Now that Bill C-31 has received Royal Assent, some Canadian families will soon want to apply for the interim federal Canada Dental Benefit created by the legislation. The Canada Revenue Agency (CRA) has opened the application portal, so we think it’s important to review how this benefit will work in practice, and where its design is almost guaranteed to fall short of the policy and political goals.
First, we think it’s important to acknowledge that there are important gaps and inequities in Canadians’ abilities to access basic dental care. Pre-pandemic, almost 65 per cent of Canadians reported that they had dental insurance to cover part or all of their such expenses. However, that means fully one-third of Canadians had no such coverage and were far more likely to avoid seeking care because of the cost.
As previous research has shown, low- and modest-income Canadians are less likely to have dental insurance. Their unmet dental care needs can lead to pain, reduced employability and poor health and well-being.
The Canada Dental Benefit was negotiated as part of the supply and confidence agreement between the Liberals and NDP and was launched as a new program “for low-income Canadians” to address gaps in dental care. Starting with children under 12, the program will cover dental care expenses for families with incomes up to $90,000. This upper-income threshold is very close to the median pre-tax income of all census families with one child.
The interim tax-free benefit will be administered by the Canada Revenue Agency. Eligible parents will be able to apply through the CRA’s MyAccount system. There are two benefit periods. The first is for dental care received between October 2022 and June 2023 (for which eligible families can receive up to $650 per eligible child). The second is for dental care received between July 2023 and June 2024 (for which families can receive a second payment up to $650 per eligible child). The total maximum benefit across the two benefit periods is $1,300 per eligible child. After June 2024, the federal government anticipates having a permanent dental program in place.
CRA will calculate the benefit amount depending on a family’s net income, with lower benefits offered to higher-income families. To determine benefit eligibility, the CRA will use the same income concept as is used in assessing eligibility for the Canada Child Benefit. Table 1 summarizes the benefit amounts by family income, as set in the legislation.
What is important to note is that the eligibility criteria for the dental benefit are based on a family’s income from the previous tax year, meaning that to qualify for the benefit in the 2022-23 benefit year, adjusted net family income reported in 2021 is used to determine eligibility.
This means that any family that had high income in 2021 and then experienced a large negative income shock in 2022 through job loss, family separations, or other causes will have to wait for the 2024 benefit year to become eligible. The lack of responsiveness in this and other income-support programs impedes the ability of these programs to meet key program objectives.
To qualify for the Canada Dental Benefit, families must also be receiving the Canada Child Benefit (CCB). There are several concerns with this. First, eligibility for the 2022-23 dental benefit is contingent on parents having filed taxes for the 2021 tax year. Although tax-filing requirements are not written into the dental benefit legislation, tying the benefit to current receipt of the CCB will mean that parents must file a tax return to get access to the new dental benefit. We know this is something not all parents do.
Second, while the CCB is a well-established program, it is not without its challenges. As the auditor general of Canada noted in her spring 2021 reports, the CRA could improve its verification processes, the timeliness of the information it uses to establish payment amounts and the consistency of requests for additional documentation.
The auditor general has also found that some vulnerable groups aren’t accessing income supports, including the CCB. The CRA and its partnering federal departments are aware of this and have not done enough to close the gaps in take-up.
To receive payment from the Canada Dental Benefit program, the child’s dental care cannot already be covered under another plan. Here the legislation starts to get a little murky, leaving us with many concerns. This may create confusion for parents; it may result in delayed payment of support; and its provisions put tax officials – not those officials more familiar with delivering important social supports – in charge of running the new benefit.
According to the legislation, parents of children who use existing federal or provincial plans are still eligible for assistance with out-of-pocket expenses not covered by the public plans. Realistically, though, it appears quite difficult for any parent to figure out what is or isn’t available to them through existing programs. Each province and territory has its own mix of programs, and sorting through their details appears to be a challenging hurdle for families.
We are concerned that the way this benefit plan is designed will require parents to first apply to – and wait to be rejected by – other plans, then go to the federal program to determine whether their out-of-pocket expenses can be covered. This delays the delivery of a much-needed benefit and could be avoided through better federal-provincial co-ordination and communication.
There’s also potential for confusion related to additional payments. Parents can claim an additional payment in the second benefit period if they did not make a claim for a benefit in the first. Or, they can apply for an additional payment if they have not made a second claim, but did make a claim in the first period and roll over dental services that exceeded $650 per eligible child in that first claim period. If you found the details in the previous two sentences confusing, you are not alone.
It is laudable to allow flexibility, and to recognize that the costs of even basic dental services can quickly add up, but this provision also raises the stakes for verification. This in turn increases the odds that families will be made to repay benefits if they do not have the documents that the CRA demands. It would have been easier to simply allow for two payments within the full period of the interim benefit and leave out questions of when services were rendered and how much they cost.
We are also concerned about the parts of the act where parents cannot apply for the benefit if the child has access to private dental insurance. It isn’t just insurance by parents, it is insurance by “any other person” who could list the child as a beneficiary. The intent here may be to allow for co-ordination only with public plans, but the legislation is potentially excluding large numbers of kids with such a wide brush stroke.
The expectation that the CRA will verify access to dental insurance with an employer is a really important challenge to consider. While the CRA has ways to verify adjusted net-family income and to determine CCB eligibility, it has no information on what dental coverage families have.
Like other temporary income benefits in recent years, the Canada Dental Benefit will require applicants to attest to key information and retain receipts, subject to verification processes that can take several years. Bill C-31 allows up to six years for reconsideration of applications that include a potentially false or misleading statement. In the case that repayment is required, families face steep penalties, including penalties to other benefits, and fines up to $5,000 or sentences of up to two years in prison.
Canadians’ experience with the Canada Emergency Response Benefit (CERB) can offer some lessons here. CERB was a temporary benefit created during a public health crisis and was the first federal benefit to pilot a “trust but verify” approach to benefit design. More than two years after the benefit was wound-down, myriad cases continue to wind their way through the tribunal and court system as part of the “verification” efforts.
We must assume that the CRA will act on the legal expectation that they “verify” once a claim has been made with orders to repay or face penalties. It can’t do otherwise. As a special operating agency that operates at arm’s length from ministerial or cabinet direction in how to interpret and apply legislation in individual cases, the CRA will march onward, applying similar techniques and enthusiasm to recover overpayment of benefits from low-income parents as it does to recover unpaid taxes owing.
Is the value of this interim benefit for children’s dental care large enough to convince parents that it’s worth navigating the confused and confusing program design? Let’s wait and see, but our magic eight ball tells us: “Outlook not so good.”