Navigating Healthcare Costs in Retirement
When it comes to retirement in Canada most people think about saving enough money to cover everything to live comfortably in their Golden Years. This means not having to worry about groceries, housing, hobbies, leisure activities, and travel.
While there’s a lot to consider when it comes to planning for retirement, one area that most Canadians tend to overlook is the costs associated with healthcare. Just nine percent of Canadians have factored potential healthcare costs into their retirement plans.
We’re fortunate to have universal healthcare in Canada that covers medical costs including doctor’s visits, emergency medical treatment, and surgery. But not all medical expenses are covered. In Canada, there isn’t one single national healthcare plan, there are 13 provincial and territorial healthcare insurance plans. And the rules vary from province to province and territory.
What Health-Related Medical Costs Could I Face in Retirement?
Since our healthcare needs often increase when we age, it’s important that we understand potential health-related expenses. Regardless of where you live, out-of-pocket medical expenses for Canadian seniors can be onerous. According to the latest data from the Conference Board of Canada, out-of-pocket expenses average approximately $5,800 and will continue to rise to at least $8,000 per year by 2035.
Again, healthcare benefits vary from province to province, and even then, what is covered can change regularly. So it’s important to visit your provincial healthcare website to find out what is and isn’t covered.
A retirement financial advisor will tell you that, in most cases, Canadian provinces have reciprocal agreements with other provinces and territories, except Quebec, for insured physician services. If you visit a doctor in Quebec, you may need to cover the expenses.
Or, for example, if you live in Alberta and seek medical aid outside of the province, you will only be reimbursed for healthcare services insured under the Alberta Health Care Insurance Plan (AHCIP.)
What Is Covered by OHIP?
With 14.6 million people, Ontario is the most populous province in Canada with the most extensive healthcare network. But even here, retirees need to be aware of what is and what isn’t covered by the Ontario Health Insurance Plan (OHIP).
Here are some of the services that are covered by OHIP
Doctor visits, including walk-in clinics
Hospital visits, doctor and nursing services, services that diagnose what’s wrong (blood tests and x-rays), accommodation and meals if you stay (if you want semi-private or private you must pay fees), medications for in-patients (once discharged, prescribed medications are not covered)
Physiotherapy
Lab tests that are medically necessary (not all non-hospital labs are covered by OHIP, but tests taken at a hospital avoid out-of-pocket charges)
Dental surgery if performed in a hospital and deemed medically necessary
Ambulance services may be covered, but in many cases, you will have to cover some of the cost
Prescription drugs (there is a drug program for seniors over age 64)
Out-of-country emergency inpatient services are paid up to $400 per day if provided in an operating room, coronary care, or intensive care, or $200 per day for lower levels of care
What Is Not Covered by OHIP?
OHIP and other provincial health services do not cover all medical costs. And with the cost of healthcare rising faster than inflation, out-of-pocket expenses can add up and can be difficult for those with a limited income or those living with a disability or chronic disease to cover.
Here are some services and medical expenses that are not covered by OHIP.
Vision care (glasses, contact lenses, eye surgery)
Hearing care
Most drugs administered outside of the hospital
Dental services, except for surgeries performed in a hospital
Private or semi-private hospital rooms
Non-prescription medicals
Additional out-of-pocket medical expenses you need to consider:
Partial cost of assistive devices, including canes, walkers, wheelchairs
Majority of the costs of home and car modifications to accommodate a disability
Part of the costs for nursing homes or residential care facilities
Some of the costs of home care services, including personal support workers or healthcare aides.
No matter where you live, medical expenses not covered by provincial or territorial governments can have a big impact on your retirement savings and lifestyle. If you live in the Toronto area, speaking with a portfolio manager or financial advisor can help ensure you have a plan that helps successfully balance your personal and financial health in retirement.
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