Personal health care costs are increasing
It’s no secret that personal health care costs are on the rise in Canada. According to the Canadian Institute for Health Information, the average Canadian spends more than $1,500 per year on prescription drugs, and this number has increased by 12% since 2005.
Although you are provided with health care coverage through OHIP, there are many health services that OHIP doesn’t cover, which means you must pay for medical expenses out of pocket if you do not have health insurance coverage through your employer.
Without group insurance or private health insurance, you might need to pay out of pocket for unexpected medical expenses if you become ill or are diagnosed with a condition that requires regular medical care and medication.
For this reason, an increasing number of Ontario residents are opting for personal health insurance to help pay for health care expenses that are not covered by OHIP. Private health insurance gives you the peace of mind in knowing that you are covered for dental fees, doctor and hospital visits, prescription drugs and even travel insurance.
However, there is one additional and commonly overlooked benefit of investing in personal health care insurance: the premium you pay is an eligible tax deduction under the Income Tax Act in Canada.
Health insurance premiums are an eligible tax deduction
Many people don’t realize that health insurance premiums are tax-deductible. In fact, in Ontario, you can claim a wide range of medical expenses.
Claiming your health insurance as a deduction will help to offset the costs of your monthly premium. It will also lower your yearly taxable income and reduce how much income tax you owe (or it could increase your refund). Make sure to keep receipts for all medical costs to maximize your tax deductions.
For more information about whether your health insurance premiums and other medical costs are eligible, talk with a licensed tax professional.
Medical expenses that are not tax-deductible
There are some medical expenses that you cannot deduct:
- Health plan premiums paid by employers
- Fees paid to a provincial health care plan
- Gym memberships, organic food, supplements and other health products
- Medical costs not listed on the Canada Revenue Agency website
Private health insurance benefits for self-employed individuals
Private health insurance is an important consideration for the self-employed. As a self-employed individual, you do not have a health plan through an employer, and you are limited to the medical coverage you receive through OHIP. Rather than paying out of pocket, consider private health insurance to provide you with the coverage and peace of mind you are looking for.
As outlined on TaxTips.ca, “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.”
Get a health insurance quote
Blue Cross health plan premiums are eligible medical expenses under the federal Income Tax Act and may create a tax credit for you. Get a free quote online now to see the plans that are available to you.