Healthcare Insurance Benefits for Retirees in Canada

Healthcare Insurance Benefits for Retirees in Canada

Great healthcare coverage is a gift worth paying for. This makes healthcare insurance benefits for retirees in Canada critical as part of your financial plan. 

While in the workforce, workplace healthcare coverage is usually commonplace. In some cases, some lucky retirees have ongoing coverage as a continuing benefit paid for by their former employer – such as in my parents’ case.

Those good ol’ days are fading fast…

This means, if you’re in your 40s or 50s, and thinking ahead to any form of semi-retirement or full retirement, I believe it’s best you make an informed healthcare insurance benefits decision.

As always on this site, I like to talk to some experts that live and breathe this stuff every day to get facts as best we can.

In the past, I’ve had my friend and insurance expert Brian So on the site.

Brian helped me personally when it came to my term life vs. whole life insurance decision here.

We also previously touched on this subject, a bit, in this post when workplace benefits are disappearing.

Based on some recent reader questions earlier this year, and based on my own reflections about what I need to consider when it comes to healthcare insurance benefits for retirees, Brian was a natural choice to get the goods on healthcare insurance benefits for retirees in Canada.

Brian, welcome back and thanks again. Let’s pick up where we left off…

I can appreciate you might be a bit biased given you see these needs every day, but do you agree that healthcare insurance benefits in semi-retirement or retirement are a good idea? Why?

Absolutely Mark. But don’t let your readers take my word for it. Have them check out this article below.

I can appreciate we don’t live in the U.S. but having an accident or illness could be very costly and totally devastating to your retirement plan if you don’t have health insurance.

The reality is, many people are used to using their healthcare benefits through their workplace for things like dental, prescription drugs, paramedical services, etc. Unfortunately, they take it for granted. That’s because some people don’t pay much attention to the employer-supported premiums paid for their healthcare benefits coverage – it’s not a direct, complete financial hit to them.

Because I do see concerns people are facing every day, I would encourage Canadians to think very hard about their healthcare needs in retirement – the simple fact is – the true costs in retirement will come with major sticker shock. Of course, you have to weigh the costs/premiums of these benefits and what you may be able to self-insure for but for the most part, most if not all Canadians need some form of healthcare insurance benefits. It will be essential at some point.

I couldn’t agree more. Hence our article today! So, what are the main healthcare insurance options for any retirees?

Mark, let’s look at three (3) major ones:

  1. Employer-sponsored group plans
  2. Rollover plans
  3. Individual plans.

Employer-sponsored group plans

The reality is retiree health benefits are expensive to maintain. Your parents are very lucky Mark. These plans are simply going away.

Simply, these benefits are just as they sound: employers sponsor (i.e., pay for) health insurance to retirees as an ongoing retirement benefit. The advantages of this are numerous of course. If you are able to take advantage of any employer-sponsored group plan throughout your retirement, generally speaking, go for it.

Rollover plans / group conversion plans

“Rollover” plans are for people who had group healthcare benefits through their employer or association when working. But instead of the employer sponsoring the entire plan going forward, you do. If you’re a former group plan member, you can “opt in” to a rollover plan within a specified period of time (generally 60 days) after you leave the employer. After that, no chance.

The great thing about this employer-group conversion plan is, you don’t have to complete a medical questionnaire or submit to a medical examination in order to qualify – just like when you likely joined your organization. Therefore, a rollover plan may be worth looking into. This is especially true if you already have some health problems that could make you ineligible for individual coverage.

The downside is your premiums are based on your age when you rollover into the plan, so generally speaking, the older you are the higher the costs. You can choose basic coverage or enhanced benefits – just like when you were working.

Individual plans

This is probably the most common type of health insurance plan.

There are really two types of this insurance:

  1. Medically underwritten plans where you have to complete a medical questionnaire, and
  2. Guaranteed acceptance plans where you don’t.

