Extended Health Care Insurance (Canada)

Extended-Health-Care-Insurance-Canada

In Canada, many of the basics of healthcare are provided through the government health plan.  However, many important expenses are not covered, including prescription drugs, medical devices (e.g., crutches, wheelchairs and orthotics), various practitioners (e.g., chiropractors, physiotherapists and psychologists) along with many other types of medical expenses.  Extended health care insurance covers a portion of these costs, with the portion and specific costs covered varying from plan to plan. Other features of some plans include dental and vision coverage, the portion of ambulance services not covered by provincial insurance and semi-private hospital rooms.  The insurance includes many of the same coverage terms used in US health insurance. If you are considering the purchase of extended health care insurance, I suggest that you read my Health Insurance post, excluding the sections on HealthCare Flexible Savings and Health Savings Accounts.

Dental Insurance

Dental-Insurance

Dental insurance pays for preventative dental services (usually two to four cleanings per year), a portion of other dental expenses (fillings, crown, root canals, for example) and sometimes orthodontia. The amounts of these expenses covered depends on the deductible and coinsurance.

Every dental insurance plan I’ve had offered by employers has had a very low maximum, such as $1,500 or $2,500.  This coverage differs from most other insurance products. Most other insurance products protect against things you can’t afford to lose, such as the injuries caused by a car accident or a tornado that destroys your home.

Dental Insurance Cost Comparison

Because dental insurance has such low limits, it doesn’t provide much protection against large dental bills. As such, the decision to purchase it is primarily a comparison of your premium with your covered expenses. Each year, I estimated my family’s dental expenses by type.  That is, I considered how many family members get regular cleanings, what the visits would cost and how many of my children had braces.  For this part of my analysis, I ignored all other dental expenses, such as fillings or root canals.

My dental plans always had the same coverage in and out of network, so the cost analysis was straightforward.  Before doing any sort of cost-benefit analysis, you’ll want to make sure you understand how in- and out-of-network dental expenses are treated, determine whether your dentist is in the network and reflect the impact on your covered expenses.  I applied the deductible and coinsurance to the expenses and compared the amount I estimated I would recover from the insurer with the premium. Networks, coinsurance and deductibles are all covered in my post on health insurance.

Discounts negotiated by the dental insurer with providers are another component of savings.  Similar to health insurance, the cost of dental services provided by in-network providers when you have dental insurance can be significantly less than the cost if you don’t have insurance.  This savings is difficult to quantify initially, but you can estimate it once you have used the same provider under a single dental insurer for a year or two. You can then include those savings in your analysis as a cost covered by the insurer.

How to Decide Whether to Buy Dental Insurance

If the premium and amounts covered by the insurer were fairly close or the premium was less, I would buy the dental insurance.  If the premium was significantly more than the covered expenses, I usually took my chances that no one would need any expensive dental work.

As with all other financial decisions, the risk-reward trade-off is an individual one so you will need to decide for yourself how much extra premium you are willing to pay to have a portion of unexpected dental expenses reimbursed by the insurer.  As you do so, remember that there is likely a fairly low cap on the total coverage provided by the insurer, so you’ll want to see how much of that maximum you’ll use up with your preventative and orthodontia expenses in evaluating that risk-reward trade-off.

Acknowledgements

I again want to thank Laura Kenney for her invaluable help with this post.

Vision Insurance

Vision-Insurance

Vision insurance is generally covers the basics – eye exams related to vision correction, glasses and contact lenses – and doesn’t usually cover more serious eye conditions.  As an aside, you should be aware that some eye conditions are considered medical in nature and are covered by health insurance. If you have an eye condition, I suggest contacting your health insurer to see if it is covered as a medical condition.

Networks of Providers

Vision insurers usually create a network of providers. My experience is that there are huge differences in coverage in and out of network, so you’ll want to see whether your providers are in or out of the network. I ran into a situation in which my eye clinic was listed as being in network, but it turned out my specific eye doctor was not. As such, it might make sense to call your eye doctor’s office before selecting vision coverage to confirm whether your specific provider is in your network.

Cost Comparison

The decision whether to by vision insurance is fairly easy. You want to answer the question, “Will I recover more than the premium?” I start by making a list of my expected annual vision expenses, including how many sets of glasses and contact lenses each person in my family is likely to need. I then apply the co-pays, deductibles and/or coinsurance to see how much I will receive from the vision insurer. See my this post on Health Insurance if you aren’t sure how co-pays, deductibles and coinsurance work.

I am also aware that some health insurance plans cover a basic vision exam. You’ll want to research whether your health plan includes that benefit. If your health insurance plan has that coverage (and your provider is in your health insurer’s network which will likely be different from the vision insurer’s network), you’ll want to exclude any recoveries from the health insurer or exclude those expenses from your list before estimating recoveries from your vision insurer.

How to Decide

I compare the total amount I estimate I will recover with the premium.  If the premium is less than the recoveries, I purchase the coverage; otherwise I don’t.  Many vision insurance plans do not cover anything other than preventative services, glasses and contact lenses.  As such, the decision to purchase vision insurance is often a straightforward cost-benefit comparison and is less focused on risk and reward.  Of course, if your plan covers other eye issues, you’ll want to take those into consideration in your decision-making process.