In Canada, we’re fortunate to have government healthcare that covers doctors’ visits, in‐hospital procedures and so on. But there’s a lot that’s not covered — like prescription drugs, eyeglasses, major dental care, therapists and more.
Those expenses can take up a big chunk of your family budget, especially when they are unexpected. Health insurance covers some of those healthcare costs so your finances are protected. When evaluating your health insurance plan, it’s crucial to balance your healthcare needs with financial considerations. Here are some key points to keep in mind.
Think of your health insurance cost as a part of your healthcare budget
Taking a look at your health insurance is about examining and reflecting on the value it adds to your money management system, and ensuring it’s optimized for the coming year. It deserves your attention — no matter how formal or informal your budgeting system. Ideally the process will provide valuable insights, expose inefficiencies, and inspire new health management ideas.
Regardless of whether you choose to maintain your existing coverage, upgrade, or downgrade your policy, it is important that you select a solution that provides the protection you and your family need. Without adequate coverage, you could be responsible for hundreds or thousands of dollars in medical bills if you experience an unexpected illness or injury.
Should I downgrade my health insurance coverage?
When you look at your budget, usually your number one consideration is, ‘’how can I spend less money? So, let’s focus on the dollars.
In order to estimate how much your health insurance costs you must consider the expenses that go with it: premiums and co-payments. The premium is the regular amount that must be paid every month for the plan. The other expense you must think about is your co-payment. Your plan will require that you pay a portion of the cost of your treatment. For instance, if your plan pays 80% toward the cost of prescription drugs, you are responsible for paying the remaining 20%.
Taking premiums and co-payments into account will give you a good idea of the total cost of your health insurance plan.
Now, think about the out-of-pocket expenses you may face. This is where it becomes clearer that its actually a lot cheaper to have insurance than not to have it at all.
Healthcare costs are going up
The fact is, like most other things, healthcare costs are rising — and will exceed the $2,000+ of healthcare cost that Statistics Canada estimated the average household spent in 2021. Each year, the government de-lists programs and services that were once covered, leaving you responsible for the costs. At time, the government expands coverage, like dental care, but only in a limited way to some people. Your provincial health plan rarely covers the entire cost of care, with the exception of hospital services and doctor visits.
How large is your nest-egg for the unexpected?
If you do not have a health insurance plan, depending on the extent of your illness or injury, the costs could be in the hundreds or even thousands for out-of-pocket medical expenses. One injury could have devastating financial consequences for you and your family if you are not properly covered – or completely drain any emergency savings you have. For example, if you were in an accident, you may require prescription drugs, therapy, or special equipment. Without health insurance, the cost of these things could add up to the point where they are unaffordable, delaying or impeding your return to good health.
Typically, your plan must be in force for 12 months before you can apply to downgrade benefits, which you would do by sending an email to your broker (like SBIS).
And thinking of cancelling coverage? Remember, individual health insurance can work with group health insurance coverage to cover out-of-pocket expenses. If you cancel coverage, you will usually have to wait 24 months before you are eligible to re-apply through the same insurer.
Should I upgrade my health insurance coverage?
When you look at your upcoming out of pocket healthcare costs – therapy, dental, vision and prescription drugs – is your current plan covering enough?
Spending more on health insurance can save you money
If you have a basic health insurance plan, your co-payment and yearly maximum coverage will be less than a more expensive plan. So, is the higher premium worth it? It can be! For example, if you switch from a plan with a premium of $100 per month to one that costs $200 per month, you will qualify for higher prescription drug coverage limits, more covered therapy costs, more generous vision care and longer durations for emergency medical travel protection. These benefits can add up to thousands of dollars more in coverage each year.
What is your health history?
Are you young and frugal now, in great health? You may be tempted to get the lowest cost health insurance. But consider this: do chronic conditions run in your family? If they do, you may want to apply (and qualify) for the best possible health plan you can get now while you are in good health. Once you encounter a chronic health condition, applying for more generous coverage to cover the higher out of pocket healthcare costs may be restricted or may even exclude your existing condition. Consider your and your family’s current health. Do you have chronic conditions or anticipate needing regular medical care? If so, a plan with more comprehensive coverage might be beneficial.
Consider your future needs
Think about potential future health needs., This can help you decide if you need more extensive coverage. Remember, you can always downgrade coverage, but upgrading coverage may not be possible if you have a health hurdle.
If you decide to upgrade your coverage, you may be required to complete a medical questionnaire (and you may expose yourself to coverage limitations based on your health history).
Should I leave my health plan the same?
That depends. The good news is that your insurer will automatically renew your coverage as you continue to pay your premiums. The best news is that your plan’s features will be assessed by your insurer every year and when needed, plan maximums and features will be adjusted to keep up with changes in Canada’s healthcare system and costs. As the cost of care increases, your insurance company may raise your costs to keep up. You can think about these things for you personally:
Is your plan covering what you and your family need?
Are you thinking about getting on a stronger health regime and want to take advantage of the great tools available with health insurance? Does it look like the kids will need braces (so you need orthodontic coverage)? Do you have easy access to telehealth or features like prescription drug delivery to make your health management easier? Maybe an upgrade in plan is in order.
Are there new additions to your family?
Did your marital status change? If you divorced or married, your coverage can be affected. You may want to add a co-insured to your plan or change to ‘single’ coverage. (Some health insurance plans allow continuation of coverage for a divorced co-insured person or dependent children if an application for continuation is submitted to the insurer within 30 days of the change in status.)
Do you have a new dependent? You can add a qualified dependent to your coverage at any time by submitting a written application and filling out a medical questionnaire, if applicable. And if your dependent is a newborn, insurers do not require a medical questionnaire as long as they are notified in writing within 30 days of the birth (coverage will be effective the first day of the following month).
Did your little one leave the nest? If your dependent has reached the age of 21 they may no longer to eligible under your plan
If you decide to change insurer, there may be restrictions on when you can apply for the new carrier’s plan – so be certain to understand any barriers to a smooth transition prior to cancelling your existing coverage.
Ask SBIS. We can cross reference your current plan against others.
Balancing the above factors will help you choose a plan that meets your healthcare needs without straining your finances. Regardless of whether you choose to maintain your existing coverage, upgrade, or downgrade your policy, it is important that you select a solution that provides the protection you and your family need. Without adequate coverage, you could be responsible for hundreds or thousands of dollars in medical bills if you experience an unexpected illness or injury. If you need personalized advice, give us a call at SBIS today at 1-800-667-0429 or 416-601-0429. Our business hours are Monday to Friday 8:45 a.m. – 4:45 p.m. eastern time. We can guide you through the specifics of your situation to see if you have the best plan for your needs and budget.