The benefit of the medically underwritten plan is you will likely get better coverage, but it might not be available if you have pre-existing medical conditions. In that case, you may opt for option #2. This way, with the guaranteed acceptance plan you are covered for existing conditions, but overall limits are lower, and the plan will be more expensive. So, with option #2, depending on your health status, premiums could be high. This is because your premiums will depend on the plan/coverage you choose, your health status, and the age of when your coverage takes effect. We’ll see some examples below.

Given employer-sponsored group plans are basically non-existent now, here are some things Canadians should consider when it comes to comparing a rollover plan to an individual plan:

  • How much are the premiums?
  • What coverage do I get for those premiums? (e.g., 80% dental?)
  • Is there a cap on service providers? (e.g., massage therapy, physiotherapy, other?)

Smart readers will know that government healthcare plans vary from province to province, and typically they don’t cover dental or vision care.

In your province Mark, Ontario, retirees won’t qualify for the Ontario Drug Benefit Program for the most part until they are age 65 – although some exceptions may apply.

So, while your plan for semi-retirement and early retirement is great, you’ll need to consider healthcare coverage and that might come with some extra costs.

Duly noted!

For those that could take advantage of an employer-group conversion plan, without the need to complete a medical questionnaire or exam, are these generally a good idea to take? Why or why not?

Reference post: what to consider when workplace benefits are disappearing.

As a rule of thumb Mark, if you are healthy, you should always go for the medically underwritten plan and complete the medical questionnaire to get the best rates and fewest exclusions.

Now, that said, a benefit of any employer-group conversion plan is there is no waiting periods to use the benefits. It is as if you never left your employer-group plan. This is not the case for a medically underwritten plan, there is a waiting period to use some benefits.

If you’re not healthy (e.g., you’re already on medication or you might have other medical issues), you can apply for employer-group conversion to continue to get coverage for your current medication. The downside of group conversion plans are they will be more expensive than the medically underwritten ones as we have outlined above.

Let’s get into the moneystuff. Assuming an employer-sponsored group plan is not an option, are you able to break down the costs of individual plans?

Last time we talked, you highlighted the typical personal insurance plan or a 55-year-old couple. Are you able to provide any examples for singles as well? What might be the estimated costs for healthcare coverage be for certain individuals or couples?

Let’s assume, coverage for at the time of this post:

  • 80% of the cost of prescription drugs up to a maximum of $5,000 per person per year.
  • 80% of basic dental services up to a maximum of $1,200 per person per year with 2 recall visits per year.
  • 50% of major restorative services.
  • 50% of orthodontics.
  • $300 per person every 2 years for vision care.
  • $500 per person per year for registered therapists and health practitioners (physiotherapists, chiropractors, etc.).
  • $5,000 per person per year for medical services and supplies not covered by government plans.
  • Miscellaneous benefits such as private duty nursing care, accidental death & dismemberment, etc.

Sure Mark!

I put together a table below, to focus on individual medically underwritten plans (not the guaranteed acceptance or employer-group conversion plans). Again, I think folks if they can get the best coverage for the best rates with individual medically underwritten plans:

55 single55 couple60 single60 couple65 single65 couple

What FAQs (Frequently Asked Questions) do you get from aspiring retirees on this subject?

A few Mark:

  1. What’s covered and how is it different than what they currently have? (Typically, the plan design will be different than what they had at their workplace; examples include different deductibles, coinsurance, etc.)
  2. What are the maximum limits? (Retirees want to know if there are annual and lifetime limits for big ticket items like drugs. Also, there are likely annual limits for dental treatment and paramedical services like massage therapy, physiotherapy, chiropractor, etc.)
  3. What is the best plan for them and how much will it cost?

So, while these are the top-3 there are many other questions and factors.

I’ve compared plans from different insurance companies for years (e.g., Manulife, SunLife, Canada Life, Blue Cross) and their plan design and costs have a wide range.

These plans typically give you a few options to choose from the most basic to the most comprehensive. Such plans let you design and customize your plan (e.g., no dental coverage, basic dental coverage, or comprehensive dental coverage).

Essentially what I ask clients to consider is which part of the plan they will use the most (to ensure they get the coverage they need). There is usually a sweet spot for any individual or couple.

