Wealth Strategies: What you need to know about travel medical Insurance

Milestone Wealth Management Ltd. - Jun 16, 2015
As a Canadian we get ingrained at an early age that if you travel to the United States you must purchase extended health care coverage before you depart Canada or else very bad things may befall you.  Let us then take a closer look at what is in....

Retiring Abroad: What you need to know about travel medical Insurance

As a Canadian we get ingrained at an early age that if you travel to the United States you must purchase extended health care coverage before you depart Canada or else very bad things may befall you.  Let us then take a closer look at what is in place now in Canada, where we travel to, for how long, and what type of coverage we might need. 

First let us launch in to the standard disclaimer that this post is not intended to be holistic, all-encompassing guidance on everything you need to know about travel insurance.  Your individual situation will depend on your personal health, travel choices, budget and many other considerations. 

Healthcare in Canada is administered and delivered provincially, for Alberta this is through the AHCIP (Alberta Health Care Insurance Plan).  There are many eligibility requirements to allow for participation in this plan but the two most notable to our topic on travelling are that you must be present in Alberta for at least 183 days within a 12 month period and that you are not claiming residency elsewhere.  

So let’s assume you meet the eligibility requirements and wish to travel within Canada, are you covered?  By and large, the answer is yes, that provinces have reciprocal coverage arrangements for hospitals and physician care with some exceptions existing in Quebec. 

If you travel out of the country, it is not true that your provincial health coverage simply drops off.  The system turns in to a reimbursement process whereby if you incur medical costs you pay them out of your own pocket and then look to the province for reimbursement.  The catch here is the coverage amounts.  Broadly speaking the maximum reimbursement through the AHCIP is $100 per day for hospital and physician care or $50 per day for outpatient services.  With this, we are then able to see where the myth of not being covered when you travel to the U.S. finds its footing.  Even the smallest of medical conditions will likely far exceed these kinds of allowances.  Enter travel medical insurance. 

The most common kind of travel insurance is to pick up the phone and purchase coverage through say, the AMA, for anywhere up to 60 days of consecutive travel.  You must meet underwriting requirements, most notably not getting tripped up with pre-existing health issues that may be excluded from being covered or invalidate you altogether from getting coverage.  Assuming all goes well you pay an upfront premium and cross your fingers that you will never make a claim.  If you do make a claim, however, and you are now stuck in that country due to your medical condition, it is possible through some insurance carriers to extend your coverage up to 183 days which.  As you might have guessed this dovetails with AHCIP’s eligibility requirements.  Some carriers might even extend this out to 365 days if they receive written evidence from AHCIP that you must remain where you are and that AHCIP is still covering you (the small amounts mentioned above) for that duration.  After one year, however, your travel insurance fully drops off in most cases both from the AHCIP and your personal coverage. 

Now if your goal is to travel more permanently, beyond the 183 day residency requirement there are two options available to you.  The first would be that you are taking up residency in a foreign country and you would apply to become eligible for their health care system.  Clearly a residency change also comes with tax implications but we can save that expansive topic for another day.  If you can meet your new country’s eligibility requirements then great, if you can’t, or they do not have a system, or you think you might move on again, then what? 

The solution would then be to seek out and purchase what is typically referred to as Ex Pat Health Insurance.  These packages are often geared towards executives getting transferred to far off locales where there is poor coverage or they might not qualify for coverage.  For many, you can run off preliminary quotes online keying in answers for where you are departing, where you plan on living, your age and how excellent (or not) you wish your coverage to be.  Experimenting with one website, we looked at a 55 year old Canadian looking to relocate to Bermuda.  Choosing a zero deductible option it calculated an annual premium of $8200 for a low to mid-level type of coverage package.  Increasing the deductible can reduce this premium by up to 60% if you are willing to front more costs out of pocket or you are simply convinced that you are very healthy and are going to remain so for some time to come. 

We would be remiss here to not mention Snowbird-specific coverage for those Canadians who like to winter in the U.S. but return to Canada to meet all their eligibility requirements for tax and healthcare.  These packages cater to the Snowbird demographic by reducing some costs and tweaking the underwriting process, most notably with respect to a more favorable approach towards pre-existing health conditions.  

Lastly, when applying for travel health coverage, it all comes down to disclosure.  Work with a reputable sales agent who asks questions in a clear and concise manner and then answer those questions as fully and comprehensively as possible.  We have all heard stories of horrific bills being declined by insurance companies for some small, perhaps even unrelated health issue that was not disclosed during the medical interview process. We wish you all the best in your travels while also wishing you many safe returns.