When a spouse passes, life goes on – and one of the biggest considerations is a future financial safety net for you, and your family’s, health.
I’d like to talk about a couple close to my heart: Audrey and Fred. (Audrey and Fred, btw, aren’t their real names.)
Sadly, Audrey lost Fred to COVID-19 last year.
Audrey called me the other day; we’ve had many, many conversations over the last little while about funeral arrangements, the purchase of a cemetery plot, donations in Fred’s memory, that sort of thing. Since I had also recently lost a spouse, she knew I had been through all this before… I was an empathetic voice of experience.
I assumed this would be a call much like the others; Audrey needing an ear to bend or a shoulder to cry on.
But not this time.
Audrey didn’t want to discuss Fred or his death, she needed medical advice. It might be odd to call a financial advisor for that, but what she was really concerned about was the cost of her prescription drugs.
Since Fred’s passing, Audrey’s doctor prescribed anti-anxiety medication. The costs were piling up which leads to… you guessed it… further anxiety.
Wait, there’s more. Her eldest daughter had four impacted wisdom teeth that demanded removal. Was she covered for dental surgery?
Anxiety on top of anxiety.
With so much happening when a spouse passes away, medical coverage that once existed – but may not any longer – isn’t your first worry. But as with Audrey, it will ultimately come up and you don’t want to be uninformed and ill-prepared.
Where does employer health care coverage begin and end?
Employers generally provide employees and their families with specific health care coverage. It can vary from employer to employer, but that usually entails vision, dental, and a certain level of health care.
In my experience, most of my clients know they have some form of coverage, but too often have no idea of exactly what – and how much – they’re covered for.
In my financial planning practice, I encourage my clients to thoroughly review each section of their employer health care plan, know exactly what it’s saying, and select benefits deliberately. Personally, I appreciate the importance of dental and vision care, but consider health care coverage most important.
So, let’s start there.
The two ways most Canadians are covered for health care.
Health care coverage in Canada has two components: Public-funded universal health care through the government, and employer-provided health benefits.
1) Universal Basic Health Care
The Canadian government provides basic health coverage through its publicly-funded universal health care system. This covers basic healthcare such as hospital and emergency room care, doctor visits, and medical services such as X-Rays or MRIs. It doesn’t cover the cost of prescription drugs or dental expenses.
Provinces and territories administer and deliver health care services according to the Canada Health Act.
2) Employer health benefits
Employers usually supplement our universal health care by providing (often limited) coverage for drugs, upgraded hospital room, and specific health care professionals such as psychologists, naturopaths, chiropractors, etc. They may also provide coverage for certain dental procedures.
When combined with Canada’s universal health care program, most of our typical health care costs (including prescription and dental care) are covered.
Back to Audrey and her family – what are they covered for?
Since Audrey and her kids are Canadian citizens residing in Canada, they’re covered by Canada’s Universal health care program. But what about Fred’s employer health care plan? Is it still active?
There’s no set rule, but most policies I’ve reviewed cover the deceased employer’s family for a certain period of time. I reviewed Audrey’s plan and, because Fred died more than a year ago, the plan had lapsed. This means Audrey, herself, must pay for her prescription medication and her daughter’s dental surgery.
So, where did this leave Audrey (once the shock subsided)?
Private health care coverage: Once the reality of these sudden and massive expenses set in, I sat down with Audrey to discuss the future. I presented the option of private health insurance through one of the major insurance companies (i.e.: Manulife, Sunlife, Canada Life) to cover some of her out-of-pocket medical expenses going forward.
Once we compared coverage, exclusions, annual limits, premiums, etc., Audrey applied for a policy providing limited coverage for prescription drugs and dental. Because of the policy’s limits, Audrey added a standalone policy to cover catastrophic expenses.
Catastrophic health coverage: My late wife Mary fought ovarian cancer for almost five years. After completing her first round of chemo, her oncologist recommended a special cancer treatment. The cost? $50,000 a month. Yes, you read that right.
That is the very definition of catastrophic.
Yes, we wanted this treatment. Dearly. Desperately. But how could we ever afford it? Would my health care plan cover so much money? What about my annual limits? I worried that we faced not just a massive medical concern, but a financial one as well.
The cost of Mary’s treatment was initially rejected by the insurance company because it was not approved by Health Canada. We were in a quandary, Mary’s oncologist recommended the drug because research studies suggested that the drug (officially approved for another cancer treatment) could also be effective for patients with Ovarian cancer yet Health Canada had not approve the drug for the use recommended by the oncologist.
We didn’t give up. We wrote a letter and asked the oncologist to also explain his reasoning and we submitted a rebuttal to the insurance company. Fortunately, it was approved. Mary and I were thrilled, and the drug worked… it gave Mary a period of 1 and half years when the cancer didn’t spread or progress.
In hindsight, almost all of Mary’s treatments were covered by our public and my private health insurance and I don’t know the full cost of her treatments but I’m guessing it was a huge bill. It included 26 rounds of chemo, three major surgeries and numerous follow-up appointments with her family doctor, a nutritionist, a therapist and many other medical professionals.
In Audrey’s case, given the policy she selected, it’s reasonable that the cost of drugs or health care professionals due to a serious illness or accident could exceed her plan maximums. Putting Audrey right back where she started.
So, what does catastrophic health insurance do? It protects against expenses that may not be covered by our government health insurance or that exceed insurance plan maximum limits. Audrey needed the plan to be affordable, so she chose a high deductible – $10,000, in her case. This means she pays the first $10,000 in expenses; after that any out-of-pocket medical costs are covered by the insurance plan.
Yes, $10,000 is a lot of money. But Audrey had the comfort of knowing her expenses end there.
When it comes to health coverage, make no assumptions
If you’re widowed, no matter how recently, don’t assume your late spouse’s employee health plan will still cover your medical expenses. Be sure to set time aside to read the plan details – every single word.
If. Like Audrey, you and your family find you’re no longer covered, consider private health insurance – and add the peace of mind that catastrophic coverage can provide beyond the stand-alone policy.
It’s all very complex, especially at a time when you might still be grieving, so if you have any questions feel free to call me and I’ll do all I can to guide you through your decisions.
I’d like to think I did something to alleviate Audrey’s anxiety, both as a friend and as a financial advisor.
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