Buying Health Insurance Made Easy: Tips for First-Time Buyers

It might seem a bit counterintuitive to buy health insurance in a country with universal healthcare. However, it doesn’t take much—like an infected tooth or a costly prescription—to realize that our public system has its limits. 

While many Canadian employers offer supplementary health insurance, not everyone is so fortunate. If you’re self-employed, retired, or recently transitioned off your parents' coverage, you might find yourself facing extra medical expenses—without the cushion of a health insurance plan.

Overwhelmed by the thought of choosing a health insurance plan on your own? We’re about to walk you through the entire process, so you can confidently choose a plan that keeps you and your family protected.

Why Buy Health Insurance?

As of 2023, the Canadian government covers about 65% of healthcare costs, leaving Canadians responsible for the remainder—12% of which is covered by private health insurance plans and 15% out of pocket. Buying supplementary health insurance provides a financial safety net, so you can access healthcare services that fall outside government plans like preventive care services, massage therapists, chiropractors, optometrists, and dentists—without the financial burden.

Understanding Health Insurance Terms

Feel like your health insurance plan was written in a different language? Trust us, we've been there too. Here’s a quick guide to standard terms and their meanings to help you make sense of it all.

Premium: The amount you pay each month for your health insurance coverage. Paying your premium keeps your policy active.

Deductible: The amount you pay out of pocket for covered healthcare services before your insurance plan starts to pay. Higher deductibles usually mean lower premiums, and vice versa.

Co-pay: Co-pays are a fixed fee you pay for a covered healthcare service, like a dentist's visit or prescription, and are typically required at the time of service.

Co-insurance: The percentage of costs you pay for a covered healthcare service after you've met your deductible. For example, if your plan has 20% co-insurance, you pay 20% of the costs while your insurance covers 80%.

Out-of-Pocket Maximum: This is the most you have to pay for covered services in a plan year. Once you reach this limit, your insurance covers 100% of additional covered services for the rest of the year.

Formulary: A list of prescription drugs covered by your health insurance plan. Formularies are divided into tiers, which determine the cost of the drugs.

Explanation of Benefits (EOB): A statement from your insurance company explaining what medical treatments and services were paid for on your behalf. This includes the amount covered and any amounts you owe.

Pre-existing Condition: A health issue or condition that existed before your health insurance coverage began. Some plans may have waiting periods or exclusions for pre-existing conditions.

Referral: A written order from your primary care doctor for you to see a specialist or get certain medical services. Some plans require referrals to see specialists.

Claim: You or your healthcare provider submit a request for payment to your insurance company after receiving services. Claims are reviewed to determine the amount the insurance will pay.

4 Different Ways to Buy Health Insurance

When it comes to buying health insurance, you have a few options. Here are the most common ones:

1. Employer-Sponsored Plans

Most businesses offer employer-sponsored plans as part of your benefits package. They typically provide comprehensive medical, dental, and vision care coverage. Because the employer shares the cost of these plans, they often have lower premiums—making them a convenient and cost-effective option.

2. Government Programs

While the public healthcare system covers basic medical services, it doesn’t include dental care or prescription drugs. To address these gaps, government programs offer additional coverage for specific groups, such as seniors, low-income individuals, and veterans. However, these are provincial and territorial programs (rather than federal), so each province and territory will have different programs and eligibility requirements.

3. Private Health Insurance

Private (or individual) health insurance can be purchased directly from insurance companies. These plans offer flexibility in terms of coverage options and can be tailored to your specific needs, making them ideal for Canadians who want more comprehensive coverage, or self-employed individuals without employer-sponsored insurance.

4. Insurance Brokers

Insurance brokers are experts who can guide you through the range of health insurance options. They offer personalized advice tailored to your healthcare needs and budget, helping you find the best plan. 

Factors to Consider When Buying Health Insurance

If you’re one of the 1 in 5 Canadians (7.5 million people) who are uninsured and paying out-of-pocket for prescription medications, understanding these factors can help you avoid coverage gaps and unexpected expenses.

