The cost of supplemental health and dental insurance can shock retirees who have gone through their working lives with an employer benefit plan.
Even for those without a work plan, rising drug and dental bills are a warning to reconsider the issue of insurance.
About 2.2 million Canadians over 65 have additional health insurance coverage for drugs and dental care through group or individual insurance plans, according to the Canadian Health Insurance Association and of life.
Yet millions of people still wonder if health and dental insurance is really necessary in retirement – and what options are available.
As with most retirement planning questions, there is no one-size-fits-all answer, says Ayana Forward, a certified paid Retirement in View planner in Ottawa.
It depends on your health, your finances, what your provincial plan covers and if you can defer coverage for your job.
“You have to do a cost-benefit analysis. Some people may need a lot of drug coverage. Some people might need a lot of physiotherapy, ”she says.
Find out what your provincial plan covers
Some provinces provide drug coverage, especially for seniors, but not all drugs are covered. Private dental coverage doesn’t cover big-ticket items for a year or two in the policy and often has a cap on claims. It is also usually integrated with supplementary health insurance, rather than offered separately.
“It’s a bit of being creative about how much you really need. How to avoid something catastrophic? Mrs. Forward said.
Some people decide to self-insure by setting up a bank account specifically to pay medical and dental bills out of pocket, which means being proactive, she says.
“Check what you spend on an annual basis. It changes from year to year, so go back a few years.
For those who decide to purchase health and dental insurance, premiums can be claimed at tax time for a credit, so there’s a bit of relief there, Ms. Forward says.
Even for those without extended health insurance or dental care, Forward says travel health insurance is a must.
“What if you had been to Spain or the United States and contracted COVID? You could have serious financial problems.
She suggests that seniors check their auto insurance policies to see if they need to increase accident benefits. It might not increase premiums much, but it does provide some peace of mind in case a car accident results in serious injury.
Check with your employer
Carla Zanotto, insurance specialist at Integral Financial Services Inc. in Surrey, B.C., explains that if an employer offers a retirement health and dental plan, it will often be priced lower than that. that the retiree can get as an individual. But fewer and fewer companies are offering these post-employment benefits today.
If retirees don’t have that option, they should purchase their own plans within 60 days of work coverage expiring, she says.
“As long as you come to see me within 60 days of losing the coverage you had from work, I can get you coverage without medical issues,” says Zanotto.
This can save on premiums and can be important if the retiree is taking medications that a new insurer might otherwise exclude from coverage.
Ms. Zanotto usually offers clients a spreadsheet with coverage details and quotes from three companies to choose from.
Retirees should also check insurance offers from unions, professional organizations or organizations to which they may belong, such as the Canadian Association of Retired Persons (CARP), which may cover their needs with a lower premium than brokers. or businesses can offer to individuals.
She recently had a client retiring from the film industry who was seeking advice on whether to purchase her own insurance or take out a plan offered by her union. They found out that the union plan was better than what she could find on the open market.
Some supplemental health insurance plans include travel, Zanotto says. People may consider adding more days to the plan than what is usually covered if they regularly travel outside of Canada.
If retirees intend to purchase travel travel medical coverage, they may be disqualified because of their responses to the medical questionnaire, she adds. This is another reason to include it in a supplemental health insurance plan that does not require requalification on each trip.
There is no disability insurance for retirees, but critically ill retirees included in a supplemental health insurance policy can claim this if they suffer from major health events such as stroke, heart attack and cancer, Zanotto adds.
Coverage may change
The Canadian healthcare system is very good, but there have been significant changes in recent years that impact costs, says Darren Ulmer of Darren Ulmer Financial and Insurance Services Inc., a Sun Life financial advisor and a health specialist.
He says provincial plans covered drugs administered while the patient was in hospital. “Now the focus is on recovery at home. Everyone thought it was a great idea until they realized they were now forced to take all of these drugs (taken outside of the hospital), ”says Ulmer, a cancer survivor.
“Most provincial drug plans will cap the cost of drugs over 65, but many drugs are not on the national formulary. [the list of prescribed drugs]. If you take a drug that is not listed on this form, it can be catastrophic to end up with $ 3,000 to $ 4,000 more per month on top of your expected living expenses.
Seniors may also consider long-term care insurance or health insurance for retirement.
“It’s a type of dignity insurance that gives you an uncapped benefit for the rest of your life, giving you a monthly benefit… that’s not taxable,” says Ulmer. “This will supplement your retirement income by $ 500 to $ 2,000 per week at the time you qualify, as you will need assistance with activities of daily living.”
The applicant’s family doctor certifies whether and at what level the applicant has met the need for this assistance, says Ulmer.
“You don’t want to be 70 and think about that kind of blanket. We usually talk to our clients in their 50s and 60s, so they’ve already built it into their financial planning for retirement, ”he adds.
“The younger you are and the less medication you take, the easier it is to get this type of coverage.
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