As the planned Canadian Dental Care program has been unveiled, there has been a lot of discussions the past year surrounding the effects it might have on group dental benefits. Will employers update their plans? Should they? Will there be a decrease in dental premiums or expenses paid by plan sponsors? Let’s take a look at how the plan will work, so we can answer these questions.
What is the Canadian Dental Care Plan Program?
This is a federal dental program which will help lower-income families with the cost of dental services, where they don’t have access to current coverage through their employer sponsored benefit plan. Although the name suggests it is similar to Medicare, it will actually be run quite differently. Medicare is run by each province, with funds coming from both provincial and federal governments. The Dental Care is run by the CRA. Visit: Canadian Dental Care Plan – Canada.ca
Who is Eligible?
The National Dental Care program has been launched with a tiered approach. In order to be eligible, the person cannot already have coverage for Dental under another plan.
The CDCP is available to Canadians:
- Without access to dental care insurance
- With an annual family net income of under $90,000
- Residing in Canada (for tax purposes)
- That filed a tax return in the previous year.
What Does It Cover
The CDCP will cover all dental expenses, including Basic Services, Major Restorative, and Orthodontics, as well as sedation and general anesthesia. Unlike private plans that have maximums and frequency limits, eligible families can apply for the funds and then use them at their convenience. There is no need to submit dental receipts or provide a dental plan card to the dental service provider. Canadians will be asked to keep their receipts and information in case of an audit.
How Will the CDCP Affect Group Dental Benefits?
Direct Affects: There should not be a direct impact on employee benefit plans because eligibility for National Dental is contingent on having NO dental coverage. This means that no dependents or members will be removed from any current plans or have any extra coverage from National Dental Care.
Therefore, there will not be a change in the number of covered lives for plan sponsors, and subsequently there should not be a change in dental claiming trends. Long story short – employers should not expect to see any immediate savings due to this program.
Indirect Affects: Have you been thinking more about your oral health lately? That is likely because all of this talk about a National Dental Care program has given it a spotlight!
Add that to other factors, which include Dentists may still behind from the pandemic closures, and as some people have been waiting longer for dental work, their oral health may have suffered, and they likely need more than just a cleaning.
All of this means that the number and cost of dental claims will stay roughly the same as they have been of late, which is slightly higher than pre-pandemic levels.
Should You Consider Removing Group Dental Benefits?
Due to all the reasons discussed above, we believe the answer is no.
Let’s recap. The National Dental Care program is income restricted with tiers. It is also contingent on having no alternate coverage. Therefore, current covered employees’ dependents are not eligible. It is also age restricted, so employees themselves are not covered.
Let’s examine the numbers. Most dental plans have coverage for the plan member as well as their dependents. Average annual maximums range from $1,000 to $2,000 per covered person. That is far more than what the government is offering, which may only cover the cost of one cleaning.
Lastly, Canadian Employees value their employee sponsored dental benefits. In this tight labour market, now is not the time to be removing benefits.
We are certainly interested to see how this will affect the overall oral health of all Canadians. If children who previously would not have been able to access dental care get the services they need, it could mean they will require less extensive dental care as they grow up (barring orthodontics). While this may not come into play for many years, we believe a National Dental Care program is a good investment in the oral health of Canadians.
New Tax Reporting Obligation for Employers
Because the CDCP will only be available to uninsured Canadians, a new tax reporting obligation for employers will take effect in the 2023 tax year to identify those with unmet oral health care needs. Employers will be required to report on T4/T4As whether dental insurance or coverage of any kind (such as a Health Spending Account) was available on December 31 of the reporting tax year for:
- Employees
- Employees’ spouses and/or dependents
- Former employees
- Spouses of deceased employees
New Tax Slip Boxes
The new reporting obligation will continue to be required annually, with new tax slip boxes for employers to fill out.
- Box 45 (T4): Employer Offered Dental Benefits. (This new box will be mandatory)
- Box 015 (T4A): Payer Offered Dental Benefits. (This new box will be mandatory if you report in Box 016, Pension or Superannuation. This box will otherwise be optional)
To complete the tax slip, employers must choose the appropriate code based on whether dental coverage was available to the plan member, not whether the plan member has chosen to participate in the coverage. In other words, if a plan member waived coverage or declined to participate in the benefits plan, they would still have access to coverage.
Employers Will Choose From the Following Code System:
- CODE 1: The plan member has no access to dental insurance or dental coverage of any kind.
- CODE 2: Only the plan member has access to dental insurance or dental coverage of any kind.
- CODE 3: The plan member, their spouse, and their dependents have access to dental insurance or dental coverage of any kind.
- CODE 4: Only the plan member and their spouse have access to dental insurance or dental coverage of any kind.
- CODE 5: Only the plan member and their dependents have access to dental insurance or dental coverage of any kind.
Questions? Please give our office a call. We are here to help.
Borrowed from BBD Blog October 11, 2022: https://www.bbd.ca/blog/national-dental-care