This is a complicated question, so let’s try and simplify it. Before we discuss private health insurance, let’s understand what coverage is provided by Canada’s public health care system.
Regardless of where you live in Canada, any treatment in a hospital that is in the same province where you live, is covered by that province.
Any healthcare treatment that happens outside of the hospital is paid for by you. This includes services such as:
- Vision care
- Prescription drugs
- Physiotherapy, chiropractic and other health practitioners
- Ambulance services
- Dental care
Often these costs are covered, at least in part, by employer group benefit plans. But, if you are not working, self-employed, retired, or not in school, you’ll have to pay for these services as you need them. (Sometimes you can plan for them, but often it’s unpredictable.)
Health Coverage for Seniors and Children
If you are among the old or the young, public health care provides additional benefits.
Pharmacare
People who are 65 years or older and have no other prescription drug coverage, can qualify for the Ontario Drug Benefit program (ODB). This programs helps residents of Ontario with prescribed drugs and devices. You can check if your medications are covered. You’ll pay a small deductible and a co-payment for each prescription.
Vision care
If you’re older than 65 or younger than 20, OHIP (Ontario Health Insurance Plan) covers a routine, comprehensive visit to an optometrist once every 12 months.
Dental Care
Ontario has government-funded programs to help with the cost of dental care. They aren’t provided through OHIP so you must apply and qualify for them.
- Ontario Seniors Dental Care Program is for low income Ontarians, aged 65 and older
- Healthy Smiles Ontario is for kids 17 and younger who live in a low income household
As well, the Canadian government recently announced a dental care plan to help low and middle income families. The plan will provide a tax free payment to cover dental care for 2 years, for each child under the age of 12.
However, if you are between the ages of 18 and 65, the provincial and federal public health care coverage may not be enough.
Private health insurance can help.
How Does Private Health Insurance Work?
A private health plan covers you for regular medical expenses. It also insures you against future unexpected medical emergencies. With a private plan, you’ll pay a predictable monthly fee, which can help manage your cash flow. And it’s a safety net: healthcare emergencies are often accompanied with large upfront costs.
On their own, prescriptions can be expensive. Without adequate coverage many families must dip into retirement and investment savings. If you have private health insurance coverage before you are diagnosed, the majority of the costs will be the responsibility of the insurer.
How Much Does Private Health Insurance Cost?
Every situation is different, so it’s hard to specify the cost of a private health plan without a few details.
Health insurance plan costs depend on a few factors:
- How old are the people being covered?
- How many people?
- What is their medical history and current health condition?
- How much risk can you and your family tolerate?
The good news is, these health plans can be customized, and you can adjust them if your situation changes.
Can You Deduct Health Insurance Premiums from Taxes?
Yes you can. The Canada Revenue Agency says, “Premiums paid to private health services plans including medical, dental, and hospitalization plans. They can be claimed as a medical expense, as long as 90% or more of the premiums paid under the plan are for eligible medical expenses.”
You can deduct health insurance premiums if you:
- are a freelancer or sole proprietor
- don’t already have a group plan from your employer
- are a small business owner and you pay for a plan on behalf of your employees
- want to improve your health coverage because your routine medical expenses are high
The only health plan cost you aren’t able to deduct is if you pay into a group benefits plan to your employer.
So, Is It Worth It to Have Private Health Insurance?
Let’s start with the typical annual costs for a family with two kids.
2 eye exams – $160
Contact lenses – $300
Physiotherapy – $328
Orthotics – $225
Massage therapy – $100
Blood pressure medication – $245
3 antibiotics – $180
4 dental cleanings $460
2 fillings – $260
1 root canal – $560
Travel insurance for 4 – $118
This totals $2,936. Based on just these everyday costs, your health insurance premiums could almost pay for itself. If you also consider that the premium is tax deductible, and you’ll have a predictable monthly expense, it seems like a logical decision. And if a medical emergency arises unexpectedly, well, your savings will be safe.
Health Insurance and Financial Planning
We’re a national insurance brokerage so we’re a little biased. But we often see Canadians neglecting private health insurance when they do their financial planning. They insure against a medical emergency during their vacations, but not their day to day lives. If something happens, it’s too late.
A review of you or your family’s health insurance picture can be as valuable, and in some cases more valuable, than an ongoing review of your investments.
Health care costs increase as we age, and they are rising in our Ontario economy. Plan for your health insurance now, and make it a part of your regular financial planning. It will undoubtedly be an important savings tool.
Contact one of our health insurance plan specialists for a custom quote.
Resources
Ontario Seniors Dental Care Program Application