Your company health and dental benefits are leaving you dangerously uninsured. And if you’re self employed with or without a health and dental plan you’re probably still at risk.
Most people believe that their company benefits will pay them in the event of catastrophic costs. And most of these people would be flat out wrong. The reason is that many (perhaps even most) health and dental plans have a cap on the benefits. The cap varies by company, but you can expect to see it being something in the low thousands of dollars. If you run into healthcare costs higher than that - if things go really wrong - then you’re going to find your health plan not paying anymore.
In Canada we have a couple of ways we can address this huge gap in our coverage. The first offset is through government assistance. Many of these expenses would be tax deductible. And some provinces have special assistance programs where you receive coverage after a certain amount of your income is spent on drugs. Both of those things, where available can help you to cover potentially high drug costs.
However there’s another way to cover this risk as well. It’s called stop-loss insurance. Basically what stop loss insurance is is very high deductible health and dental insurance. For example, stop loss insurance may not cover anything for the first $5000 of costs, then cover everything after that. It’s intended for the really catastrophic eventualities, not for the everyday antibiotic drugs or your annual dental cleanings.
Stop loss insurance is perfect for anyone who mistakenly believes their group insurance coverage at work is going to look after them in the event of catastrophic costs (your plan likely doesn’t have this coverage - you should check). It’s also great for self employed folks or folks who don’t have any health and dental benefits and who are currently paying these costs out of their pocket. From an insurance perspective it’s fine to pay your own health and dental costs for the smaller amounts (though there may be some tax advantages to having a plan) but you should make sure you are satisfied with your coverage for the potential high cost losses. And that’s where stop loss fits the bill.
There’s probably a couple of companies that offer this type of stop loss coverage. Personally since we’re self employed, we just use Manulife’s coverme plan. They have a policy called ‘FlexCare Catastrophic Coverage‘ that is effectively stop loss coverage. This policy covers all your generic drug costs after the first $4500, along with a few other things. The first $4500 of costs would have to be covered out of your current health policy or out of your pocket.
I just ran a quick quote on their site for a family of four, 40 year olds with a couple of kids around 10 years old. Premiums for that case were less than $50 a month. Well worth the piece of mind in this case, particularly at that price.