How much health insurance do you need in Canada?

Canada has a robust publicly funded health care system, which covers about 70% of total health care spending. This means you still have to cover the remaining amount out-of-pocket.

With health care being as expensive as it is, the out-of-pocket medical expenses can cause financial stress. 

This is where a private health insurance policy comes in. It covers expenses not covered by Canadian Medicare, allowing you to focus on what matters most – your recovery.

Keep reading to find out what the Canadian public health care system covers, why you need a private health insurance plan, different types of health insurance, and more. ‍

‍What is health insurance? 

Canadians can benefit from both public health care and private health insurance.

Publicly funded health care, which is paid for with tax revenues, covers the cost of medical expenses incurred as a result of an injury or illness. Some routine medical expenses can also be covered by public health insurance. Each province has its own health plan, so read your provincial health care plan carefully to find out what services and products are covered.

In addition to universal public health care, you can also purchase a private health insurance policy through work or independently. It can fill help the gaps in your provincial healthcare.  

What Does Canadian Public Health Care Cover?

Canadians with public health insurance have access to publicly funded hospitals and medical facilities. However, it does not cover all medical expenses.

Public insurance plans differ by province, with the majority excluding coverage for dental visits. A complex dental procedure may be covered in some cases if it must be performed in a hospital setting, but general procedures at a dentist's office are typically not covered.

In many provinces, public health insurance covers only one eye examination per year. This benefit is usually only available for individuals over age 65. If you are under 65, you have to pay out-of-pocket for regular eye care (exams, contacts, and glasses). However, necessary eye procedures, such as treatments for eye injuries or conditions like diabetic retinopathy, glaucoma, or cataracts, are still covered by public insurance.

Canadian Medicare often does not cover mental health services, including counseling and psychotherapy with a private practitioner. However, it may offer coverage for mental health services at a publicly-funded facility, such as outpatient psychiatry at a hospital. 

Provincial healthcare only covers the cost of drugs provided in a hospital. If you get a prescription outside a hospital, you must pay for it yourself unless you have private health insurance. 

Furthermore, prosthetic limbs, chiropractic care, wheelchairs, and podiatry are not covered by public insurance. Some private health insurance plans may cover all or part of these costs. 

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How is Private Health Insurance Different from Public Health Insurance? 

Canadians have access to both public and private health insurance. Anyone who is a Canadian citizen or a permanent resident can access public health insurance, such as RAMQ in Quebec and OHIP in Ontario. 

Canadians can supplement their public health insurance with private health insurance. It can assist you in covering medical expenses and services that are not covered by your provincial health insurance.

While not required by law, many Canadian employers provide private health insurance (or health spending accounts) as part of their employee benefits package.

Group coverage is often provided at no or reduced cost to the employee. If your employer provides this type of insurance, you can use it to cover expenses that your provincial health care plan does not. If you don’t have group health insurance, you can buy an individual private insurance plan from insurers like Manulife, Sun Life, Desjardins, or Blue Cross Canada. These plans are frequently inexpensive and can provide peace of mind by covering medical costs. Reach out to us to learn more.

What Does Private Health Insurance Cover?

Private health insurance aims to fill the gaps in the public health system. Generally, it reimburses a part of the cost of dental care, prescription drugs, medical equipment, supplemental health care, vision care, and nursing.

Basic private health insurance plans pay a percentage of medical expenses and are usually inexpensive. More comprehensive health plans are also available and can be a good option for those who do not mind paying extra for higher reimbursement on a wide-range of treatments. These health insurance plans may cover the cost of private therapy sessions, semi-private hospital rooms, emergency travel, and more.  

Private health insurance plans often include catastrophic coverage, which can help reduce financial risk in the event of a serious illness. This type of insurance offers a safety net, covering the cost of prescription drugs once expenses reach a certain level.

For example, if you choose a $4,000 deductible, your private health insurance plan will reimburse the cost of qualifying drugs once you have paid $4,000 out-of-pocket in a given year. You can add catastrophic coverage to your private health plan for a fee or buy it separately.

