Do retirees have to pay for private health insurance?

When Yvonne Payne retired at the age of 63, she took part of her business with her. The former Toronto investment professional felt the group medical insurance package her company offered was a bargain, giving her a lower premium than she would pay individually – while providing peace of mind during the retirement years.

“I thought it was important to have it in case there were medications that weren’t covered by OHIP,” she says, referring to OHIP’s public health insurance plan. Ontario. “Most people don’t seem to realize that not everything is covered.”

Now 72, Ms Payne doesn’t regret her decision, paying $2,500 a year for top-tier private medical coverage and $650 for mid-tier dental coverage. She used the physiotherapy allowance and the dental allowance on several occasions. Recently, a health problem required a new prescription. While her insurer would have covered the most expensive injectable medication she needed, the provincial plan only paid for oral treatments. She is happy that private insurance gave her the choice.

“There’s a level of comfort there,” she says.

Private medical insurance can be a relief for retired Canadians worried about chronic illnesses, expensive new drugs and delisted provincial health services, especially if their former employer helps defray the cost of premiums by offering them rates. group plan. But with many drugs and therapies already covered by provincial health programs after age 65, retirees who face high annual insurance premiums from private providers may question the benefits of buying the insurance. . With many private health services capped or restricted, they wonder if their insurers will actually provide enough coverage to save them money in the long run.

There has been a sharp increase in spending on private medical insurance in Canada. Two-thirds of Canadians now have private medical insurance that covers the costs of outpatient medications, dental services, vision aids, physiotherapy, psychological counseling and private hospital rooms, says data firm Statista. in the market and consumers. Of those 24.6 million, 2.2 million Canadians over the age of 65 have this coverage, according to the Canadian Life and Health Insurance Association Inc., or CLHIA.

Although there are people who are lucky enough to have retirement benefits through a group plan, “it’s less and less” common, says Jason Heath, managing director of Objective Financial Partners in Toronto. “Like those who have a defined benefit pension plan, they are in the minority.

Mr Heath says that in cases where a person is retiring, has multiple health conditions and an employer offers group coverage at a reduced rate, private medical insurance could make financial sense. In these cases, the insurance is not underwritten, which means that any pre-existing medical conditions are calculated to determine a premium.

But if someone is in good health, with few health problems and is 65, they need to analyze the numbers to determine whether individual private insurance will be of any value, says Mr Heath. And they should get insurance from as young a age as possible. Indeed, once you turn 65, many prescription drugs are covered. And some insurers will only sell medical insurance up to age 69.

Plus, warns Heath, unless you have a group plan, premiums will increase as you get older, which could further reduce your cost advantage. “On average, you’re going to get back less than you put into the policy.”

His advice? “Think twice.”

Provinces cover a lot, but have gaps

Provincial medical coverage for people over 65 depends on income, but is comprehensive, Heath says. And it’s affordable.

For example, in Ontario, a retired couple, of which at least one person is 65 years of age or older, and who together have a combined annual income greater than $37,100 after deductions, pays $100 per person deductible on all prescription fees each program year and up to $6.11 for each prescription filled or refilled.

OHIP covers optometrist visits every 12 months, podiatry services, physician-recommended physiotherapy, home care services and 5,000 prescription drugs. There are also more than 1,000 drugs that can be covered by the exceptional access program if specific clinical criteria are met, according to government guidelines.

Ontario also covers certain diabetes monitoring and screening products, certain over-the-counter medications, such as ibuprofen and ferrous sulfate, certain nutritional products, medications used in palliative care, and smoking cessation medications.

Like Mr. Heath, Joan Weir, vice president of group benefits at CLHIA, believes retirees should carefully consider what they will pay versus what they will receive in private medical insurance.

But she says that because public plans cover a third of what private plans cover, private insurers can offer more drug coverage. However, each private plan caps these amounts, so it’s important to read the fine print when doing a cost-benefit analysis.

“There is little or no dental coverage for seniors in Canada,” adds Weir. Conversely, private plans offer dental benefits, but with annual maximums.

Some private plans may also cover additional services that public insurance does not cover, depending on the province. These can include overseas travel medical insurance, nursing care provided at home and medical equipment to aid mobility, says Brian So, a Vancouver-based life insurance adviser.

“Private health insurance plans come in packages that include prescription drugs, dental care, allied health practitioners like massage therapists, and vision,” he says. “So the more services you use, the more you get.”

For Ms. Payne, the decision to buy private medical insurance comes down to safety and affordability. She plans to continue her coverage.

“If you can afford it, you can afford it,” she says.

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