When Canadians build retirement income plans, they typically project housing, food, travel, and discretionary spending. Healthcare costs — one of the largest and most unpredictable expenses in the later years of retirement — are often dramatically underestimated or ignored entirely. This is a mistake that can unravel an otherwise solid retirement plan.
What OHIP actually covers — and what it doesn't
Canada's public health insurance covers doctor visits and hospital care — but it leaves significant gaps that become more expensive as you age.
| Category | Covered by OHIP? | Typical out-of-pocket cost |
|---|---|---|
| Prescription drugs (under 65) | Partially | $100–$500+/month |
| Dental care | No | $1,000–$5,000+/year |
| Vision care | Partially | $300–$800/year |
| Hearing aids | No | $3,000–$8,000/pair |
| Physiotherapy | Partially | $80–$150/session |
| Private nursing / home care | No | $25–$50/hour |
| Long-term care facility | Partially | $3,000–$8,000+/month |
| Mobility aids, equipment | No | Varies widely |
Average out-of-pocket healthcare costs in retirement
The federal Canadian Dental Care Plan has begun covering some dental costs for uninsured Canadians — but coverage is limited and the program is still being rolled out. For most retirees, dental remains one of the largest out-of-pocket expenses.
Long-term care: the biggest wildcard
Long-term care is the most significant and least predictable healthcare expense in retirement. The risk is real:
- Approximately 70% of people over 65 will need some form of long-term care during their lifetime
- The average length of a long-term care stay is 2–3 years, but many people require care for 5–10 years or more
- Ontario publicly funded long-term care facilities have long waitlists — private facilities are significantly more expensive
- Home care allows you to stay in your own home longer but can cost $2,000–$6,000/month for significant care needs
- If a couple requires care simultaneously, costs can be catastrophic without prior planning
Planning for healthcare costs
Build healthcare costs into your retirement budget
Don't treat healthcare as an 'if needed' expense. Build a specific annual healthcare allocation into your retirement income plan from day one.
Maintain a dedicated healthcare reserve
Carrie recommends setting aside a healthcare-specific reserve fund — typically $100,000–$200,000 for a couple — invested conservatively and earmarked for medical costs.
Model long-term care scenarios explicitly
Carrie will stress-test your retirement plan with scenarios that include one or both partners requiring extended care — showing whether your plan can sustain these costs.
Review provincial government programs
Each province has different drug, dental, and care programs. Understanding your entitlements is the first step in identifying coverage gaps.
Consider insurance solutions
Long-term care insurance, critical illness insurance, and extended health coverage can transfer significant healthcare risk to an insurance company.
Healthcare insurance options
- Long-term care insurance: Pays a daily or monthly benefit if you're unable to perform basic daily activities. Premiums are lower when purchased in your 50s.
- Critical illness insurance: Pays a tax-free lump sum if you're diagnosed with a covered condition (cancer, heart attack, stroke). Can fund extraordinary healthcare costs.
- Extended health & dental: Group or individual plans that cover drugs, dental, vision, and paramedical services. Review whether your employer plan continues into retirement.
- Sun Life health solutions: As a Sun Life advisor, Carrie can review and recommend appropriate coverage for your specific healthcare risk profile.
Carrie's honest advice: Healthcare costs are the most commonly underplanned element of retirement I see. The families who navigate retirement most comfortably are those who built healthcare expenses into their plan from the start — not those who discovered the gap when they needed care. Let's make sure your plan is honest about these costs.
Carrie Wang
Carrie is the founder of Seven Lakes Financial Services Inc. and a Sun Life advisor serving clients across Ontario and Saskatchewan. She specializes in retirement, estate, and investment planning, with a warm, personalized approach. She is fluent in English, Mandarin, and Taiwanese.