• Coverage Needs: Assess your family’s healthcare needs, including the frequency of specialist visits and prescription medications. Make sure the plan covers preventive care services, chronic disease management, and emergency services to ensure comprehensive coverage.
• Budget: Determine how much you can afford to spend on health insurance premiums each month. Remember to factor in associated costs like deductibles, co-pays, and out-of-pocket maximums—which account for nearly 50% of private sector spending. 
• Prescription Drug Coverage: Make sure your plan's prescription drug plan covers any regular medications and understand any costs or restrictions.
• Plan Flexibility: Consider how flexible the plan is in accommodating changes in your healthcare needs. This includes adding family members, changing doctors, or adjusting coverage levels as you age. A plan that offers flexibility can be more adaptable to your changing health circumstances.
• Additional Benefits: Look for any extra benefits the plan may offer, such as dental, vision, mental health services, or wellness programs. These benefits can add significant value to your insurance plan and provide comprehensive coverage for your overall health.
• Customer Service: Research the insurance company's reputation for customer service. Efficient claims processing, helpful support staff, and clear communication are essential for managing the costs of your health insurance effectively.

Common Mistakes to Avoid When Buying Health Insurance

Avoiding these mistakes can help you choose the best health insurance plan for your needs:

• Not Assessing Coverage Needs: Choose a plan that covers your medical history, doctor visits, and ongoing treatments.
• Overlooking Total Costs: Consider premiums, deductibles, co-pays, and out-of-pocket maximums to understand the full financial impact.
• Not Reviewing Prescription Drug Coverage: Check if the health plan covers your regular medications and understand any restrictions.
• Skipping the Fine Print: Read the policy thoroughly to understand its health coverage limits and exclusions.
• Not Comparing Multiple Plans: Compare different plans to find the best fit for your needs and budget.
• Ignoring Customer Service Reputation: Research the insurance company's support and claims processing efficiency.
• Underestimating Additional Benefits: Look for plans with comprehensive benefits, including dental, vision, and mental health services.

How to Buy a Health Insurance Plan in Canada

Now that you understand what to look for in a health insurance plan, it’s time to buy one. Here's how you can do it:

Step-by-Step Guide

1. Determine Your Coverage Needs: Assess your healthcare requirements, including medical, dental, vision, and prescription drug coverage.
2. Research Your Options: Look into different health insurance providers and their plans. 
3. Get a Quote: Use online platforms like PolicyMe to get a quote in as little as 30 seconds.
4. Compare Plans: Evaluate the plans based on coverage, premiums, deductibles, co-pays, and out-of-pocket maximums.
5. Check for Additional Benefits: Look for plans that offer extra benefits such as mental health services, wellness programs, and coverage for alternative therapies.
6. Apply Online: Complete your application online. Platforms like PolicyMe allow you to finish this step in about 5 minutes. This can be done on your own or with the help of a phone advisor.

Tips for First-Time Health Insurance Buyers

Navigating the complex world of health insurance for the first time can be a lot. Here are a few tips to help you navigate the process like a pro.

• Assess Your Needs: Consider what medical services you and your family use most frequently. Do you need extensive prescription drug coverage or are dental and vision care more important?
• Understand the Basics: Familiarize yourself with key terms like premiums, deductibles, co-pays, and out-of-pocket maximums. Knowing these terms will make it easier to compare plans.
• Compare Plans: Look at various health insurance plans to see what each offers. Pay attention to coverage details and costs.
• Consider Total Bills: Remember, your overall health insurance costs will include more than your monthly premium payments. Factor in deductibles, co-pays, and other out-of-pocket expenses to understand the plan's total cost and ensure it aligns with your budget.
• Look for Additional Benefits: Some plans offer extra benefits like mental health services, wellness programs, or alternative therapies that can add significant value to your coverage.
• Read the Fine Print: Yes, all of it. Knowing the details helps you fully grasp your coverage and understand any limitations.
• Seek Expert Advice: When in doubt, consult an insurance advisor. They can provide personalized recommendations based on your specific needs and circumstances.

Frequently Asked Questions About Buying Health Insurance