T4 box 85: health premiums your client paid, not in box 14

What does T4 box 85 report?

Code 85 reports the premiums your client paid to a private health services plan (PHSP), usually through payroll deductions for a group health and dental plan. The employer doesn't put the amount in box 14, and the CRA treats it as a qualifying medical expense that your client claims on line 33099 canada.ca. The figure includes any GST/HST or PST charged on the premium canada.ca.

Using code 85 is optional for the employer. If it's left off, your client can still claim the premiums, but the CRA may ask for supporting documents canada.ca. Several other slip codes sit close to it, and they're easy to mix up.

The T4A row and the provincial plan part of the code 40 row come from the CRA's insurance plan page canada.ca; the non PHSP part comes from the PHSP page canada.ca. Box 45 is a mandatory coverage code, separate from code 85; the details are in T4 box 45.

Which premiums belong in code 85?

Only premiums for a plan that qualifies as a PHSP. One test does most of the work: 90% or more of the premiums must relate to expenses that qualify for the medical expense tax credit, and the plan has to be insurance covering the employee, their spouse or common law partner, or certain household members canada.ca. Medical, dental and hospitalization plans all count canada.ca.

What the employer pays into a qualifying PHSP isn't a taxable benefit federally, so it appears nowhere on the T4 canada.ca. Code 85 is only the employee's share. If the plan fails the PHSP conditions, the employer's payments become a taxable benefit under code 40 canada.ca. The same goes for premiums the employer pays to a provincial or territorial hospital or medical care plan canada.ca.

Premiums to a provincial medical or hospitalization plan aren't eligible medical expenses at all canada.ca. So a payroll deduction for a provincial plan should never land in code 85. More on what code 40 covers is in taxable benefits.

Code 85 can push a medical claim over the threshold

For 2026, your client claims eligible expenses above the lesser of $2,890 or 3% of net income, up from $2,834 in 2025 canada.ca. The federal credit is 14% of the excess, because 14% is the lowest federal rate for 2026 canada.ca. For 2025 the lowest rate is 14.5%, since it dropped from 15% to 14% on July 1, 2025 canada.ca. The full threshold math is in medical expense threshold 2026.

Say your client earns $62,000 of net income in 2026. Payroll took $95 a month for the family health and dental plan, so code 85 shows $1,140. They also paid $1,600 out of pocket for dental work and prescriptions that the plan did not reimburse.

Without the premiums, the claim never clears the $1,860 threshold. With them, $880 is allowable and the federal credit is $123.20, before any provincial credit. Skip code 85 and your client loses that credit.

What if code 85 is blank or wrong?

A blank code 85 doesn't block the claim. Your client can still claim the premiums they paid, and the CRA may ask for supporting documents canada.ca. Ask your client for their final pay stub of the year or the employer's year end summary before you file.

Watch the period too. Code 85 shows premiums for the calendar year, but your client can claim expenses paid in any 12 month period ending in the tax year canada.ca. If you pick a period ending in, say, June, you'll need the monthly deduction from pay records rather than the slip total.

If the employer put the premiums in box 14 by mistake, your client would be taxed on money they paid themselves. The fix is an amended T4 from the employer, not an adjustment you make on the return.

Quebec reports the same premiums on the RL-1

For Quebec employees, the employer reports the premiums the employee paid on the RL-1 by entering 235 in a blank box, and the amount stays out of box A. If it's missing, the employee may ask the employer for supporting documents revenuquebec.ca.

The bigger difference is the employer's share. Revenu Québec treats employer contributions to a group insurance plan, including a PHSP, as a taxable benefit, reported in boxes A and J of the RL-1 revenuquebec.ca. Federally the same contributions aren't taxable canada.ca. So a Quebec employee's RL-1 box A can exceed T4 box 14 by the employer's PHSP contributions, and that gap is correct.

Who else reports or claims these premiums?

A retired or former employee who pays premiums gets them on a T4A under code 135, which is also optional canada.ca. They go on line 33099 the same way.

The credit covers premiums paid for your client, their spouse or common law partner, and household members related by blood, marriage, common law partnership or adoption canada.ca. Spouses usually pool medical expenses on the lower income spouse's return, so the code 85 amount can move with them.

A sole proprietor who deducts PHSP premiums from business income under subsection 20.01(1) can't also claim those premiums as a medical expense. Paragraph 118.2(2)(q) excludes them to the extent they were deducted laws-lois.justice.gc.ca.