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) 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.

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.