Is Health Insurance Tax Deductible in Canada?

In general, health insurance can be claimed on your tax return in Canada, as either a tax credit or a tax deduction, depending on your circumstances. With out-of-pocket health costs rising—particularly for older Canadians, who spend an average of $1,321 per year—the Medical Expense Tax Credit (METC) can offer meaningful relief. Understanding how the credit works is crucial as it can help reduce the tax you owe, especially if your medical spending exceeds the CRA’s threshold.

Most people claim their individual health insurance premiums on their personal tax return through the METC. However, self-employed individuals may be able to deduct premiums as a business expense if the plan qualifies as a Private Health Services Plan (PHSP).  

Here’s how the METC works:

• The Medical Expense Tax Credit: The METC is a non-refundable tax credit. It won’t give you a refund by itself, but it can lower the amount of tax you owe—especially if your medical expenses are high. 
• The catch: You can only claim the portion of your total health care costs that go over a certain threshold. The threshold is set at 3% of your net income to a maximum of $2,833 for 2025. For instance, if your net income is $50,000, you can only claim the portion of your medical expenses that exceeds $1,500. If your medical expenses are relatively low for the year, this credit might not help much.

And here’s where self-employed people get a potential edge:

• Sole proprietor or partnership business owners: If you're a sole proprietor or in a partnership, you may be able to deduct your health insurance premiums as a business expense instead. That directly lowers your taxable income, which could lead to bigger tax savings overall—especially if you have a relatively high income.
• How it works: For self-employed individuals, the business expense route skips the minimum threshold rule and applies no matter how much you spend on other medical expenses. However, the CRA has specific limits and eligibility requirements for this deduction. In particular, your net self-employment income must be at least 50% of your total income, and your income from sources other than self-employment must be under $10,000.

What types of health insurance premiums are tax deductible?

In Canada, only specific private or employee-paid plans meet the CRA’s definition of a private health services plan (PHSP). Here’s a breakdown of which premiums are eligible and when you can claim them.

Individual health and dental insurance premiums

Premiums you pay for a PHSP, which include most standard individual health insurance plans (along with dental insurance plans, or plans with vision benefits), are generally eligible to be claimed as medical expenses if the plan covers services that qualify under the CRA’s medical expense list.

According to the Canada Revenue Agency, premiums paid to a PHSP qualify as eligible medical expenses when “all or substantially all” of the coverage relates to medical expenses approved for the METC. This means that if your plan covers a wide range of medical services, you can claim the premiums on your income tax return.

Typical components that qualify include:

• Health coverage: paramedical services, diagnostic services, hospital services
• Dental coverage: basic and major dental procedures
• Prescription drug coverage: drugs that legally require a prescription and are not over-the-counter

Check out our list below for more details.

Group health insurance premiums (through an employer)

If you contribute to your employer’s group health or dental plan through payroll deductions, your share of the premium is considered an eligible medical expense.

If your employer is paying for your health insurance in full, you cannot claim it as a tax deduction. Instead, the federal tax break goes to your employer.

How should I claim my health insurance premiums?

The best route to claim health insurance premiums typically depends on your work situation. Here’s a quick overview of who’s eligible to claim health insurance as a tax credit or business deduction:

The bottom line

The system offers flexibility. Employees who pay for part or all of their health insurance coverage claim the METC. Self-employed and incorporated business owners may benefit more from claiming premiums as a business expense through a PHSP or an HSA. You have options, and understanding them can help you maximize your tax savings.

If you’re unsure whether the premiums qualify or how to claim them, a tax professional can assist. Online tax calculators can also help you estimate whether your medical expenses exceed the CRA’s METC threshold before you file.

Which medical expenses can you claim (beyond premiums)?

Besides your premiums, the CRA also lets you claim a wide range of other medical expenses. If they are partially covered by a health plan, the non-reimbursed amounts can be claimed. The table below shows a list of many of the eligible medical expenses that can be claimed in the CRA’s official list:

Read more: Review the CRA’s non-exhaustive list of eligible items

How to claim health insurance premiums and medical expenses on your taxes

Claiming health insurance premiums and medical expenses in Canada is straightforward once you know which expenses qualify and how the CRA wants them reported. Here’s a step-by-step process.

1. Determine which expenses are eligible

Before you go claiming medical costs when tax season rolls in, make sure to confirm that your health insurance premiums or any additional costs you’re claiming fall under the CRA’s list of eligible medical coverage. This includes qualifying premiums for PHSPs, prescription drugs, dental work, vision care, medical equipment, and other approved items.

2. Gather receipts and documentation

Collect all receipts, statements, and invoices. You must have proof that you paid the expenses. For premiums, this may include:

• Insurance invoices
• Payroll deduction records (if you’re part of a group plan), though employee-paid PHSP premiums should be reported in box 85 of your T4 slip
• Annual benefit summaries from your insurer showing submitted and reimbursed expenses

3. Choose 12 months ending in the tax year

The CRA lets you claim medical expenses for any 12-month period that ends in the tax year. It doesn’t necessarily have to be from January to December, though most people do use the calendar year for simplicity. If shifting the start date helps you cross the threshold, it’s okay to do so.

4. File your claim on Line 33099 or 33199

Enter the total eligible expenses for your chosen 12-month period on the appropriate line of your tax return or tax software:

• Line 33099 for medical expenses you paid for yourself, your spouse, or your dependent children under 18
• Line 33199 for eligible expenses you paid for other dependants (like parents, grandparents, adult children with disabilities, etc.)

5. Understand CRA thresholds and limitations

The CRA’s minimum threshold then reduces the amount you can actually claim. The lesser of 3% of your net income or a fixed dollar amount for the tax year (maximum of $2,833 for 2025). Only expenses above that threshold will qualify for the credit.

FAQ: Is health insurance tax deductible?

The information in this article is provided for general educational purposes only and does not constitute tax, legal, financial, or professional advice. It should not be used as a substitute for guidance from a qualified tax professional. Tax rules can vary based on individual circumstances and may change over time. For advice tailored to your situation, please consult a licensed tax expert or accountant.

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