The Self-Employment Benefits Gap
When you work for yourself, you gain freedom and flexibility. What you lose is the group health benefits that most employed Canadians take for granted. No employer is subsidizing your drug coverage, dental cleanings, or physiotherapy sessions. Your provincial health card covers doctor visits and hospital stays, but everything else comes out of your pocket — unless you buy individual health insurance.
This is not a niche problem. Over 2.9 million Canadians are self-employed, and that number has been growing. The gig economy, freelancing, and small business ownership are mainstream career paths. But the insurance industry has been slow to adapt, and many self-employed Canadians are either uninsured or unsure what their options are.
What Individual Health Insurance Actually Covers
An individual health plan fills the gaps your provincial plan leaves open. Most plans offer coverage in these categories:
Prescription drugs: Coverage for medications on the plan's formulary, typically with a deductible and co-insurance (e.g., you pay 20%, the insurer pays 80%). Annual maximums range from $2,000 to $10,000+ depending on the plan.
Dental care: Preventive (cleanings, exams, X-rays), basic (fillings, extractions), and sometimes major (crowns, bridges, dentures) dental work. Annual maximums typically range from $500 to $2,000.
Vision care: Coverage for eyeglasses, contact lenses, and eye exams. Usually every 24 months with a maximum of $150 to $400.
Paramedical services: Massage therapy, physiotherapy, chiropractic care, acupuncture, psychology, naturopathy, and other licensed practitioners. Per-practitioner annual maximums of $300 to $1,000.
Other benefits: Semi-private hospital room, travel medical insurance, ambulance coverage, medical equipment, and sometimes hearing aids.
What It Actually Costs
Individual health insurance premiums in Canada depend on your age, province, family size, and the level of coverage you choose. Rather than estimate, see the recorded prices in our cheapest-plan research, or compare plans for exact monthly prices for your own age, province, and household.
The cheapest plan is not always the best value. A plan with a low drug maximum costs less, but if your prescriptions cost more each year than that maximum, you pay the rest yourself.
Underwritten vs. Guaranteed-Issue: The Key Decision
As a self-employed person, you are not converting from a group plan, so your two main paths are:
Underwritten plans require a medical questionnaire. If you are in good health — no major conditions, no expensive medications — you will typically be approved with no exclusions and at the standard rate. Underwritten plans offer the best combination of coverage and price. The application process takes one to three weeks.
Guaranteed-issue plans ask no medical questions, so your health cannot get you declined; you still need to meet the plan's age, province, and other eligibility rules. These plans usually cost more, and some have waiting periods or limits on certain benefits or pre-existing conditions. They are the right choice if you have conditions that might cause an underwritten plan to decline you or add unfavourable exclusions.
If you are healthy, start with an underwritten plan. If you have health concerns, a guaranteed-issue plan lets you get coverage without health questions.
The Tax Side
How premiums are treated for tax depends on how your business is set up. Confirm your own situation with an accountant or the CRA.
Sole proprietor or partner (unincorporated): You may be able to deduct private health services plan (PHSP) premiums, such as individual health and dental insurance, from your business income on Form T2125, but only if you meet the CRA's conditions. You must be actively engaged in the business on a regular and continuous basis, and in the current or previous year either your net self-employment income must be more than 50% of your total income, or your income from other sources must be $10,000 or less. If you had no employees throughout the year, the deduction is limited to $1,500 each for you, your spouse or common-law partner, and each household member 18 or older, plus $750 for each household member under 18, prorated for part-year coverage (2025 rules, CRA guide T4002).
If you do not qualify for the deduction, or do not claim it, premiums you pay to a PHSP count toward the medical expense tax credit. That is a non-refundable credit, not a deduction: for the 2025 tax year it applies to eligible expenses above the lesser of 3% of your net income or $2,834. You cannot claim the same premiums both ways.
Incorporated: Your corporation may be able to pay premiums for a PHSP that covers you as an employee. PHSP premiums paid for employees are generally not a taxable benefit. But if the CRA sees the coverage as given to you as a shareholder rather than as an employee, its value is taxable to you and the corporation cannot deduct it (Income Tax Folio S2-F1-C1). Set it up with your accountant.
Health Spending Account (HSA): An HSA is a type of PHSP that can reimburse eligible medical costs, including deductibles, co-insurance, and services your plan does not cover. Incorporated businesses, including shareholder-employees, can use one. The CRA warns that a sole proprietor with no arm's-length employees cannot deduct amounts paid to an HSA (CRA tax tip). Our guide to paying for health insurance through an HSA explains how it works.
How to Choose the Right Plan
Step 1: List your actual health expenses. What medications do you take? How often do you visit the dentist? Do you see a physiotherapist or massage therapist regularly? Do you wear glasses? Your real usage patterns should drive your plan choice, not a guess about what you might need.
Step 2: Compare plans from multiple carriers. Do not just go with the first insurer you find. Premiums, formularies, maximums, and co-insurance rates vary significantly between carriers. A comparison platform lets you see the differences side by side.
Step 3: Match coverage to your needs. If you spend $300 per month on prescriptions, you need a plan with a high drug maximum. If you rarely go to the dentist, a basic dental tier might be fine. Do not pay for coverage you will not use, but do not underinsure the areas where you spend the most.
Step 4: Factor in tax. If you can deduct premiums or claim them as a medical expense, ask your accountant what that is worth for you.
Step 5: Consider your risk tolerance. Health insurance is not just about routine expenses — it is also protection against unexpected costs. A serious dental issue, a new medication, or a medical emergency while travelling can cost thousands without insurance.
The Bottom Line
Being self-employed does not mean going without health coverage. Individual health insurance is available, the tax rules may lower its cost, and it is essential for protecting both your health and your finances. The Canadian self-employment landscape has changed — your health insurance approach should change with it.
Frequently asked questions
How much does health insurance cost for self-employed Canadians?
It depends on your age, province, household, and the level of coverage you choose. We don’t publish estimated ranges: the comparison shows exact monthly prices for your situation, and our research lists recorded prices for the cheapest plans.
Are health insurance premiums tax-deductible when self-employed?
They can be. If you are a sole proprietor or partner and meet the CRA’s conditions (for example, more than half your income comes from self-employment, or your other income is $10,000 or less), you can deduct private health services plan premiums from business income, within CRA limits. Otherwise, premiums you pay count toward the medical expense tax credit, which is a non-refundable credit, not a deduction. If you are incorporated, the corporation may pay premiums for you as an employee, but coverage given to you as a shareholder is taxable, so confirm the setup with your accountant.
Should I choose an underwritten or guaranteed-issue plan?
If you are in good health, an underwritten plan offers the best combination of coverage and price. If you have conditions that might cause a decline or exclusions, a guaranteed-issue plan asks no medical questions (you still need to meet its eligibility rules), though it usually costs more and some have waiting periods or limits on certain benefits.
What does an individual health plan actually cover?
Prescription drugs, dental care, vision care, and paramedical services like massage therapy and physiotherapy, plus benefits such as semi-private hospital rooms, travel medical insurance, ambulance, and medical equipment. Maximums and co-insurance percentages vary by plan and tier.