In Canada, employer health insurance laws vary by province. While employers are not federally required to offer private health benefits, many do provide supplemental coverage to complement public healthcare. Some provinces, like Ontario, require employers to pay a health tax based on payroll to help fund the system.
Since most Canadians are covered by the national healthcare system, there aren't a lot of people who get their health insurance through their workplace. However, many employers offer supplemental insurance or separate comprehensive care. Employer health insurance laws require business owners to pay a required tax every year in some provinces to keep the system running.
Here are five facts about health insurance in Canada that every employee should know.
1. Doctors Don't Work for the Government
People outside of Canada assume that doctors in their publicly funded healthcare system must be employed by the government. This isn't the case.
Canada has a robust and publicly funded healthcare system, but only a small minority of doctors work directly for the government. Patients are allowed to choose their doctors and are entitled to health services regardless of their financial situation. There is no charge for anyone who is in need of basic care.
However, doctors are self-employed and manage their own schedules. They choose where to set up their practices and manage their own offices. All of their overhead comes out of how much they make from billing the government for the services they provide to patients.
The government maintains a strong system of account managers and inspectors to ensure that no doctors take advantage of the billing system. Doctors earn their money fairly through a fee schedule laid out by each province. While the government sets the rates they'll be repaid, doctors don’t need to worry about delayed payments, as the system is publicly funded and stable.
2. There's No Single Healthcare System
While people outside of Canada love to talk about the Canadian healthcare system like it's a single entity, it's not. There are actually 13 different systems operating at the same time—one for each province and territory. Every province has its own system, and territories can operate independently.
The Canada Health Act describes the basic framework for healthcare: that it's universal, publicly administered, and accessible. But beyond that, local governments are responsible for the details. The basic tenets of the system require care to be accessible across the country, but how it's delivered is up to each jurisdiction.
Each system operates based on its own rules. What is covered and how the care is given is decided provincially, based on local advisory committees and political decisions.
The system also ensures that there are specific services available for Indigenous populations and veterans. There are federal programs with special rules that determine how this care is administered.
With provincial authority over healthcare systems, each province is empowered to decide what's best for its residents. This gives significant power to the democratic process. However, when major reforms are needed, it can take considerable effort and coordination to implement change across jurisdictions.
3. The Law Doesn't Require Equality
While the Canada Health Act requires that essential care services be provided to everyone and paid for by the government, the finer details can be complex. Every province gets to determine what's considered truly essential. They decide what healthcare services they'll cover and how much they’ll pay.
They also define who provides care and where it gets delivered. These decisions are governed locally.
For instance, Quebec includes a broader range of services in its coverage, including certain fertility treatments that other provinces do not. Some provinces pay for licensed midwives to assist in childbirth, while others do not. Even autism-related therapies and services can be inconsistently funded depending on where you live.
Abortion access remains a sensitive issue. Though legal, services are not evenly distributed across the country and can be difficult to access in more rural areas.
Canadians are often praised internationally for lower drug prices, but it's important to note that Canadians still pay for most prescription medications out of pocket. The Canada Health Act does not mandate drug coverage.
Likewise, services like home care, long-term care, and palliative care are not fully covered under the Act, leaving many older Canadians or those with chronic conditions to seek private options or rely on family care.
4. Physicians Can't Charge for Covered Services
If a particular service is covered under provincial insurance plans and the Canada Health Act, doctors cannot bill patients for it. These so-called “user fees” are illegal for insured services.
However, some family doctors and primary care providers charge “annual fees” for services that are not covered. While this is legal, the fees cannot include essential or insured services. These charges are typically part of broader “concierge” or “comprehensive care” packages.
If you miss an appointment, your doctor may choose to charge you a no-show fee. They might also bill for services done over the phone—like prescription refills or referral letters—since these may not be reimbursed by the government.
Since doctors aren't reimbursed for these extras, they are permitted to charge for them directly.
5. Financing is Both Public and Private
Canada doesn’t have a true “single-payer” healthcare system. There's a shared responsibility between the government and individuals when it comes to healthcare spending.
Across the country, more than half of all money spent on prescription drugs comes from private sources, including out-of-pocket payments and insurance. This means that the government’s share isn’t significantly higher than what individuals are already paying.
In fact, among developed nations that provide universal healthcare, Canada stands out as one of the few where the government does not cover the cost of most prescription drugs. Dental care and eye care are also largely excluded from public coverage.
As a result, Canadians often require supplemental health insurance—through either employer benefits or private plans—to access comprehensive coverage. In 2025, rising costs have made these plans even more important. Reports indicate employer medical costs are projected to increase by over 7% this year due to inflation and higher utilization rates.
FAQs About Employer Health Insurance Laws
Got questions about employer health insurance in Canada? Here are the most common ones answered for 2025.
No, Canadian employers are not legally required to provide private health insurance. However, many do offer supplemental health benefits—such as dental, vision, and prescription drug coverage—to attract and retain talent. The core healthcare services are covered publicly by provincial health insurance plans.
The Employer Health Tax (EHT) is a payroll tax that Ontario employers must pay to support the public healthcare system. As of 2025, the first $1 million of payroll is exempt for eligible employers, but this exemption must be shared among associated corporations. Employers with over $5 million in combined payroll lose the exemption.
Yes, employer-sponsored health plans in Canada often cover dental care, prescription medications, vision care, and paramedical services—which are not included in public provincial plans. Coverage details vary by employer and insurance provider.
Not usually. Most Canadian employers only extend health benefits to full-time employees. Part-time, temporary, or contract workers often don’t qualify unless the employer specifically includes them in their group plan. Eligibility criteria depend on company policy.
If an employer fails to comply with provincial laws like Ontario’s EHT, they may face penalties, interest charges, and audits. In 2025, new rules have made the EHT exemption sharing and filing deadlines more stringent. Employers are expected to accurately report payroll and follow updated tax rules.
Employer Health Insurance Laws Are Provincial
Depending on which province you operate in, employers must pay different amounts for employee health coverage. In some provinces, employers contribute through specific taxes—like Ontario’s Employer Health Tax (EHT)—while in others, they provide access to supplemental insurance plans.
For example, Ontario amended its EHT rules in 2024. As of 2025:
- Associated employers must now share the $1 million exemption based on payroll proportion.
- If the combined payroll of related businesses exceeds $5 million, none of them are eligible for the exemption.
- EHT instalment payments have been eliminated.
- The annual filing deadline has been moved to March 15, and new rules allow for reassessments and refunds of overpayments.
Employers who offer disability insurance or other health-related employee benefits should stay informed about provincial updates.
If you're an employer who provides disability or health insurance for your team, check out our comprehensive guide to find out more information.
