What Advisors Need to Know About HSAs and the CDCP

The

Canadian Dental Care Plan (CDCP) was introduced to expand access to dental care for Canadians without existing coverage. As an advisor, you may get questions from plan administrators or clients about how a

Health Spending Account (HSA) affects eligibility.

When the CRA clarified how to report dental coverage through Health Spending Accounts (HSAs) and allowances, I’ll be honest—I was excited! When it comes to HSAs and the CDCP, advisors have been asking if it’s possible to have both, a bit like trying to have your cake and eat it too.

The CRA’s new guidance doesn’t offer dessert, but it does provide clarity.

Here’s what the CRA said:

“If you provide your employee with an allowance to cover dental services or insurance that covers dental insurance, you must report the extent of that coverage using the applicable code in box 45. If the health spending account or allowance does not cover dental services or include dental insurance, it is not considered providing access to dental services and you can fill out box 45 using code 1.”

In plain language: — If an HSA reimburses dental expenses, that is considered dental coverage. Employees are not eligible for the Canadian Dental Care Plan (CDCP).

If dental is excluded from the HSA, it is not considered access to dental care. Employees could qualify for the CDCP (assuming they meet the other criteria).

At first glance, it feels like this opens the door to a new strategy for small businesses: carve dental out of the HSA and let employees fall back on the CDCP. But when I sat with it a little longer, I realized the situations where this would actually make sense are pretty few and far between.

The Big Catch — There are just too many unknowns that would all have to line up:

Household income : The CDCP is income-based, and employers don’t have access to household income or UCCB benefit details to confidently calculate Adjusted Family Net Income (AFNI).

Dentist participation : Employees only benefit if local dentists are enrolled in the CDCP, and that information isn’t always easy to find. (As of Aug 2025, over 26,000 oral health providers have enrolled, but participation varies by region.)

Regional differences : What works in one community could fail in another. Rural vs. urban access is not the same.

Out-of-pocket costs : The CDCP doesn’t cover everything. Employees could still be left with unpredictable expenses… and you can’t use an HSA to pick those up.

Privacy concerns : Even if you wanted to gather more information, you can’t realistically ask employees for it.

Employee reaction : Removing dental from the HSA could look like a cutback, no matter the reasoning.

Ongoing changes : The CDCP itself is evolving. Rules, eligibility, and provider participation may continue to shift.

The Rare Exceptions — There are a few specific cases where it could work:

Employer budgets are very limited, and there isn’t room to fund both health and dental.

The employee base is small and well-understood, such as in a family business where incomes are known.

The region has high CDCP dentist participation.

It’s being used as a short-term stopgap while budgets are tight or participation stabilizes.

My Take — I was glad to see the CRA put out this clarification. It’s something the industry needed. But for most employers, there are simply too many variables to lean on the CDCP as a replacement for dental in an HSA. Still, it’s good to know the option exists if you find yourself in one of those rare situations.

Disclaimer: — This isn’t advice. These are simply my thoughts as someone who spends a lot of time thinking about spending account design. My aim is to give advisors the clarity they need to position HSAs as a strong option for employers, while also helping them stand out as trusted experts who can guide plan design decisions with confidence.

Allison Gigliotti Vice President of Business Development myHSA