000, leaving $7,200 in out-of-pocket costs.
• The lower-income spouse earns $38,000, making 3% of their income = $1,140
• Deductible medical expenses: $7,200 - $1,140 = $6,060
• Tax credit calculation: 20.05% of $6,060 = $1,215.03 tax credit

For other dependants

You can also claim medical expenses for family members who depend on you for support, including:

• Children or grandchildren who are 18 or older
• Parents, grandparents, siblings, aunts, uncles, nephews, or nieces, as long as they were residents of Canada during the year
  Medical expenses for each dependant must be calculated separately before being claimed on line 33199.

Can I claim health insurance premiums on my taxes?

Health insurance premiums are the amount of money you pay to an insurance company for your health coverage. This payment is typically made on a monthly, quarterly, or annual basis, depending on your policy. Health insurance covers expenses related to keeping you alive and healthy, while life insurance covers expenses related to your death.

You can claim your health insurance premiums on your taxes as part of the expenses covered by the Medical Expense Tax Credit as long as:

• Your insurance is a private health services plan, and
• Your insurance pays for medical expenses that aren’t covered by your provincial medical insurance plan.

You can claim the portion of the premiums you pay yourself but not any amount covered by your employer. You can add this to your other eligible medical expenses (such as travel medical expenses) and claim the entire amount as a credit on your tax return.

Here are some examples of premiums and their tax eligibility:

Also read: An ultimate guide to insurance tax write-offs for self-employed Canadians

What’s the tax benefit?

The Medical Expense Tax Credit is one of the most underused tax breaks available to Canadians. Getting the most from it requires some careful planning, including keeping all your medical receipts. Your expenses don’t all have to come from the same tax year, but they must come from any 12-month period that ends in the tax year you are filing for. You don’t need to send your receipts or documentation with your tax return. However, you do need to have them ready in case the Canada Revenue Agency (CRA) asks to see them later.

The amount of tax relief you could receive depends on how many eligible medical expenses you had to pay for and your eligible health insurance premiums. If you have any questions about your eligibility, speak to a tax professional.

The bottom line

Many Canadians miss out on valuable tax savings simply because they don’t realize their medical expenses—including some health insurance premiums—can be claimed. By understanding what qualifies and keeping track of your receipts, you can maximize your tax credits and reduce your overall tax burden. As you prepare your return, take the time to review your expenses and ensure you’re getting the full benefit of the Medical Expense Tax Credit. If you’re unsure about your eligibility, a tax professional can help you make the most of this opportunity. 

Also read

• Is travel insurance tax deductible in Canada?
• Is small business insurance tax deductible in Canada?
• How to use life insurance for tax and estate planning