Finally, Brian, if folks are not yet convinced, they should at least consider healthcare insurance in retirement, what advice do you have for them?

Well, unless they know something I don’t know about, I believe healthcare costs will rise as you get older.

In fact, when you compare yourself to your working years, Canadians over age 65 consume 45% of provincial and territorial government health care dollars (source CIHI), despite making up about only 14% of the population.

Simply put, retirees in Canada need to plan for their healthcare costs.

One way (beyond healthcare insurance) is by saving more and keeping a larger emergency fund. I know you are considering a cash wedge in retirement – that seems very smart to me.

That’s likely not enough, so healthcare insurance will provide some relief.

For some affluent retirees, they might not need too much insurance but I encourage everyone to ask a few “what if” questions. Your decision to own healthcare insurance in retirement will depend on many factors such as your current savings, retirement income streams, whether you have that cash wedge cushion to absorb increased medical expenses, but it will also depend on your risk tolerance.

While healthcare insurance coverage may not be a huge need while you are younger and working, you simply won’t have the opportunity to recuperate assets or losses as a retiree. This is especially true for folks who unfortunately have an accident or illness. Something for your readership to think about!

Great stuff Brian.

I think this post will help many aspiring retirees!

If you have questions for Brian, he’ll be happy to answer them below on this site and keep the conversation going.  Alternatively, if you have a specific set of questions for him – don’t hesitate to reach out.

Further Reading:

Check out my post with Steve Bridge, a Certified Financial Planner (CFP®) from Vancouver who works as an advice-only financial planner about what goes into a good financial plan. 

Brian So is a life insurance agent based in beautiful Vancouver, British Columbia. He runs Brian So Insurance (no affiliation) and is committed to helping his clients find the best coverage for their needs.

He takes a holistic approach to insurance, implementing life, disability, critical illness, healthcare and long-term care insurance into his clients’ risk management plan to provide comprehensive coverage for their families.

How are you navigating your loss of workplace benefits?  What is that costing you?  Did you factor that into your retirement budget and plans?  Let me know and share in a comment below.

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

50 Responses to "Healthcare Insurance Benefits for Retirees in Canada"

  1. In Ontario, it should be noted that cancer drugs that are in pill form are not covered by OHIP and they are very expensive prescriptions. I opted to get health insurance with a high amount of drug coverage at 250,000 maximum. I view my health insurance as insurance and being able to get back money for the other stuff…orthotics, paramedical appts is like a reduction in my premiums. If you can afford the premiums for the drug insurance, I would recommend it.

  2. My parents have a health plan but i think it is a waste of money due to limitations on payments for prescription drugs. Very little is paid for. I don’t know-if this is common.

    1. Hi Christina. You’ll find limits for prescription drugs on every type of plan. However, they all vary in amount. Some of them have an annual limit of $5,000 while others have limits as high as $250,000.

    2. I think limits are common on any plan but I will let Brian speak to that. Christina, how are you planning for your healthcare needs in retirement? Thoughts?

  3. Another consideration is if the plans premiums are tax deductible. Private plans are. Alberta has ARTA for teachers, nurses, fire, police, City, University and most gov’t retirees. Paying about $272 for basic health and premium dental. Chose to exclude travel and will buy that as needed. Going into year 3 of paying premiums and figure it’s worth it so far.

    1. That’s $272 per month Gruff? Interesting and good piece of mind I suspect. Have they been going up based on your age or have they been rather stable?

      1. Yes, per month. Rates went down 5% in 2021 due to administrative changes. Three years ago was $268 per month so stable. That’s for a couple, no required medical if you sign up within 60 days, 80% coverage level on medical to max 10K. 80% coverage on minor dental and 50% on major dental to max $800. 80% coverage on basic and preventative dental with unlimited annual max. Those are per person. When you consider that the premiums qualify as a non refundable tax credit, premiums are slightly lower. First year we broke even as we needed a CPAP machine. Last year paid more then I used as we didn’t access as much as could due to virus. Consider it a form of self insurance as I “bank” premiums for the years we will require more.

