As people age, their healthcare needs tend to increase, and this can be a significant financial burden for those who are retired and living on a fixed income. In Canada, the government does provide some coverage for healthcare costs through the public health insurance program, but it is important for individuals to understand what is covered and what is not covered, in order to plan appropriately for their retirement years.
The public healthcare system in Canada was established in the 1960s and was designed to provide access to medically necessary hospital and physician services to all Canadians, regardless of their ability to pay. The program is funded through a combination of federal and provincial/territorial taxes and is designed to cover the cost of medically necessary services.
- According to the Canadian Institute for Health Information, total healthcare spending in Canada was approximately $242 billion in 2020 (CIHI, 2020).
- In 2020, the average Canadian household spent $6,604 on out-of-pocket healthcare costs, including prescription drugs, dental services, and other health-related expenses (CIHI, 2020).
- Despite the public healthcare system in Canada, many seniors still face significant out-of-pocket costs for healthcare, including co-payments, deductibles, and other fees not covered by the public program (CIHI, 2020).
What Does the Government Cover?
The Canadian government does provide coverage for a wide range of medically necessary services, including hospital care, physician services, diagnostic testing, and certain prescribed drugs. However, there are limits to the coverage provided by the government and many health-related expenses are not covered, including dental care, prescription drugs not covered by the public program, and long-term care services.
Table: Comparison of Public and Private Healthcare Coverage in Canada
|Public Coverage||Private Coverage|
|Hospital care||Dental care|
|Physician services||Prescription drugs not covered by public program|
|Diagnostic testing||Long-term care services|
|Certain prescribed drugs||Non-medical services (such as home care)|
To give a better idea of the costs involved, consider the following example: A 65-year-old couple who retired in 2020 will need an estimated $350,000 to cover their healthcare expenses in retirement, assuming they live to age 90 (assuming 2% inflation and a 5% discount rate) (CIHI, 2020).
For many retirees in Canada, out-of-pocket healthcare expenses can be a significant burden. For example, a retiree who requires regular prescription drugs not covered by the public program could face thousands of dollars in annual expenses. Similarly, a retiree who requires long-term care services could face substantial costs, as these services are not covered by the public program.
Pros and Cons
- The public healthcare system in Canada provides access to medically necessary services for all Canadians, regardless of their ability to pay.
- The government does provide coverage for a wide range of healthcare services, including hospital care and physician services.
- There are limits to the coverage provided by the government, and many health-related expenses are not covered, including dental care, prescription drugs not covered by the public program, and long-term care services.
- Out-of-pocket healthcare expenses can be a significant burden for many retirees in Canada, particularly those with limited income and savings.
While the Canadian government does provide coverage for some healthcare costs, it is important for individuals to understand the limits of this coverage and to plan for the expenses that are not covered. This can include setting aside funds for out-of-pocket expenses, purchasing private insurance to supplement the public coverage, or considering alternative options such as long-term care insurance. It is important to stay informed about changes to the public healthcare system, as well as any new programs or initiatives that may be introduced to help cover the costs of healthcare in retirement.
For those who are nearing retirement, it is especially important to start thinking about these costs and to develop a plan for how to manage them. This might involve working with a financial advisor to create a retirement budget, considering options for reducing or eliminating out-of-pocket healthcare expenses, and exploring other resources and benefits that may be available to help with these costs.
In short, planning for healthcare costs in retirement is an important part of preparing for a financially secure future, and individuals should take the time to understand the costs involved and to develop a plan for managing these expenses. Whether through the public healthcare system or through private insurance, it is important to ensure that you have the coverage you need to meet your healthcare needs in retirement, so that you can enjoy your golden years with peace of mind and financial security.
- Canadian Institute for Health Information. (2020). Healthcare spending in Canada. https://www.cihi.ca/en/health-spending/health-spending-in-canada.