Update on the Canadian Dental Care Plan (CDCP)

Since our last news bulletin on this topic in December 2023, the federal government’s CDCP has been made available to eligible Canadians in all categories except those between age 18 and 65. Access to the program is expected to open for this group starting sometime in 2025.

The CDCP is not intended to be a replacement for existing dental benefits offered through employer/pension-sponsored or private plans. Canadians, who have access to a private dental plan, including a health spending account or a wellness account, are not eligible for the CDCP program. This is true even if they have to pay a premium for the coverage.

This is particularly relevant for individuals between age 18 and 65, as this age group contains the majority of actively employed Canadians. The program will be available to working Canadians in the low and middle-income brackets (adjusted annual family net income below $90,000) but not if their employer offers any kind of benefit plan that would cover dental services.

Some employers have contemplated eliminating dental care coverage from their benefit plans, essentially transferring the cost of dental care to the federal government. However, employers must consider that such a change would affect each employee differently. Access to CDCP coverage varies for each individual based on factors and circumstances that employers may not know or control (e.g. a spouse’s income). Removing dental care coverage from the benefit plan could result in a family with a combined income of more than $90,000 being left with no dental benefits at all.

Employer-sponsored plans may provide better coverage than employees could access under the CDCP program. In addition, some CDCP eligible individuals will not have the full cost of their dental care covered.

  • • The level of reimbursement under the CDCP is based on each individual’s adjusted annual family net income and patients may be required to pay a percentage of the cost of treatment. There is no co-pay requirement for those with family income below $70,000. Those with family income between $70,000 and $79,999 will be required to pay 40% of the cost of services, and those with family income between $80,000 and $89,999 will be required to pay 60%.
  • • The CDCP fee guidelines are different from the established industry fee guidelines and practitioners can charge higher fees at their discretion. The CDCP coverage will be based on the CDCP fee guidelines and patients would have to pay the difference if their practitioner charges higher fees.

The CDCP coordinates with provincial and territorial dental programs but does not coordinate with employer-sponsored plans. When employer-provided benefit coverage is inferior to the coverage that would be available through the CDCP, some low and middle income individuals could be faced with paying out-of-pocket for treatments not covered on their benefit plan that would have been covered through the CDCP. As the CDCP is intended to help ease financial barriers to accessing essential oral health care, this seems contradictory to the plan’s objective. However, changes to this aspect of the CDCP are not currently being considered.

Below is a link to the government’s info site providing CDCP program details:

https://www.canada.ca/en/services/benefits/dental/dental-care-plan.html

We would also like to take this opportunity to remind our clients of the CRA reporting requirement with respect to dental coverage. For the 2024 tax year, employers must report whether they offer dental coverage to employees, former employees and spouses of deceased employees. This reporting is done on T4 and T4A statements. If the payee or any of their family members were eligible to access dental insurance, or dental coverage of any kind, this must be reported using the new T4 (Box 45) and T4A (Box 015) codes. If coverage was available as at December 31 of the taxation year, it must be reported; use “CODE 3: Payee, spouse and dependent children” – regardless of whether the employee actually has dependents.

Potential dental coverage includes health spending accounts and wellness accounts, and reporting is based on whether dental coverage was available – not whether the plan member has chosen to participate in the coverage. If a plan member has waived coverage or has chosen not to participate in the plan, they would still have access to coverage. Employees with access to employer-provided dental benefits are not eligible for the CDCP program.

Please contact your Baynes & White consultant should you have any questions on the above or any other employee benefits related matter.