Offering a Health Spending Account seems straightforward. But with the rollout of the Canadian Dental Care Plan (CDCP), many plan administrators and advisors are hitting a wall.
A simple mistake—like including dental in your HSA—might leave employees ineligible for government coverage they qualify for based on income.
Do you know how the CRA wants these benefits reported?
The right approach protects employees, reduces compliance risks, and strengthens your long-term benefits strategy.
– Increase value without overspending on dental coverage
– Avoid CRA reporting errors, despite ever-shifting rules
– Help employees access CDCP when it makes more sense
The ultimate outcome? A benefits package that adapts to changing regulations—while continuing to support your team.
Tip 1: Know What CRA Considers Dental Coverage
It’s not about what you intend. It’s about what you report.
The CRA clarified: if your HSA reimburses dental services—even optionally—it counts as dental coverage. You must report this in box 45 using the appropriate code.
Why this matters:
– Employees with dental coverage are not eligible for the CDCP
– This includes even partial or occasional reimbursement through an HSA
Here’s how to avoid missteps:
– Want employees to be CDCP-eligible? Exclude dental services from your HSA entirely
– Coding matters—report code 1 if no dental, otherwise use the correct coverage code
– Don’t assume employees will “opt out” of dental—all reimbursement options count
Trying to split hairs or game the system could backfire. Keep it simple. Maintain accurate records. Be transparent in communication.
Some advisors thought removing dental coverage from HSAs might open access to federal benefits. But this only applies in rare situations, like:
– Low-income households
– Tight employer budgets
– High CDCP-participating dentist availability
These exceptions exist. But betting your plan design on them is risky.
Start with clarity and compliance.
Tip 2: Don’t Rely on CDCP to Fill the Gap
I’ll be honest—when the CRA issued its guidance, I thought this could be a new path for leaner budgets.
But I changed my mind.
The CDCP is not a silver bullet. It has major unknowns:
– Dentists aren’t required to join the program. Over 26,000 oral health providers are enrolled, but regional participation varies
– The CDCP is income-tested. Employers can’t access family income data to confirm employee eligibility
– There are out-of-pocket costs depending on the employee’s adjusted family net income
– HSAs can’t be used to cover the gaps left by CDCP
If you think carving dental out of your HSA solves everything, pause.
Here’s a better way to approach it:
– Map dentist participation rates in your area
– Consider your employee base: Is it small, stable, and predictable?
– Use this only as a stopgap while budgets recalibrate
And be aware: employees might see removing dental from their HSA as a benefit cut—even if CDCP eligibility seems like a gain.
Test the waters. Pilot with a small group if possible. Reassess often.
Every region, employer, and workforce is different. Don’t take assumptions at face value.
Tip 3: Communicate with Clarity and Purpose
Taking dental out of a plan without context feels like a cut. That perception matters.
Here’s what poor communication leads to:
– Distrust
– Misunderstanding about CDCP eligibility
– Decreased perceived value of benefits
Fix it with a clear 3-step plan:
Step 1: Explain the CRA’s rules in plain language
Step 2: Detail how this affects their access to the CDCP
Step 3: Share why your plan is designed to maximize total value—either through HSA inclusion or through government programs
Don’t present CDCP access as a “perk” if it’s not guaranteed.
Reassure employees that decisions are made with their financial health in mind. Be transparent about trade-offs. Use examples and data when possible.
Frame decisions in terms of access, fairness, and flexibility—not cost-cutting.
Long-term, a well-communicated policy builds trust. Employees who understand the reasoning are more likely to support the change.
Summary
– Know when an HSA counts as dental coverage according to the CRA
– Don’t depend on the CDCP to replace dental benefits unless criteria align
– Communicate changes with clarity to preserve trust and transparency
Plan design isn’t about lowering costs. It’s about delivering value—without guessing.
Build smarter HSAs. Know the rules. Protect your teams. Always lead with clarity.