In its 2023 Budget, the federal government introduced a new Canadian Dental Care Plan (CDCP) intended to help lower dental costs for eligible families earning less than $90,000 per year. For those who have a household income of less than $70,000 a year, dental costs would be fully covered. The program is expected to provide dental care to 9 million Canadians.
The government plans to fully implement the Canadian Dental Care Plan (CDCP) by 2025, however the initial stage only covers dental care of children under 12 years who do not have access to private dental insurance. The plan will be administered by Health Canada with claims adjudication by a third party.
Should employers terminate dental benefits from their group insurance plan?
Since the Federal government announced the introduction of the CDCP, employers have been asking us whether employees would benefit from the termination of employer-sponsored dental benefits. Unfortunately, the introduction of the CDCP will not ensure that all your employees would be benefit from the federal government since this is an income-tested program. Even low-paid employees may not be eligible for this benefit if their spouse earns a high income, given that CRA will consider the net family income in order to establish eligibility.
Employer-sponsored dental plans are highly valued by Canadians and can be a great attraction and retention tool. We do not recommend terminating coverage.
Can employers replace their dental benefit with a Health Spending Account?
Among other eligibility criteria, CDCP will only be available for Canadians that do not have access to employer-sponsored dental insurance or dental coverage of any kind, including a Health Spending Account or Wellness Allowance. Unfortunately, replacing your traditional dental benefit with another form of benefit would not make employees eligible for the CDCP.
Reporting requirements for employers
As part of the new CDCP, employers now have a new tax reporting obligation. The government requires them to report on a tax slip whether an employee, former employee or spouse of a deceased employee was eligible, on Dec. 31 of the reporting tax year, to access dental coverage due to current or former employment.
Employers must report this information in Box 45 (Employee-Offered Dental Benefits) on each employee’s T4 beginning with the 2023 tax-reporting cycle; and continue to report it every year.
Refer to this government resource for more details regarding reporting.
Where can I find more information about the CDCP?
For a complete description of the CDCP, consult the Government of Canada website.