Considering Buying Health Insurance? Make Sure You Know What’s Covered

Dave Otto - Aug 12, 2021

Did you know that people over the age of 65 can expect to pay an average of almost $5,400 a year for medical costs out-of-pocket? That average means that many do not spend anywhere near that amount; however, many spend much more than that. And that average also includes unforeseen medical expenses.

Is this expected to change because of the current pandemic?

Not likely. But of course, one of the newest things in Canada since COVID-19 is virtual care.   Virtual care has been popular for a while in other countries that do not offer public health care. It’s a perfect solution in days of COVID-19 in terms of not having to go to the doctor's office and run the risk of getting ill from other patients in the doctor’s office.

Having virtual care available doesn’t mean that face-to-face consults with your doctor are not happening anymore. The virtual care app on your smartphone or computer connects you with a nurse practitioner who will listen to your issues and, if needed, will pass you on to an actual medical doctor who can prescribe medications by email and request medical tests as required.

So, in a way, even though the way we receive medical care has changed, it doesn’t mean the way we are covered does.

What are the types of coverage you can choose?

Suppose you are considering buying individual health coverage, and you are taking certain medications. In that case, it's essential to check the drug identification number on your current prescription to make sure it's covered on the plan you are considering purchasing.

There are two types of coverage: guaranteed issue and medically underwritten coverage.

Guaranteed issue is typically available for people leaving a group plan due to termination or retirement. You usually have 30 to 90 days, based on the plan, to convert non medically to a guaranteed issue plan.   

It's important to note that guaranteed issue plans typically have lower maximums on certain coverages, for example, drugs. It's also crucial to know that the guaranteed issue plan has no pre-existing conditions and has lower maximums typically.

Medically underwritten plans may offer you coverage at a lower premium if you qualify medically and may also have higher limits available.

So, the question really should be which plan suits your needs best. If you need higher limits, then a medically underwritten plan may work better for you. However, if medically you can't qualify, then in order to get coverage, a guaranteed issue plan would be the better choice.

If you're leaving a group plan, you should consider a medically underwritten plan first. If you cannot qualify, you can convert within 30-90 days to a guaranteed issue plan.  

Another consideration is that you don't always have to convert to an individual plan with the same company your group plan is with.

Should you choose a plan with high coverage limits on prescription drugs?

There are many people wanting plans with high drug limits. It's not uncommon for someone going through treatments such as cancer treatments to spend $6,000 a month potentially on out-of-pocket costs not covered by OHIP.  For those with rheumatoid arthritis or Crohn's disease, it's not uncommon for out of pocket costs to be $2,000 a month or more.

Those relying on the Trillium drug plan for large expenses should note that it only covers a list of 4,400 drugs. Private health insurance plans cover three to four times more drugs. So, just because Trillium is available does not mean your drug will be covered. So, this decision depends on your individual needs.

How to decide which type of insurance is best for you?

You can read many resources online to make an informed choice, but ultimately, you should consult a professional in the area.

Years ago, someone from church contacted me asking if I offered health insurance. I said yes.  He said he was upset that his accountant did tell him his business could pay and deduct his health expenses, and he is correct, but did not provide any further guidance. Many people expect their accountants to be experts on all things financial, but they are not, and expecting this from them is not fair. An accountant is a professional who deals with taxes, not insurance.

So, not only is it essential to seek a professional, but you have to also find the right professional.

Many business owners, even businesses with only one person, are not aware their company could pay and deduct personal health expenses. If this sounds like you, feel free to contact me.

Individual private health insurance plans are also gaining interest over traditional group insurance plans. It's not uncommon for group insurance plans to see some wide fluctuation in premiums from one year to the next due to the plan not being fully pooled across Canada. Because private health insurance plans are fully pooled across Canada, the impact of any claims increase will be less over a group insurance plan.

If you’re interested in finding out if health insurance is the right solution for you, make sure to contact us today.