Avoid surprises and be aware of health-care options
If you’re heading into retirement, you should know what services are — or aren’t — covered and what they may cost you
One of our great national delusions is the belief that we live in a country where all medical services are free.
It’s true that we get very good acute-care coverage. A visit to a doctor’s office is free; if you need surgery and recuperation in a hospital, the bed is there for as long as you need it.
But the system doesn’t cover things that many Canadians think it does, such as glasses, hearing aids and physiotherapy. An annual SunLife study finds — again — that the misconception gap is wide.
So for many heading into retirement, it’s a shock to discover they’ll have to pay for many things they need. What to do is a recurring question.
Toronto reader Mary B. summed it up in a recent email. She is single, in good health and will lose her workplace benefits when she retires this fall.
“I always assumed I would have to get private coverage,” she says. “But then it occurred to me that virtually all of our medical needs are covered by the government of Ontario.
“I know there is a government drug plan for people over the age of 65. And I thought that perhaps I do not need to take out any private coverage. What are the pros and cons?”
Mary is right to think that her basic needs will be met, but may be overestimating what public coverage includes.
For glasses, dental care, hearing aids and long-term care, she’s on her own. Since she’s 67, her medications will be covered under the Ontario Drug Benefit Program, which includes 4,300 prescription drugs.
But if Mary heads south for a holiday, drugs purchased outside the province are not covered. Nor are such things as syringes and diabetic supplies.
If she ends up in an American hospital and doesn’t have travel insurance, Ontario would pick up the amount it would charge here for a hospital stay, not the American amount.
If Mary buys travel insurance and has a pre-existing condition not considered stable, the policy would likely exclude coverage for that. An extended healthcare package would cover it.
In the end, her decision will come down to her risk tolerance, says Paul Sywulych, a vice-president at Toronto human resource consultant Morneau Shepell. If she’s healthy and doesn’t worry about out-of-pocket costs, she shouldn’t buy the insurance. But she should be aware that her health now is not what it will be in 15 or 20 years.
The purpose of insurance is to cover against expensive, unforeseen events, so Sywulych agrees that dental coverage isn’t a good idea; that’s really a budget item with more or less predictable costs. One option is to ask your dentist about average annual spending and set that sum aside.
Round-the-clock home care and nursing homes are much more expensive, and are not covered by the province, so this is where people tend to worry, Sywulych says.
If you want to explore the insurance option, here are the basic choices:
Aconversion plan: Your employer may let you continue your workplace coverage if you pay. Sywulych says this can be pricey, with a relatively low level of coverage.
Group plans: As with car and household insurance, your college, university, union or professional association may have an affinity plan.
Brokers: They will shop for you and let you compare packages. Ask friends what they do.
Other resources: The OmbudService for Life & Health Insurance website lists companies offering those services. The Canadian Life Health Insurance Association has a good consumer guide. The Ontario Ministry of Health and Long-Term Care site has details on what it covers.
Whichever way you go, the costs of health care in retirement should be part of your financial plan. It’s one of those things where a little thought now saves a lot of stress later. Adam Mayers writes about investing and personal finance on Tuesdays and Thursdays. Reach him at amayers@thestar.ca.