  4. Great article Mark. However what was missed are the “association” plans. In Manitoba I know of two personally that offer better premiums than the ones transferred from a plan. The Retired Teachers of Manitoba has a plan only for retired teachers who had previous coverage with another plan. The health, travel health and trip cancellation insurance through Johnson Insurance is superior to the Manualife plan that was transferred over. There is also a retired government employee association that also offers a similar plan, but with higher premiums.

    1. Great point, Randy. Association plans can be great for people who have access to them. Unfortunately, not everyone can buy these, so the general public has to look elsewhere for coverage.

    2. Hey Randy, thanks for those extra insights. I was vaguely aware of those association plans but I can’t speak to how universal they are – may be specific to only some professions in some provinces? On that note, have you or will you take advantage of any such plan or do you have a personal preference for your own healthcare insurance needs in retirement?


      1. We are enrolled in the RTAM program through Johnson. The travel health and trip cancellation are great values. Trip cancellation comes with $8,000/person/trip coverage. We also opted, before Covid, for a top up of another $10,000/person of coverage. We can opt in again for this coverage if we need it in the future. We don’t have the dental. The premium is about $300/year for $500/person coverage.

    3. Interesting. My wife is a retired teacher in NS and her plan was and still is with Johnson. We have some great rates there for supplementary from the medical coverage, dental, travel etc

      1. That’s what I was thinking for me RBull, self-insure where we can but also take any employer-group conversion plan if/when the time comes and extra insurance – literally. We’ll see!?

        1. Deane Hennigar (RBull) · Edit

          I’ve got some refreshing to do reviewing her plan since I know it changes in 3 years when we need to go on the provincial 65+ seniors OMG!! plan. Think that will add around $1k/yr for us. Her medical is currently 100% employer paid until age 65 (12 yrs retired). Would have to verify but I think our total annual costs for similar to above (maybe better) includes some life insurance, plus travel insurance & trip cancellation for ~2 mths away was under $1200/yr -a lot was dental that I want to cancel but she doesn’t. LOL.

          1. A real puzzle, right? I mean, hard to predict the crystal ball for any retirement healthcare plan but at the same time, you need to be vigilant I think because to assume you can self-insure (and some might), would need significant cashflow to do so. That’s great if folks can self-insure and pay themselves the premiums and such per se but I think these folks are in the minority. I could be totally wrong of course!


            1. Deane Hennigar (RBull) · Edit

              Yes. Its another consideration for retirement some people might not thought to when planning or getting into retirement.

              Some of us are lucky to have a group work plan with cost effective options that may be extended favourably into retirement. Others need the help of someone like Brian So to source a good package, or decide to self insure (or might have that decision made for them due to lacking financial resources).

  5. It is amazing that healthcare costs will just continue to go up. People need healthcare so the number of people who are willing to pay for it will just continue to increase.

    A cost that people definitely need to think about before making the plunge to early retirement.

  6. Good article Mark. This information is probably what a lot of people in this country use. It is the conventional wisdom.
    We have a very good health care program in Canada paid for by the government. Health benefits plans while we are working and paid for by our employer were also good. Insurance companies are in business to make money. So that is the common advice being offered by brokers and insurance companies. Do we really all need this? Everyone I know in my circle of friends is self insured. Unless you have a company paid for plan post retirement, it is better to just pay as you go. There could be exceptions for people that have pre-existing conditions and have a lot of expenses. But then their rates will also be even higher. In my 3.5 years of retirement we have already saved anywhere from 10 – 15K (and we still have a teenager in the house) and will continue this way. If and when expenses start rising we will pay from these savings.(virtual savings, I don’t like to have idle cash) Buy more dividend paying equities and pay your expenses as to come up with dividends.

