One of the many benefits of living in Canada is universal health insurance. Regardless of which part of Canada you live in, you can access free health care services if you are a citizen or permanent resident.
Despite this, the average Canadian household spends roughly $2,000 on services that are not covered by their healthcare insurance, such as dental care, massage therapy, and psychotherapy; and about $4,000 on private health insurance premiums. Nearly 66% of Canadians have some form of private health insurance.
Continue reading to find out how the Canadian healthcare system works, as well as how private health insurance supplements universal health insurance, and what to consider when purchasing a private health insurance policy.
What is health insurance?
Health insurance is a type of insurance that covers medical and surgical expenses incurred by you. In Canada, you can access both public health insurance and private health insurance. You can access universal healthcare through your territory or province. This pays medical expenses that arise due to an illness or injury.Depending on your province or territory, it may cover certain everyday medical expenses such as general practitioner appointments. However, you can supplement your public health insurance with a private plan to enjoy more robust health coverage.
Canadian healthcare system
The Canadian government uses some of their tax income to provide healthcare to their citizens and permanent residents. The official name for Canada’s publicly funded health care system is Medicare.
There are 10 provinces and three territories in Canada. Each of them runs their own public health care services. Because of this decentralized approach, the extent of medical cover varies from one region to the next.
Who is eligible for free healthcare in Canada?
All Canadians and permanent citizens are eligible for free healthcare in Canada. Tourists cannot apply for Medicare. If you are traveling to Canada, it may make sense to buy a short-term private health policy.
Public vs Private Health Insurance
In Canada, you can get health coverage through private and public health insurance. The former is available to all citizens and permanent residents, regardless of their financial situation. Examples include RAMQ in Quebec or OHIP in Ontario.
Private health insurance plans cover services and additional expenses not covered by public health insurance. Some of the most popular private plan providers in Canada are Manulife, Sun life, GMS, Desjardins, Canada Life, and Blue Cross Canada.
Some say Canada has “free” healthcare, but that is not so. Health care is never free, and Canada’s public health insurance is no exception since Canadians pay for it through taxes.
To receive medical services, Canadian citizens and residents must have a health card. With each province having its own public health insurance plan, health coverage can vary significantly from one province to the next. Generally speaking, these plans cover most basic medical needs, such as hospital visits, doctor’s visits, and surgeries.
Typically, provincial health insurance does not cover:
- Prescription medicine
- Hearing aids
- Limb prostheses
- Psychologist care
Private insurance is a kind of health coverage that can partly pay for expenses not covered byMedicare. You can access private health insurance on your own by buying an individual plan or through your employer via group health insurance. Typically, a private plan covers a percentage of dental care, prescription drugs, medical equipment, vision care, nursing, and supplemental health care. These are generally basic health plans and have lower monthly health insurance premiums. More comprehensive, costlier plans provide high health coverage levels. Generally, these plans include services such as access to psychotherapists, orthodontic services, semi-private hospital rooms, and chiropractors.
Depending on your private health insurance plan, it can cover a high percentage of costs such as:
- Dental care
- Prescription drugs
- Prescription eyeglasses
- Ambulance services
- Hearing aids
- Podiatric orthotics or orthopedic shoes
- Physician services
- Medical devices and accessories purchased in pharmacies
- Nursing care
Who has health insurance?
Medicare, while immensely beneficial, is far from perfect. There are issues such as lengthy waiting times and prescription medication costs. For example, Medicare has no provision — or subsidy — for prescription medicine. Because of this limitation, many Canadians are not able to afford the prescription medicines they need.
Given such issues, it is no surprise that roughly 66% of people in Canada have signed up for private medical cover. With a private health insurance policy, you can cover things such as prescription drugs, dental care, ambulance services, physiotherapy, eye care, and so on.
Nearly 8 out of 10 Canadians with medical cover rely on group health insurance through work. The remaining supplement Medicare with individual health plans. Some Canadian employers offer group health insurance for free, while some others require their employees to cover the bill. All the same, group health insurance is much cheaper than individual health plans. However, the trade-off is that these plans are generally not as comprehensive. Plus, they are usually not transferrable. Meaning, the coverage will likely end if you leave or lose your job.
Should you get private insurance?
Many Canadians supplement Medicare with a private health insurance plan. Should you do the same? Given Medicare’s limitations, signing up for private insurance might not be a bad idea.
Estimates suggest that Canadians on average pay a whopping 30% of healthcare costs.Which means Medicare pays for only 70% of most people’s medical costs. This is so because Medicare does not cover many common healthcare expenses.
Did you know that most provinces do not pay for dental work or dental visits? If you undergo any complex procedure in a hospital, that might be covered. But generally, Medicare does not cover dental procedures done in a dental office.
Your public health insurance is also unlikely to cover any psychological treatment. Nor are you likely to be reimbursed for self-administered drugs given in a hospital outpatient setting. Additionally, chiropractic care, prosthetic limbs, wheelchairs, and podiatry are not included in public health insurance.
