While working many Canadians have medical and health insurance as an employee benefit. Their company often pays for a substantial portion of the coverage, and most often medical and health insurance expires when you retire.
So, a common question or concern as people approach retirement is what should they do about medical and health care coverage when they retire?
The typical insurance coverage a person may have while working with a company group health and medical plan are:
- Life Insurance
- Short-term and Long-term Disability Insurance
- Prescription Drug coverage
- Dental care
- Extended Health care such as therapists and vision care.
- Semiprivate and private hospital ward coverage
- Out of province/country medical and health insurance
Once you retire, typically the coverage will retire with you, unless you are fortunate to have a company retirement package that will include that as a benefit.
What are your options:
If you wish to replace the coverage you had when working, you have three main options:
- Some companies offer an employer-sponsored group plan that you can take, and often you will have to pay part or all the insurance cost.
- Buy private insurance form an insurance company directly or from an alumni or association plan.
- Many Insurance companies offer a rollover plan in which if you apply within 60 days (depending on the insurance company) of leaving a group plan, you do not have to fill out any medical questionnaires. (this can be a benefit if you have any current health issues)
- Self-Insure, where you pay for the costs as they occur, and rely on the provincial plans, if any. (i.e. the Ontario Drug Benefit plan at age 65)
Review what Your Government Plan Covers
When deciding whether or not you wish to obtain a new health and medical insurance plan in retirement, the first step is to review in detail what services are covered by your provincial plan and in Ontario this is OHIP. In Ontario at age 65, Prescription Drug coverage is available, but there is no insurance coverage for dental, vision care, or out of country medical insurance.
- Prescription Drug Coverage. A key item to remember is that once you are age 65 in Ontario, you do get OHIP coverage for drugs with the Ontario Drug Benefit Program. You will want to review what is covered, and you should review what is not covered by OHIP. A key item is that prescription drugs are not covered under the age of 65.
- Dental Services. OHIP does not cover regular dental care in a dental office for items such as check-ups, cleanings, filling, ex-rays, root canals and tooth removal. It does cover some emergency oral surgery in a hospital.
For lower-income seniors, the government launched the Ontario Seniors Dental Care Program in 2019
- Glasses or Contact Lenses. In Ontario, there is no coverage for glasses or contact lenses, but they may pay for an annual checkup if you have certain conditions such as cataract or retinal disease among others.
- Out of Country Medical Expenses. If you plan to travel out of Canada it is imperative that you purchase out of country medical & health expense insurance, as two weeks in a US hospital could ruin you financially.
What can you do?
You really must take a deep dive and figure out exactly what type of coverage you require insurance for and the things that you do not need coverage for:
- Short- and Long-Term Disability Insurance: Presumably if you are retiring, you will no longer require short- or long-term disability insurance, so you will not need to worry about replacing that.
- Life Insurance: Many companies group plans, allow you to rollover the group insurance to a personal plan without a medical if you pay the premium. However, before you do that, find out if you can qualify for a personal life insurance plan, as often it may be less expensive.
Find out your currents costs if you paid for it personally
To do a true comparison, you will want to review prior to retirement what you would be currently spending without the insurance coverage for the following key items:
|Item||What would your Annual costs be?|
|Vision and other extended-care, i.e. physio & therapists||??|
|Out of country/province medical and health Insurance||??|
Once you figure out how much you are spending annually, you can compare this to what a personal insurance plan will cost, and simply “do the math” to see if it is worthwhile. It is simple, is what you are paying out of pocket less than the insurance premium itself? or is it about the same? However, the insurance plan may provide some other benefits such as physiotherapy, chiropractic care, and semi-private hospital rooms coverage.
With personal insurance plans, you will have to be sure to review what the actual dollar limits are for each type of coverage within the plans.
For the prescription drugs, be sure to review what you may be taking is covered, with the provincial plan, and if not, be sure to review those costs carefully.
It may take some time to review, as most insurance companies offer different levels of plans and prices depending on the coverage offered.
Even if you do not buy a comprehensive personal health care plan at retirement, you will still need to purchase out of country medical or health coverage if you travel.
You can buy insurance specifically for out of country health and medical coverage for a specific number of days, and this can be obtained from insurance companies, alumni, and association plans. You can also check your credit card to see if it offers coverage. Please be sure to read the fine print of any policy for a number of continuous days of coverage and dollar limits.
We did not review how to pay for additional health care costs as one ages or cost for a retirement home or long-term care facility, and this will be reviewed in a later article.
Be sure to take the time to review the specifics for your situation and compare what options if any you or your spouse’s company may offer in conjunction with a personal plan. Often this type of coverage is purchased for peace of mind that it can offer. Each person circumstances are different, so there is no one solution for everyone.
For more information, you can refer to Preserving Wealth: The Next Generation – The definitive guide to protecting, investing, and transferring wealth by Jack Lumsden, MBA, CFP®
For your FREE Copy CLICK HERE
For your free retirement readiness assessment CLICK HERE
To buy a copy of the book CLICK HERE
Jack Lumsden, MBA CFP® Financial Advisor, Assante Financial Management Ltd.
This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. The information provided is for illustrative purposes only. Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.
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