Private health insurance plans can cover a large portion of medical costs such as: 

• dental care
• prescription medication
• physiotherapy
• prescription eyeglasses
• ambulance services
• physician services, laboratory services, and surgery/anesthesia
• nursing care
• hearing aids
• medical devices and accessories 
• orthopedic shoes.

How much health insurance do you need in Canada? 

How much health insurance you need depends on your situation. For example, elderly people or those who regularly take prescription medications may require more coverage than young and healthy people. If you don’t have access to group health insurance through work, you may want to consider a more comprehensive private plan. An individual health insurance plan may also benefit those who prefer private clinics to public hospitals. 

The cost of private insurance is determined by several factors, including:

Age 

Your age is the most important factor influencing your health insurance rates. Health insurance, unlike life insurance, generally does not require a medical examination; however, your application form will include several detailed questions about your current health and medical history. In general, the cost of insurance rises with age because older people are more likely to develop a serious illness.

Medical history

Your personal health also impacts your insurance cost. A pre-existing condition might not put private health insurance out of your reach, but it will certainly make it more expensive. 

Location

You will pay more for coverage if you live in an area where healthcare is more expensive than the national average. All other variables being equal, someone living in Toronto is likely to pay a higher health insurance premium rate than someone living in St. John's.

Coverage amount

A health insurance plan with a policy maximum payout of $100,000, which refers to the maximum amount payable for covered expenses or services, will be more expensive than one with a policy maximum of $50,000.

The type of plan you choose

A policy that only covers you will be less expensive than one that covers everyone in your family. Depending on the insurer, you may be able to select various add-on features, such as catastrophic health coverage. While these add-ons may be worthwhile in some cases, they will raise your overall cost.

Insurance deductibles and co-payments

The health insurance deductible is the amount of money you must pay out-of-pocket each year before the insurer will cover any expenses. For example, if you have a private health plan with an annual deductible of $800, you must pay 100% of covered medical expenses or services until you reach the $800 threshold. After that point, the insurer will pay all or a percentage of the covered expenses.

Co-payments, on the other hand, are specific dollar amounts you pay after you have met your deductible for each eligible medical service. Your health insurance plan, for example, may require a $30 co-payment for each doctor's appointment, a $15 co-payment for each prescription, and a $250 co-payment for each emergency visit.

Health insurance plans with higher deductibles and co-payments are generally more affordable.

Should You Buy a Private Health Insurance Policy? 

Given that the public health care system only covers 70% of medical costs, buying a private health insurance plan may be a good idea. It can help to fill gaps in your provincial health plan's coverage.

Dental visits, chiropractic care, drugs prescribed outside of a hospital setting, prosthetic limbs, general eye care, and podiatry, for example, are not covered by universal public healthcare. Furthermore, if you incur medical expenses in another province, relying solely on your provincial health plan may not provide adequate coverage.

Group or individual health insurances can also supplement the Canadian Medicare, giving you the peace of mind that you are adequately protected against life’s what-ifs. 

You may want to consider buying a health insurance policy if you: 

• are elderly
• regularly take prescription medicines
• frequently travel between different provinces
• do not have group health insurance
• want to receive treatment at private clinics.

What Types of Health Insurance are there? 

The best health insurance in Canada can assist in filling coverage gaps left by universal public health care. These include:

1. Personal Health Insurance 

Personal health insurance can help cover dental and medical expenses that are not covered by your provincial plan. Depending on your plan, it can pay for things like eyeglasses, root canals, prescription drugs, and private therapy sessions. 

2. Critical Illness Insurance

Critical illness insurance provides a one-time cash benefit if you are diagnosed with a covered medical condition. You can use the payout to cover medical expenses not covered by your provincial plan or for any other purpose. 

Depending on the insurer, you may be able to add critical illness coverage to your life insurance policy or purchase it as a separate benefit. Keep in mind that most critical illness plans require a waiting period, typically 30 days, before the policy will pay out.