Furthermore, when traveling to another province, your provincial health care plan might not cover your medical expenses. The public health insurance only provides coverage for certain things when traveling outside your home province. What is and is not covered when you travel between provinces varies from one provincial health plan to another. For example, some public health care plans do not cover expensive healthcare service, such as air ambulance transportation.
Also, remember that when traveling abroad your Canadian health insurance may not pay your medical fees. Even though many countries have single-payer health insurance, being a foreigner, you may not have access to it. Which means you will have to pay for any medical care that you receive abroad out-of-pocket.
Private insurance plans can help bridge these coverage gaps to some extent, and so is worth considering. You may want to supplement Medicare if you fit into any of these situations:
- You take regular prescription medicine
- You are moving out of your home province for a new job or school (In this situation, you will have to apply for health care in your new province of residence. This can take some time. For example, Ontario’s health insurance plan (OHIP) has a three-month waiting period. A short-term private health plan can cover you during this period.
- You frequently travel between Canadian provinces
- You frequently travel outside Canada
- You are elderly
- You do not have access to group health insurance, or the group health insurance offered by your employer does not provide comprehensive coverage
- You receive medical care services not covered by your provincial health insurance
- You receive private medical treatment
With a private health plan, you can cover some of the costs not covered by Medicare. Depending on your policy, the coverage may include vision, psychology, and dental care as well as prescription medication.
However, keep in mind that individual health plans only partially cover these expenses. Many plans also have a cap on the maximum amount of money you can spend per treatment or doctor visit.
For instance, some plans may allow you to have unlimited sessions with a psychotherapist but will cover only for a certain amount. Once you reach the predefined threshold, which varies by plan, you will have to pay the rest out of pocket. Sometimes, these plans also have a cap on the amount they will pay for each session. For instance, your policy might include psychotherapist care, but only pay up to $40 for each session. If your therapist’s fee is more than that, you will have to cover the difference yourself.
Benefits of private healthcare
Here are some of the main benefits of private healthcare in Canada:
- Medicare usually has lengthy waiting times. You can avoid this by accessing private healthcare. Not getting access to the required medical treatment can have serious consequences.
- Provincial health plans have certain restrictions. Each province runs its public healthcare and may not cover you adequately when you travel to another province. For example, if you are a resident of Ontario and break an arm while visiting a relative in Alberta, you may not receive coverage. As a result, you may have to pay for the medical bills out of pocket. In contrast, if you signup for a private health plan, you will not have to foot medical bills in other provinces.
- With a private health policy, you can stay in private rooms and undergo treatment in better facilities.
- An individual health policy gives you peace of mind that comes from knowing you are adequately covered against life’s uncertainties.
How much does health insurance cost?
The health insurance cost varies based on many factors. Some of these are in your control; others not. Here is a rundown on the main factors that will impact your health insurance premium.
This is one of the biggest factors that affect your premium rate. Generally speaking, health insurance companies follow this rule of thumb: the older you are, the higher the premium rate. This makes sense from an economic standpoint, when you think about it. Older people have an increased chance of developing a chronic illness than younger people and, as such, are likely to use the medical care services more.
Given that health insurance premiums go up as you age, it is probably a good idea to buy a plan when you are young and healthy.
Health insurance companies offer their best rates to healthy applicants. Pre-existing conditions might not disqualify you from getting health insurance, but you are likely to pay a higher premium rate than a healthy applicant.
Just as someone living in Vancouver or Toronto is likely to pay more in rent than a person residing in Lloyd minster or St. John’s, where you live also impacts how affordable health insurance cost is. If you live in a city where medical costs are higher than the national average, your premium rate will be higher. The opposite is also true.
A policy with a higher maximum limit costs more than one having a lower maximum limit, all other things being equal.
The type of plan you choose
Generally speaking, group health insurance plans are much cheaper than individual policies. Also, the more add-on coverage you purchase, the higher the monthly premium rate. For instance, an individual policy that covers only you will be more affordable than a plan that covers everyone in your family.
Insurance deductibles and co-payments
An insurance deductible is the amount you agree to pay before your insurance plans starts to pay. Let’s say your health policy has a deductible of $1,000. You will pay 100% of healthcare expenses until the bill totals $1,000. After that, your insurer will pay the eligible expenses.
A co-payment, on the other hand, refers to the preset rate you pay for different health care services when you receive them. For instance, you may have a $25 co-pay each time you visit your primary doctor, a $10 co-pay per prescription, and a $200co-pay for each emergency room visit. As is the case with insurance deductibles, the higher the co-payments, the lower the health insurance premiums.
Canada’s universal health insurance is funded by taxes and is available to all Canadian citizens and permanent residents. It provides access to essential medical services, but does not include several other services, such as dental care. Private health insurance can offset a greater part of the costs not covered by Medicare. In fact, it is very popular among Canadians, with estimates suggesting that nearly 66% of Canadians have access to some form of private health insurance. If you want to supplement Medicare with an individual health plan, Dundas Life can help you find the most comprehensive coverage and the most affordable health insurance policy.