'The unions aren't going to want to see a reduction to the benefit levels'
Recently, Ottawa released further details about the rollout of the Canadian Dental Care Plan (CDCP), citing the wide range of oral health care services to be covered, along with the criteria for who would qualify.
But questions remain, and it’s unclear how exactly the new offering will impact employers.
Of course, with the government offering a basic dental plan, employers may be tempted to cut expenses by dropping their more generous plans.
That’s “the biggest question” right now, says Padraigin Murphy, an associate at Koskie Minsky in Toronto.
While the government is saying it doesn’t want that to happen, “at this point, we're not entirely clear on whether there's a plan to do anything more firm about that, to put any rules in place.”
Unions and employee benefits
Ottawa has said it is looking to fill a gap, for people who don’t have access to dental care, she says, but “from a public funding perspective, we don't want to see private actors actively make that gap bigger, making it more expensive than is currently planned.”
Working primarily with union-sponsored benefit funds and jointly sponsored benefit funds, Murphy says the chances are lower that the funds are going to make these changes because these benefits are collectively bargained, she says, “and the unions aren't going to want to see a reduction to the benefit levels.”
Unions aren’t going to settle for employers dropping their plans, says Dr. Carlos Quinonez, vice dean and director, dentistry at the Schulich School of Medicine & Dentistry, Western University, and if they do, labour groups will call for something else in return.
“You're either going to be paying for the dental benefit or you're going to be paying for way more massages in a unionized environment.”
Will employers drop their dental plans?
Overall, Quinonez is skeptical that employers are going to move in that direction.
Why? For one, employees say repeatedly that they very much value dental benefits, he says, and “private plans or employer-sponsored plans will invariably be more generous than the federal plan or any public dental care program, by virtue of the fact that it's based on an employer-employee relationship as opposed to... a public health care program.”
It also helps to look to the United States when “Obamacare” or the Affordable Care Act was brought in back in 2010 and introduced coverage for dentistry, he says.
“There was significant alarm in the dental profession... that it was going to drive employers away from dental benefits [but] the reverse actually occurred -- it drove up employer offers to employees with respect to dental benefits,” says Quinonez.
“The mechanisms around that are a bit unclear, [but] the point is it had the exact opposite effect.”
Tax credits for employers
If employers should decide to drop their private plans, it could lead to increased costs for government, and potentially fewer benefits for workers and their families, according to the Canadian Life and Health Insurance Association (CLHIA).
“One way to prevent this unintended consequence is to introduce a tax credit for employers who provide dental benefits. We hope to hear more from the government about this idea when they roll out the full program details in the coming months,” it said.
“We’re looking forward to seeing how the federal dental benefit program will work.”
Design of dental benefit plans
There’s one other notable consideration with the introduction of the national program, according to Quinonez, and that’s the design of the benefits.
Dental care programs that are funded by taxpayer dollars have a lot of checks and balances on them, so they tend to be more rule oriented or administratively heavy compared to private plans, he says.
“I'm starting to get the sense that employers, in order to try to save costs, are looking at public dental care programs to see, ‘Well, what is best practice for making sure we're making the best use of our sparse dollars?’”
Employers might start thinking more carefully about what dental services they fund, how much they fund, or at what frequency, says Quinonez.
“I have already been getting some of those signals from people, dental benefit plan administrators, [about being] more efficient with their spending.
“If I’m an employer who has a population with other health needs, maybe I can use some of the money that I would have targeted towards dentistry and put it elsewhere to better meet the needs of employees.”
Reporting requirements for CDCP
Of course, as part of the new program, employers will have to provide details around dental care spending for employees when filing taxes.
Starting with the 2023 tax year, employers issuing T4 Statement of Remuneration Paid and T4A Statement of Pension, Retirement, Annuity, and Other Income must report on a T4 or T4A slip whether – on Dec. 31 of the taxation year to which the information return relates – a payee or any of their family members were eligible to access dental insurance, or dental coverage of any kind, including health spending and wellness accounts, due to their current or former employment.
As it stands, it’s very clear that employers and pension funds providing these benefits have this obligation, says Murphy.
“What’s not entirely clear, though, is when you're looking at, say, a multi-employer, union-sponsored benefit fund that’s separate from the pension funds. It looks like they don't have reporting requirements under the current rules. And we're not sure if that's intentional or a gap, and if we can expect it to change.”
The same question remains for health benefit funds for retirees, she says, but “if the government wants a full picture, then you probably would want those funds reporting as well.”
One of the complications with funds that aren’t pension funds is that they don't necessarily send out T4s or T4As for everybody, says Murphy, “because a lot of the benefits they’re providing are tax free, they don't need to be reported. So it would be a new burden on these funds to require them to issue T4s, T4As just for this reason.
“But then the counterbalancing point is if you're not requiring it, well, then you’ve got a whole lot of people with benefits and those benefits aren’t getting captured in this reporting.”
