Contractors’ Questions: What about health insurance for a contract in Canada?

Contractor’s Question: What’s the health insurance situation when a UK contractor is in an overseas city like Ottawa?

In the situation I’m enquiring about, there is an employer/organisation which has a contractor in Canada’s capital and the employer/organisation charges health insurance tax to the contractor.

The employer/organisation has an attorney who says this charge should always (always) be charged. But the contractor thinks the tax should not be charged since the UK has tax treaties with Canada. Who’s correct, and if I’m a contractor set to follow in the aforementioned contractor’s footsteps, what ought I do to ensure I’m both protected and not unfairly hit on health insurance?

Expert’s Answer: The first point to note is that tax treaties do not cover the provision of healthcare nor social security. So, while there is a bilateral tax treaty between the UK and Canada, it does not enshrine a UK person’s entitlement to free medical treatment in Canada.

There is a limited social security treaty, but this covers only pension contributions and entitlements and does not touch on reciprocal healthcare provision.

While the Canadian private medical sector provides the provision of universal free medical care, the Canadian tax system pays for the cost.

Citizens vs immigrants

If you are a Canadian citizen or permanent resident, you may apply for public health insurance. With it, you do not have to pay for most healthcare services. When you use public healthcare services, you must show your health insurance card to the hospital or medical clinic.

Each province and territory has its own health insurance plan. So my advice to you or the contractor before you -- make sure you know what your plan covers! Reassuringly, all provinces and territories will provide free emergency medical services, even if you don’t have a government health card. But there may be restrictions depending on your immigration status.

Get your card, but beware the 3-month delay

For your outbound trip, you will need a health insurance card from the province or territory where you’ll live in Canada to receive health care. You must show this card each time you get medical services.

Keep in mind, in some provinces you must wait, sometimes up to three months, before you can get government health insurance. You should contact the ministry of health in your province or territory to find out how long you’ll need to wait. So potentially critically, you must make sure you have private health insurance to cover your healthcare needs during this waiting period.

Best interests

Finally, and in relation to what you mention specifically, we are not entirely sure what you mean by 'health insurance tax' -- we cannot find any reference in regards to Canada.

But as a tax treaty is not a reciprocal health care agreement and in the case of Canada and the UK, there is no reciprocal health care provision, we would deduce that the Canadian employer, which you also mention, can only be acting in the contractor’s best interest by taking out health insurance cover and, understandably, charging for it.

The expert was Kevin Austin, managing director of Access Financial, a specialist in overseas contracting.