    1. Thanks Div. You are very fortunate with your plan then – congrats! Great healthcare coverage is a gift.

      All businesses (I would argue) are in business to make money but that said, I think if you can self-insure that’s ideal. The reality is, most Canadians will be unable to. So, best to pick a plan potentially with general coverage, the most common needs, at the lowest possible premiums. I hope to take advantage of my rollover/employer-group conversion plan myself and self-insure where possible.

      Health is wealth!

    2. DivInvestor makes the all-important point that insurance companies are in business to make a profit. Unless health and dental costs are pooled with a much larger group, your insurance premiums will rise if your claims exceed the premiums. You may be ahead for a year or two with an insurance plan but sooner or later the premiums will rise accordingly to cover their expenses – the insurance company needs to recoup their losses. So over the long haul, I can’t see how you are any further ahead by insuring with an insurance provider rather than self-insuring in Canada. If someone is able to come up with the funds to pay monthly insurance premiums then they are surely also able to take that same amount and pop into into a high interest savings account and pay the expenses out of the account as they arise. Now it’s possible that a very large expense may occur early on in retirement before a good savings balance has been accumulated, but, at least in Ontario where I live, and I believe in most of Canada, provincial health care plans cover most “catastrophic” expenses.

      1. Very good points Tom. So, self-insure is the way you’re going or going to go yourself? What do you think is a decent, self-insure fund to maintain? At least $5K or $10K?

        I would need to figure out eventually what provincial health care plans cover and do not re: “catastrophic” expenses. Always time for more content.

        Stay well Tom.

    1. That’s awesome to hear Cannew as we are in AB too and looking to self insure in the near future. We were estimating $200-250/mo for our family of 4 when we played around a few years ago. Did you get this quote/coverage working directly with AB Blue Cross or with a broker? Cheers!

      – Court

  7. With my husband retiring at the end of March, I have recently spent a lot of time looking at the health insurance options. After a very careful analysis, we decided in the end to go with nothing purchased.

    We had access to several plans, all were quite different in coverage and deductibles and maximums. If you aren’t spending a lot on medical necessities (which would be covered) at the time, they just weren’t worth the cost and the bother.
    I say bother, because it is actually a relief to not be dealing with an insurance company now, after all these years. All these years of them processing claims wrong and having to write them, phone them, spending time to get things fixed. The last error was them charging the deductible twice in January and I just couldn’t be bothered to contact them about that, again.
    Premiums are quite high, I figured it is better to put that money aside for any necessary spending. And the premiums will go up every year after year after year.
    I will, however, buy an annual travel insurance plan, when we can travel outside the country again. Even that is problematic due to short duration. I also would prefer to buy a plan that excludes the USA, as that the costly destination. But haven’t seen that on offer.

    1. Very interesting Barbara. I do know folks, like you now I suspect, that self-insure in retirement. It’s actually a good thing if you can do that but not many can.

      Premiums can be high, yes. If you can afford to put $$ aside for this in advance that’s a great thing. How much do you figure that is per year?
      $2K-3K on average?

      Travel insurance is very problematic for sure as we all get older.

      1. Mark, one thing that really put me off, was the premium increases.
        As a retired university professor, we had access to 3 different plans. I had a sheet outlining these in detail with 2019 rates. Upon trying to ascertain 2021 rates, I saw the first plan cost had increased 33 percent in the two years! That SunLife plan was only useful if you were already using a lot of expensive prescription drugs and it had high deductibles. Coverage of anything else was quite minimal. We had zero interest in that plan. I have basically never taken a Rx drug, except for a sinus infection a few years back. Bought that same drug in Mexico for a few dollars last year when I suspected the same sinus problems. That limited plan (absolutely no dental, these are separate) cost over $2100. It did, however, cover travel of 90 days.

        Another plan was offered by Johnson, the cost for it (no dental of course) was almost $3400, with a maximum Rx drug cost of $2000 per household. For a max $4000 Rx, the rate was closer to $6000 per year. Travel insurance of 62 days.

        The only plan I considered was the RTO, as a retired professor my husband was eligible for this. It has quite comprehensive coverage and cost a bit over $2400 in 2021 (no dental, price for a couple). No semi-private hospital room, but you could pay extra for that, about $400. Prescription drugs, generic only, covered at 85%, and many other things at 80%. Travel coverage of 93 days which was pretty good.

