September 21, 2023
Do retirees have to pay for personal medical health insurance?
Do retirees have to pay for personal medical health insurance?

Yvonne Payne is an enormous supporter of getting medical insurance coverage in retirement.JENNIFER ROBERTS/THE GLOBE AND MAIL

When Yvonne Payne retired on the age of 63 she took a bit of her firm together with her. The Toronto-based former funding skilled felt the group medical insurance coverage bundle her firm was providing was an excellent deal, offering her with a decrease premium than she would pay individually – whereas providing peace of thoughts within the retirement years.

“I believed it was necessary to have in case there have been medication that wouldn’t be lined below OHIP,” she says, referring to the general public Ontario Well being Insurance coverage Plan. “Most individuals don’t appear to understand that not the whole lot is roofed.”

Now 72, Ms. Payne has no regrets about her determination, paying $2,500 a yr for top-tier personal medical protection and $650 for mid-tier dental protection. She has used the physiotherapy profit and the dental profit repeatedly. Lately, a well being situation required a brand new prescription. Whereas her insurer would have lined the extra pricey injectable drug she wanted, the provincial plan solely paid for oral therapies. She is completely happy personal insurance coverage gave her a alternative.

“There’s a consolation stage there,” she says.

Non-public medical insurance coverage could be a reduction for retired Canadians fearful about persistent situations, costly new medicines and delisted provincial well being companies – particularly if their former employer helps defray the prices of premiums by providing them group plan charges. However with many medicines and therapies already lined below provincial well being packages after 65, these retirees who face steep annual insurance coverage premiums from personal suppliers might query the advantages of buying the insurance coverage. With many personal well being companies capped or restricted, they marvel if their insurers will really provide sufficient protection to avoid wasting them cash in the long term.

There was an enormous uptick in spending on personal medical insurance coverage in Canada. Two-thirds of Canadians now have personal medical insurance coverage that covers outpatient drug prices, dental companies, imaginative and prescient aids, bodily remedy, psychological counselling and personal hospital rooms, says Statista, an organization specializing in market and client information. Of these 24.6 million, 2.2 million Canadians over 65 have this protection, in response to the Canadian Life and Well being Insurance coverage Affiliation Inc., or CLHIA.

Whereas there are people who find themselves lucky to have retiree advantages by a gaggle plan, “it’s much less and fewer” widespread, says Jason Heath, managing director of Goal Monetary Companions in Toronto. “Like these with an outlined profit pension plan, they’re the minority.”

Mr. Heath says that in instances the place a person is retiring, has a number of well being issues and an employer is providing group protection at a diminished charge, personal medical insurance coverage might make monetary sense. In these instances, the insurance coverage isn’t underwritten, that means that any pre-existing well being points are calculated in figuring out a premium.

But when somebody is wholesome, with few well being situations and is 65, they should crunch the numbers to find out whether or not particular person personal insurance coverage will likely be of any worth, says Mr. Heath. And they need to purchase insurance coverage on the youngest age doable. That’s as a result of when you attain 65, plenty of prescribed drugs are lined. And a few insurers will solely promote medical insurance coverage till 69.

Plus, Mr. Heath cautions, except you’re in a gaggle plan, the premiums will go up as you become older, additional probably lowering your value profit. “On common, you’re going to get again lower than you set into the coverage.”

His recommendation? “Suppose twice.”

Provinces cowl lots, however have gaps

Provincial medical protection for these over 65 relies on earnings, however is complete, says Mr. Heath. And it’s reasonably priced.

For instance, in Ontario, a retired couple, the place at the least one individual is 65 or older and collectively have a mixed annual earnings above $37,100 after deductions, pays a $100-a-person deductible on all prescription prices every program yr and as much as $6.11 for every prescription that’s stuffed or refilled.

OHIP covers optometrist visits each 12 months, podiatry companies, physiotherapy with a physician’s referral, house care companies and 5,000 prescribed drugs. There are additionally greater than 1,000 medication that could be lined by the Distinctive Entry Program if particular medical standards are met, in response to authorities tips.

Ontario additionally covers some diabetes monitoring and testing merchandise, sure over-the counter medicines, akin to ibuprofen and ferrous sulphate, choose vitamin merchandise, medication utilized in palliative care and smoking cessation medicines.

Like Mr. Heath, Joan Weir, vice-president of group advantages on the CLHIA, believes retirees ought to look rigorously at what they’ll be paying versus what they’ll be receiving on the subject of personal medical advantages.

However she says that as a result of public plans cowl one-third of what personal plans cowl, personal insurers might provide extra protection for medicines. Every personal plan caps these quantities, nevertheless, so it’s necessary to learn the advantageous print when doing a cost-benefit evaluation.

“There’s little to no dental protection for seniors in Canada,” provides Ms. Weir. Conversely, personal plans provide dental advantages, albeit with annual maximums.

Some personal plans might also cowl extra companies that public insurance coverage doesn’t, relying on province. These might embrace out-of-country journey medical insurance coverage, nursing care supplied at house and medical tools to help with mobility, says Brian So, a Vancouver-based life insurance coverage adviser.

“The personal medical health insurance plans are available packages that embrace prescribed drugs, dental, paramedical practitioners like therapeutic massage therapists and imaginative and prescient,” he says. “So the extra companies you employ, the extra you profit.”

For Ms. Payne, the choice to purchase personal medical insurance coverage comes all the way down to safety and affordability. She plans to proceed her protection.

“Should you can afford it, you may pay for it,” she says.

Be good together with your cash. Get the newest investing insights delivered proper to your inbox 3 times every week, with the Globe Investor publication. Enroll at this time.