The launch of the Canadian Dental Care Plan (CDCP) is one of the most significant changes to the benefits landscape in a generation. Designed to provide dental coverage for uninsured Canadians with a family net income under $90,000, the plan is a boon for low- and middle-income families across the country.
However, for Western Canadian employers—from Vancouver to Winnipeg—the CDCP creates a complex challenge. It’s not about coordination; it’s about competition and cost containment. The federal plan, designed as a public safety net, does not coordinate with private, employer-sponsored plans. If an employee has access to any dental coverage through your company, they are ineligible for the CDCP, regardless of whether they enroll or use your plan.
This single rule forces employers to re-evaluate their dental coverage. Is your current plan providing enough value to justify the premium, or is it preventing some of your employees from accessing a potentially better government plan?
The Two Strategic Options for Employers
For every business in 2026, the question boils down to two distinct paths when it comes to dental benefits: Maintain or Carve-Out.
1. The Maintain Strategy: Keeping Your Plan Status Quo
The Choice: You continue to offer your current group dental plan (e.g., 80% basic, 50% major).
The Rationale:
- Competitiveness: Your plan is likely more generous than the CDCP. Private plans often cover a wider range of services (orthodontics, higher limits on scaling) and typically use a more current provincial fee guide, resulting in lower out-of-pocket costs for the employee.
- Employee Value: Employees with incomes above the CDCP limit (AFNI $\ge$ $90,000$) rely entirely on your plan, as do highly compensated employees in the competitive Western labour market. Removing dental would be perceived as a significant loss of value.
The Drawback: Any employee with an Adjusted Family Net Income (AFNI) under $90,000 is blocked from accessing the CDCP, even if the CDCP might offer a better solution for their family’s finances (especially if the employee’s premium is high).
2. The Carve-Out Strategy: Removing or Reducing Dental Coverage
The Choice: You eliminate or significantly reduce your current dental coverage, usually removing basic coverage entirely.
The Rationale:
- Premium Savings: You immediately save on dental premiums, which can then be returned to the business as savings or reinvested into other, non-competing benefits (like higher mental health coverage or a Wellness Spending Account).
- Employee Eligibility: Low- and middle-income employees (AFNI $\le$ $90,000$) who are now uninsured become eligible to apply for the CDCP.
The Drawback:
- Income Gap Risk: Employees with incomes just over the $90,000$ threshold or those with incomes that fluctuate could be left with no dental coverage at all.
- Perception: Removing a long-standing benefit is always a sensitive issue and can negatively impact employee morale and recruitment efforts.
The Critical Financial Divide: The $70,000 Threshold
The decision is further complicated by the CDCP’s co-payment structure, which highlights the financial risk for employees:
| Adjusted Family Net Income (AFNI) | CDCP Co-Payment | Private Plan Strategy |
| Below $70,000 | 0% (100% CDCP coverage) | These employees are best served by the CDCP. Your plan is likely costing them more in premium than it is saving them in co-pays. |
| $70,000 to $79,999 | 40% Co-pay | May still be better off with a comprehensive private plan that covers a wider range of services. |
| $80,000 to $89,999 | 60% Co-pay | Your private plan is almost certainly better than paying a 60% co-pay under the CDCP. |
| $90,000 and Above | Ineligible | They rely completely on your private plan. |
The true dilemma rests with employees whose family income is below $70,000. These employees, who may currently be paying a portion of your group dental premium, would receive 100% CDCP coverage for eligible services if they were uninsured.
Action Item: If you have a high percentage of employees in the under $70,000 AFNI bracket, a carve-out or reduction strategy, coupled with clear communication and a shift of premium dollars to other valued benefits, may be the most cost-effective and ethically responsible choice.
Employer Compliance and Reporting
Regardless of the strategy chosen, all employers must comply with the new federal reporting requirement for the T4 and T4A tax slips.
Starting with the 2023 tax year, employers must indicate on these slips whether an employee (or their spouse/dependents) was eligible to access dental insurance of any kind through the employer. This includes coverage through a Health Spending Account (HSA).
The Implication: This mandatory reporting is the mechanism that prevents double-dipping. The CRA uses this information to determine CDCP eligibility. Even if an employee opts out of your dental coverage, if they were offered it, you must report that access, which still makes them ineligible for the CDCP.
The CDCP is not a minor adjustment; it is a catalyst for major strategic change. Western Canadian employers must audit their plan demographics and financial objectives now to ensure their dental strategy for 2026 is cost-effective, competitive, and genuinely supportive of all their employees’ financial health.