If a province funds health care systems through health care premiums and the employer pays the premiums, what is the payroll implication?

• A. Not taxable
• B. Deduction from payroll
• C. Employer expense only
• D. Taxable benefit

Answer: (D)

When an employer pays a government health care premium, the payment is treated as a taxable benefit to the employee. The employer’s contribution to fund a provincial health program is not considered a private or opt-in health coverage that the employee is paying for themselves; instead, it represents additional compensation provided by the employer. As a result, the value of the premium paid by the employer must be included in the employee’s income for tax purposes and is subject to standard payroll deductions, just like other taxable benefits.

This is different from amounts paid for a private health plan that qualifies as a private health services plan, which can sometimes be treated as non-taxable when it meets specific conditions. But for provincial health care premiums funded by the government, the treatment is that the employee must include the benefit in their income.