When people start planning for retirement, they think of the extra time they will have to spend with family, the trips they want to take and other things they can now more easily enjoy. Although they know that health care is an important consideration, many are shocked when they find out just how much health care can cost and how much they may need to pay out of pocket. Many health care needs are not covered by OHIP or through an employer’s health benefits.
Health care for retirees is more expensive than many Canadians realize. “A few years ago, we asked Canadians what they considered the biggest risk when they were planning for their retirement,” says Chris Buttigieg, a senior manager at the Bank of Montreal, in the Globe and Mail. “And the overwhelming response was that they were unprepared for unexpected costs.”
Many Canadians are also confused about what OHIP covers after retirement. In fact, many incorrectly assume that everything is covered. Without some form of private health insurance coverage, the same Globe and Mail article says that the average retired Canadian can expect to pay $5,391 a year on out-of-pocket medical costs after age 65.
One of the main issues is that many Canadians do not have a plan for their long-term care, and with Canadians living longer, having a plan is becoming even more important. “Three-quarters of Canadians have no long-term financial plan for long-term care if they need it,” says Stephen Frank, vice-president of policy development and health at the Canadian Life and Health Insurance Association, in the Globe and Mail.
“As long-term care isn’t covered under the Canada Health Act, depending on an individual’s province of residence and annual income, home care may be either covered, partly covered or – most likely – not covered at all,” adds Anna Sharratt.
Since many Canadians are caught off guard by health care costs when they retire, they must either rely on family to help cover the costs or adjust their living expenses and dip into retirement funds.
Canadians need to have a plan to help offset the cost of health care after retirement. The cost of health care is only going to increase, and the increasing number of seniors is only going to put more pressure on the public health care system.
Here are two ways to ensure you can get the health care you need when you retire:
- Adjust your retirement planning: It’s important to account for health care costs as you plan your retirement. Whether you have already started planning, are close to retirement or are just starting, consider adjusting your retirement plan. You can do this by investing more money into your retirement plan or making adjustments to your current plan to help cover the costs of health care.
- Private health insurance: Investing in a private health insurance plan will help offset the costs not covered by your provincial health care plan. It also provides you with a clear idea of what you have coverage for, helping you to better plan for medical care.
It’s never too early or too late to consider health insurance coverage. Get a free quote for affordable health insurance today!