Affordable health care isn’t just a U.S. concern
Sure, Ottawa covers cost of basic medical coverage, but those with complex ailments can end up out of pocket thousands of dollars
Last week, I spent four days in hospital for a surgical procedure (don’t worry, nothing life-threatening). When I was discharged, I was presented with a bill for $1,055. That covered semi-private accommodation (the hospital had no facilities that qualified as “wards”) and recommended post-op massage therapy. None of the expenses were covered by OHIP.
I have a family member who suffers from a rare and debilitating disease. His specialists have prescribed a very rare drug, which costs about $3,000 a month. It is not covered by OHIP. A friend of mine has a very serious eye condition. He requires monthly shots just to maintain the limited vision he has left, at a cost of $1,500. Since he is under age 65, he has to pay for these out of his own pocket. OHIP doesn’t cover it.
Sometime this year, I am going to need new hearing aids. The cost will be upward of $6,000. Ontario’s Assisted Devices Program will pay up to $500 per aid, every three years. I have to cover the rest.
The point of all this is that health care in Canada is not free — only certain procedures, devices and services are covered. You’re responsible for everything else, and if you’re unlucky the costs can run into many thousands of dollars.
I’m sure many of you have seen Jimmy Kimmel’s heart-wrenching story of his baby boy who was born with a defective heart (if not, check out YouTube). As a star, he had the money to pay for the child’s lifesaving surgery. But many people wouldn’t, and his message was that no one should be put in a position of seeing a loved one die because of a lack of funds.
His comments were clearly directed toward Washington, where the Republicans are determined to repeal Obamacare and replace it with a plan that will probably result in millions of Americans losing their medical coverage.
But his point is valid here in Canada, too. If my family member didn’t have private insurance coverage that picked up his $3,000-a-month prescription tab, he would probably be dead by now. If my friend with the bad eyes couldn’t pay for his monthly shots, he would likely be totally blind today.
Governments are gradually increasing the free services that our health care system provides. The extension of free prescription drugs to people under 25 that was announced in the recent Ontario budget is one example.
But Ottawa and the provinces can’t pay for everything. Talk about denticare and pharmacare for all are pipe dreams. The costs would drive up taxes to intolerable levels. We need to live in the real world.
So what should you do to protect your finances in this situation? Here are my suggestions. Review your employer health coverage. Most large employers and some smaller ones offer group health insurance plans. However, they vary in terms of the services they cover. Many, for example, do not pay for eye care. Some plans place strict limits on the dental procedures they will cover — my own plan does not pay for bridges, as I recently found to my dismay.
If you have an employer- or union-sponsored health plan, review the details carefully. Find out what is covered and what isn’t. Check the restrictions — some plans have limits on how much they will reimburse you for certain procedures or devices. See if there is a co-pay arrangement, which requires you to pick up a percentage of the cost. It will take a little time to read through all the details, but if a medical crisis arises you will need to be prepared.
Buy private coverage if needed. If you’re self-employed or your employer doesn’t have a health insurance plan, go shopping. Many companies offer personal plans, including Manulife, Sun Life, Blue Cross and CAA. Do an online search for providers and don’t focus solely on costs. Review all the plan details and know what’s covered and what’s not before making a decision.
Consider catastrophic insurance. These policies cover you in the event of a serious accident or a major illness like cancer, heart attack and stroke. They often come with high deductibles — one plan I looked at only covered prescription drugs once the total annual bill exceeded $4,500; another set its deductible at $10,200. But the cost is usually low, especially for young people. Budget more as you age. The latest census showed the number of seniors in Canada (65-plus) exceeds the number of children (15 and under). As a country, we’re aging, and the older you get the more likely you are to suffer health problems. A study published in 2014 by the BMO Wealth Institute found that Canadians over 65 without private coverage can expect to spend $5,391 a year on medical costs. The figure is undoubtedly higher now.
In my experience, most people do not budget anything near that amount when preparing for retirement. If anything medically bad happens — and it probably will as you age — the financial consequences can be very serious.
The bottom line is that we live in a country where basic health care is available to all, and thank goodness for that. But when you get beyond the basics, the price tag can rise very quickly. Be prepared. Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters. His website is BuildingWealth.ca.