T4 box 85

So I just got my T4 and box 85 value does not equal the amount that was deducted throughout the year as health premiums.

What could explain that

To solve this:

Speak to your employer on Monday and ask them to either send the reconciliation to your accountant, or ask your employer to call your accountant to discuss the T4.

When the employers sign up for a group plan, not only do they pay for health/denta/vision benefits (the premium for which is all tax deductible), they also sign up for life insurance and accidental death and dismemberment benefits. The latter two is where the insurance company makes its money, as it rarely has to pay out anything. This is why there is a difference between the amount in box 85 and what has been deducted from your paycheque.

Alberta Employment Standards requires earning statements include deductions from earnings and the reason for each deduction. I expect that would be true across the country. Therefore, the employer is either not complying with the standards and/or have an made an error calculating Box 85.

Insurance premium is normally paid by employee in order for any insurance benefit paid out to be received as non taxable.

Some health insurance plans include a life insurance component. That would not be an eligible medical expense. As Joe points out, asking is a good way to solve it.

When there is a benefit plan on a pay slip, I usually see:

  • List item Life Insurance
  • List item AD&D [Accidental Death or Dismemberment]
  • List item Short term disability
  • List item Long term disability
  • List item Dental
  • List item EHC [Extended Health Care]

Often the disability premiums are paid100% by the employee so claims would be tax free.

Private Health Service Plans like Blue Cross are not taxable.

The t4 guide unfortunately says, the use of code [Box] 85 is optional however, if you do not use this code,[CRA] may ask the employee to provide supporting document.

Obviously, if Box 85 is used, it should agree with the pay slips.

I think you guys are right. In the payslip it is just listed as insurance. But I know we have life and accident insurance as well and these are not tax deductible. I will ask on Monday.