Some insurance companies may require a medical exam before approving a critical illness policy, but guaranteed issue plans are also available for those who want to avoid the exam at a higher cost. Basic critical illness coverage typically covers a limited number of conditions, usually no more than six, whereas comprehensive policies typically cover up to 36 illnesses.

3. Long-term care insurance 

Long-term care insurance pays out on a regular basis if you are unable to perform at least two of the six essential daily activities (ADLs) due to ageing, poor health, or disability. Personal hygiene, eating, dressing, grooming, mobility, and continence are examples of ADLs.

4. Disability insurance 

Disability insurance is a legal contract in which the insurer agrees to replace a portion of your pre-disability salary if you are unable to work due to illness or injury. The majority of disability plans replace 50-80% of pre-disability income. 

If you become disabled, your policy will pay you a fixed monthly income that you can spend however you see fit, with no obligation to submit bills. 

Disability insurance policies have a set payout period, which can be a set number of years or until you reach a certain age. All else being equal, the longer the payout period, the higher the premiums. 

Disability insurance also has a waiting period before it will pay out, which is usually 90 days but can be up to a year.

How do I Get Health Insurance Quotes in Canada? 

You can get competitive health insurance quotes online or through an independent broker like Dundas Life. We work with top Canadian insurance providers and may be able to secure discounts that are not available online. Reach out today to learn more.

Can I Combine Health and Dental Insurance? 

Yes, you can customize a private health insurance plan to meet your specific needs. It is possible to combine health and dental benefits into a single policy. Of course, if you only need one of them or want to purchase a separate policy for each, you can do so.

Are My Health Insurance Premiums Tax-Deductible in Canada? 

In Canada, private health insurance premiums are tax deductible if at least 90% of the premiums paid go toward eligible medical expenses such as hospitalization, medical, vision, and dental. Claim your health insurance premiums as a tax deduction to reduce your annual taxable income and the amount of tax you owe.

Keep in mind private health insurance premiums paid by employers are not tax-deductible, nor are the fees paid to a provincial health care plan. 

How do I Cancel a Health Insurance Policy in Canada? 

Canceling a health insurance policy is as simple as filling out an online form or calling your provider to inform them of your desire to discontinue coverage. If you purchased the policy from an agent or broker, you must contact him or her to complete the cancellation process.

How do I Buy Travel Medical Insurance? 

You can get travel medical insurance through your current provider, a different provider, your credit card, or a travel agent, among other options.

Travel medical insurance is especially useful if you get sick while on vacation because your provincial plan may not cover medical expenses incurred in another province or outside of Canada. With emergency medical costs frequently reaching thousands of dollars, travel medical insurance can provide peace of mind, especially if traveling abroad.

Travel medical insurance provides coverage for emergency medical expenses while traveling and reimburses eligible medical costs up to predetermined limits if you become ill or injured while traveling.

Travel medical insurance covers medical expenses such as: 

• doctor’s bills
• ambulance service
• hospital charges
• operating room charges
• drugs and medicines
• lab tests, examinations, X-rays, anesthetics, and treatments.

Can You Get Health Insurance With a Pre-existing Health Condition?

A pre-existing health condition may not prevent you from obtaining health insurance, but it is likely that your plan will not cover that specific condition. 

For example, if you have high blood pressure, most plans will cover private treatment if you suffer a hand injury but not any hypertension-related symptoms. Certain pre-existing conditions may be covered by some insurance companies, especially if they are minor or unlikely to reoccur. However, if you have a serious pre-existing medical condition, such as Alzheimer's or cardiac arrest, you may be ineligible for private health insurance.

Conclusion

Canada’s universal health care system is a source of national pride. Still, certain medical expenses, such as dental care, are not covered.

These uninsured medical expenses can put a strain on your finances. A private health insurance plan, which covers a significant portion of these costs, can help to alleviate this burden. The appropriate amount and type of health insurance for you will be determined by your unique circumstances, needs, and budget.

At Dundas Life, we can help you understand your health insurance needs and find you an affordable policy. Contact us to learn more today.