        Any dental plans cost more than basic dental would cost you in a year. They are expensive and limited. So get all your dental work done before retirement!

        1. Retired Teachers of Ontario (RTO?) would have a very good plan – no? If travel coverage alone is outstanding and worth paying for if a snowbird or you wanted to travel abroad.

          I would have to read up on the dental coverage when it comes time ourselves. I figure dental is about $1K or so per year for us right now as a couple at the very top end.

          Lots of considerations for early retirees that won’t have an employer-sponsored plan – we won’t. It will be door #2 or #3 for us.

          Great personal insights, thanks for sharing! 🙂

    2. In agreement with DivInvestor & Barbara, having well explored the option 3 as we entered retirement 3 yrs ago (now 65 y.o. couple). Concluded it’d be much better value for us to save $1,000 / mos (or any amount you can afford) into a personal “HealthCareAccount” for catastrophic events, & otherwise fund all health care needs as arise. Haven’t had to use account, now @ over $36k, & otherwise would have paid about $15k to an insurance company to save little in health benefits. As a actuarial professor friend, also involved with insurance companies, says, “Insurance is first & foremost a business, & they will make a profit.” However, this article reminded me that we are now eligible for Ontario Drug Benefit Plan – & acts as a prompt to apply for that!. BTW – your site is awesome, Mark, & your guests are also likewise informative, thoughtful &, I feel, genuinely interested in the average person’s best interest. Thanks!

      1. PJ, great and very kind words. Genuinely trying to help others and share my personal thoughts and perspectives here! 🙂

        As for your “HealthCareAccount”, I think that’s smart. I’m thinking my wife and I need a “cash wedge” in retirement for just that and more.

        I’m not sure the route I should go yet. I think ideally if we can get any employer-group conversion plan, depending on the cost of course, that might be good to take and then also self-insure as well.

        You make a great point about the insurance business overall but I also don’t know many industries that don’t like making money! Ha.

        Yes, go apply for Trillium!

    1. Hey Bob, although you can buy these directly through some insurance companies, they charge the same if you go through a local broker. So you might as well use the broker’s service to help you find the right coverage.

    2. I know Brian will reply….but I like using a broker myself. They have the expertise at no cost to the consumer. Thanks for the visit Bob!!

  8. Hi, Mark and Brian,

    Great post, really informative article.

    I think that we will need some help in terms of individual health insurance plan. Neither of us has company plans, thus individual is the solution. We are 52 and 60, currently, I have term insurance and critical illness, husband has none. We did not have any dental, vision, and other coverages. But, I do see the need to set up this asap.

    Brian, what is the next step to start the process? When you design the policy? How much quotes will you get for us?



  9. Thanks for covering this topic, Mark and Brian. I liked the advice on getting a medically underwritten plan if possible to save money, as well as the specific example of coverage and cost.

    I am curious if Brian sees a wide range on price from different companies (are they vastly different, or fairly close). On a related note, how many quotes do you think is a good number for a retiree or near-retiree to get?

    Thank you!

    1. Hey Steve. I’ve seen prices range quite a bit among different companies. Part of the reason for this is because no plan is identical, so price variation is expected.

      As for how many quotes you should get, try to get as many as you can! Coverage, deductibles, limits, premiums are all different, not to mention the financial stability and reputation of the insurance company. So it doesn’t hurt to shop around, much like you would for other types of insurance like life and auto.

      1. Thank you Brian.

        The variation amongst companies makes it quite challenging to compare apples-to-apples, doesn’t it? Do you know of any websites that do a comparison across companies/plans?

        @Mark, at this point the interest is from the perspective of helping clients find a suitable plan, but at some point probably yes… 🙂


    2. Thanks for your comment Steve. Brian did a fine job here with me for sure. Great questions. I know he’ll reply…

      Are you thinking about getting any insurance in your upcoming semi-retirement Steve?


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