Canadians benefit from a publicly funded healthcare system, and many have additional coverage from an employer’s group plan. But there can be situations, such as self-employment, unemployment or retirement where it might be worthwhile to buy additional personal health insurance.
Provincial healthcare covers most procedures in a hospital setting with health insurance providing upgrades like better rooms and aftercare like physiotherapy and rehabilitation, said Jeffrey Wu, a group insurance and group annuity plans advisor and financial planner at Unison Financial Solutions with Sun Life in Montreal.
There are other healthcare maintenance items like vision and drugs that aren’t fully funded by the government, said John Salmond, vice-president of affinity and workplace with Empire Life. “Private health insurance fills in the gaps.”
Self-employed
Most of the time, if a client asks their advisor about buying personal health insurance, they are either self-employed or working for a small business that doesn’t offer health insurance, Wu said. Health insurance could be considered a business expense and tax deductible for some self-employed people.
For small business owners, group coverage is typically available when there are three or more employees, Salmond said.
Job change or job loss
If a client is in between jobs or waiting for their new employer’s benefits to kick in during their probationary period, they may be covered under their spouse or common law partner’s group health insurance, Wu said.
If the client doesn’t benefit from a partner’s group plan, they can buy “stub coverage,” Salmond said. Some carriers allow plan members to buy guaranteed issue replacement health on a monthly commitment.
For example, employees leaving a Manulife group plan can buy personal coverage mirroring their former group benefits within 90 days of their benefits ending, said Pamela Wong, head of affinity at Manulife Canada in Toronto.
Guaranteed issue plans don’t have an underwriting requirement or age limit, and can be suitable for those with preexisting conditions, Wong said.
Age restrictions
Another group of clients who look for personal health insurance are people close to retirement who want to keep their dental and drug coverage when they leave the workforce, Salmond said. Picking up coverage in advance of retirement can help clients lock in a more favourable rate.
Many group plans stop covering members once they hit 65, Wong said. And certain benefits, like travel medical insurance, could be restricted depending on age. Adult children may also need to get their own coverage when they’re no longer covered as a dependent under their parents’ group plans, she added.
Cost
Age and coverage levels are major factors when it comes to pricing individual health insurance. Products that need medical underwriting usually only require answering a questionnaire with lifestyle and health information but won’t require any blood work, Salmond said.
As for which coverage level a client should select, it comes down to the coverage maximums for each benefit category and the client choosing what monthly payments they’re able to afford, Salmond said.
Clients could find savings if they buy individual health insurance through a professional organization or an alumni association, so they should compare that to retail options, Salmond said.
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