What Does Alberta Health Care Not Cover?

Critical illness insurance pays a tax-free lump sum when you are diagnosed with one of the conditions listed in the policy. The most common covered conditions are cancer (excluding certain early-stage cancers), heart attack, and stroke. Most policies cover 25 or more conditions, including coronary artery bypass surgery, kidney failure, multiple sclerosis, and Alzheimer's disease.

The key feature is that the money is yours to use however you choose. There are no restrictions. You can use it to cover treatment costs not covered by provincial health care (private rooms, experimental treatments, out-of-country care), replace lost income during recovery, pay your mortgage, hire help at home, or simply reduce financial stress while you focus on getting better.

Coverage amounts typically range from $25,000 to $2,000,000. The right amount depends on your income, debts, family situation, and how long you could manage without working. A common starting point is one to two years of after-tax income.

Disability insurance replaces a portion of your income if you become unable to work due to illness or injury. Unlike critical illness insurance, which pays a one-time lump sum for specific diagnoses, disability insurance provides ongoing monthly payments for any condition that prevents you from performing your job.

Individual disability policies typically replace 60% to 70% of your gross income. The benefit is structured this way because if you pay the premiums personally with after-tax dollars, the benefit is received tax-free. If your employer pays the premiums, the benefit is taxable income. This distinction matters significantly when calculating how much coverage you actually need.

The two most important features to evaluate in any disability policy are the definition of disability and the benefit period. These two factors determine whether the policy will actually pay when you need it and for how long.

If you have group benefits through your employer, you likely have some level of life insurance, disability coverage, and health/dental benefits. The problem is that group plans are designed to provide a baseline level of coverage at a reasonable cost to the employer. They are not designed to fully protect your family's financial situation.

Group life insurance is typically one to two times your annual salary. If you earn $100,000 and have a mortgage, two kids, and a spouse who works part-time, one to two times salary is nowhere near enough. A proper needs analysis would likely show a requirement of eight to twelve times your income.

Group disability coverage often has significant limitations: the definition may switch to "any occupation" after two years, the monthly maximum may be capped at $5,000 or less, and the benefit is taxable because your employer pays the premiums. After tax, you may be receiving 40% of your pre-disability income.

If you are self-employed, a contract worker, or your employer does not offer group benefits, individual health and dental plans can fill the gap. These plans cover prescription drugs, dental care, vision, paramedical services (massage, physiotherapy, chiropractic), and other expenses not covered by your provincial health plan.

Individual plans are medically underwritten, which means you answer health questions at application and the insurer may exclude pre-existing conditions or decline coverage. Premiums are based on your age, health status, and the level of coverage you select. Unlike group plans, where the employer typically pays a portion of the premium, you pay the full cost yourself.

For self-employed individuals, health and dental premiums may be deductible as a business expense if you meet certain criteria, or they may qualify for the medical expense tax credit on your personal tax return. Consult your accountant for the most tax-efficient approach.

Long-term care insurance provides benefits when you are unable to perform a specified number of activities of daily living (ADLs) such as bathing, dressing, eating, toileting, continence, and transferring (moving from bed to chair). It can also be triggered by cognitive impairment such as Alzheimer's disease or dementia.

The cost of long-term care in Canada varies significantly by province and type of facility, but private or semi-private care can easily cost $4,000 to $8,000 per month or more. Provincial programs cover some of this cost, but wait lists for subsidized beds can be long, and the level of care may not meet your expectations.

Long-term care insurance is most relevant for individuals in their 50s and 60s who want to protect their retirement savings and maintain choice about where and how they receive care. The premiums increase significantly with age, so earlier application results in lower rates, but you are paying for a longer period before you are likely to need the coverage.