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Rising Out of Pocket Health Expenditures

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Retirement is an exciting time for most Canadians. It's the culmination of a lifetime of hard work ending with a chance to finally relax and live a life of leisure. Fortunately, those of us who are retiring in Canada, we can look forward to having most of our healthcare costs covered by the province or territory where we reside.

Note that we said “most” healthcare costs. There are a significant number of healthcare services that fall outside of what’s covered by the government. These services include prescription drugs (covered in some provinces after age 65), physiotherapy, dental care, emergency ambulance transportation and medical equipment.

Those planning to retire in the next few years must ensure adequate room in the budget for out of pocket healthcare expenses.

Health Expenditures on the Rise

Many Canadians understand that there are services that fall outside the provincial healthcare programs. What they don’t understand is the effect on their household budgets that paying for those services can have, especially as they get older.

Paying for prescription drugs out of pocket when you are young and healthy may mean occasionally picking up the tab for antibiotics for a lingering infection or medication to manage the pain from a sports injury.

However, paying for prescription drugs out of pocket when you are managing an ongoing health condition like high blood pressure or diabetes is another story. The situation is only made worse by the increasing costs that are attached to these treatments every year.

According to a recent CBC online article, out of pocket healthcare expenditures have been steadily on the rise over the last 12 years, and there is no end in sight to this trend. This can leave those living on a fixed income, like retired seniors, struggling with the decision to choose between paying for necessary medical treatments or paying necessary household bills.

Insurance Protects Financial Freedom

There’s no way to know for sure how high out of pocket health expenditures will climb. As provincial and territorial governments make changes to their budget each year, more and more covered services may find their way off the list. This can strain the already tight conditions of life on a fixed income.

Fortunately, your healthcare and household budget don’t have to exist at the whim of the latest government in power. Health and dental insurance companies keep a close eye on the outcome of federal and provincial budget announcements. This allows insurers to be flexible when adapting to new changes in healthcare coverage.

Another advantage to health and dental insurance premiums versus paying for out of pocket health expenditures as they arise is the ability to plan accordingly. Other than incremental rate adjustments occasionally, insurance premiums are a fixed cost that can be considered when planning retirement savings. Some insurance providers also have category increases every few years, so make sure you ask about these when applying for insurance so you can stay within your budget.

If you’re getting close to retirement, speaking to an insurance broker now can help you better understand how insurance works. An insurance broker works for you, not the insurance companies, and can help you make sense of the sometimes complicated language of insurance.

Be sure to speak a broker when choosing the right health and dental insurance for your needs in retirement.

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