Health Insurance for Retirees: Is it worth it?

A nurse or caregiver wrapping a blanket to an older man sitting down

Do you need health insurance after 65?

Yes, Canadians aged 65+ typically require health insurance. For many baby boomers in Canada, health care is a major concern. As we age, many of us have to cope with a wide range of health issues, from poor eyesight to heart disease and everything in-between.

Fortunately, each province and territory has its own health plan, which provides many health care services for free. The problem is, however, that not everything is covered.

How much can we expect to have to pay for health care costs in retirement? How much does health insurance cost for retirees? And is it worth it? We’ll cover some of these topics through this blog so that you have all the information you need.

Provincial Health Plan Coverage

What’s covered in provincial health plan coverage?

Although the federal government provides funding to provincial governments to cover some of their health care costs, the extent of health care provided is decided by each province and can vary considerably. What you might get for free in PEI could cost you hundreds in BC.

The good news for baby boomers in Canada is that health care is free for most essential services. Provinces provide the following services free for all residents:

  • Doctor’s visits
  • Emergency room treatment
  • Hospital stays
  • Hospital accommodation and food
  • Prescription drugs in hospitals
  • Hospital dental surgery

In Ontario, for example, the Ontario Health Insurance Plan (OHIP) covers many necessary health services, including doctor visits, emergency room trips, and any required tests or surgeries. Cosmetic surgery and other elective medical procedures are not covered.

However, for many baby boomers in Canada, health care needs often go beyond these essentials. And this is where it I can get complicated — and potentially very expensive.

What’s not covered in provincial health plan coverage?

  • Prescription drugs outside the hospital are not covered by most provincial health care plans, for most people. There are some exceptions, including people on low income and people over 65. Some provinces will cover a percentage of certain prescription drug costs for anyone over the age of 65.

In Ontario, for example, the Ontario Drugs Benefit Program means that retirees over 65 with a moderate to high income will pay the first $100 of any prescription costs in a year and then $6.11 for each subsequent prescription. However, this is only for the 4,400 prescription drugs covered by the program. For any others, you have to pay the full amount. In Alberta, meanwhile, the over 65s pay 30% of the prescription cost, if it is on the Alberta Drug Benefit List. Otherwise, they have to pay the full amount.

Most retirees under 65 pay their full prescription cost, sometimes thousands of dollars a year, unless they have low income. This is one of the key reasons why health insurance for retirees in Canada can be so important.

  • Dental treatment is rarely covered by any provincial health care plan. It can also be one of the largest health care expenses for retirees. Simple check-ups can cost $100-plus and major treatments can cost thousands.

Some provinces will provide limited free dental services to people aged 65-plus with low income. Others will only provide these free dental services if you already qualify for other assistance programs.

  • Physiotherapy, for many baby boomers in Canada, can be an essential health care service. Issues with joints or injuries from falls often require extensive physiotherapy. However, this is rarely covered by provincial health plans for people under 65. Many people over 65 may not qualify either, depending on the province.
  • Medical equipment can become a considerable health care cost for baby boomers in Canada. Some provinces will cover part of the costs if you are over 65, while others will only contribute if you are on low income. It is worth getting private health insurance in some instances, for younger retirees with high medical equipment costs.
  • Other health care expenses that are not covered or only partially covered by provincial health care plans include home care, diabetes care, eyeglasses, dentures, acupuncture, chiropractic and mobility devices.
Think health coverage is too expensive? Find out how much cash you can get with a reverse mortgage.

Types of health insurance plans

In addition to coverage provided by government health insurance plans, Canadians have three sources of available health insurance:

  • Employer-sponsored group plans are a benefit offered by some private-sector employers. These insurance plans are only purchased in groups; individuals cannot purchase coverage in these types of plans. Ask your employer before you retire to learn about your employer-sponsored group plan.
  • Conversion insurance plans are designed for those who lose the insurance benefits offered through their employers. Acceptance in conversion insurance plans is usually guaranteed, with no medical questionnaire.
  • Personal health insurance (also known as private health insurance) provides coverage for preventative care and pay for other health-related expenses, including: prescription drugs, dental or vision care, physiotherapy or medical equipment.

Average cost of health insurance for retirees

Health care insurance for retirees can range from just over $100 to over $400 per month. The price varies depending on your age, province and the extent of the coverage you may need. For example, cheaper options have a limit for prescription and dental costs and you have to pay a deductible (up to 40% of the cost).

Medical insurance options for early retirees are probably more attractive, given that they usually don’t qualify for any financial assistance before 65.

If insurance costs less than the money you’d have to pay, then it could definitely be worth having private health insurance. So, before taking out any health insurance for retirees in Canada, it’s important to do the math.

Alternative ways to pay for health care costs

If you’re struggling to pay for prescriptions, dental care, home care or any other medical expenses, and it’s not worth getting private health insurance (or you can’t afford it), what options do you have?

For homeowners aged 55-plus, the CHIP Reverse Mortgage® from HomeEquity Bank could provide the money you need to pay all of your medical costs, without having any impact on your retirement income.

With a reverse mortgage you can receive the money in a lump sum or in monthly payments, to coincide with your monthly health care costs. And, because you don’t have to pay what you owe (not even the interest), until you decide to sell your home, it won’t stretch your finances.

If health insurance for retirees in Canada is out of reach for you, but you have considerable health care expenses, call us now at 1-866-522-2447. We’ll work out how much cash you can access and help you start the process.

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