# Friday, March 8, 2013
Retirement Health Insurance
Retirement is something that many of us look forward to. No more daily grind, no more long, slow commutes through congested traffic. Retirement is a time to unwind and get active with those things that we find interesting.

One aspect of retirement that is sometimes overlooked is continued health and medical benefits. This is especially important for those retirees that had an employee benefits healthcare plan at work. A group insurance plan usually provides health, dental, prescription drug and vision care coverage at little or no cost to the employee, and this coverage is lost upon retirement.

A good human resources department will advise a retiring employee about various retirement health insurance options, but sometimes this does not happen. The onus is then on the retiring employee if they want continued medical benefits.

Important Health Insurance Tips for Retirees

The following are a summary of important tips for retirees and are expanded upon further down in the article:
  1. Act quickly if you have just retired and lost your employee benefits coverage! There are group conversion plans (see below) that are guaranteed issue, but there is a limited time to apply after the loss of group insurance.
  2. If you have pre-existing conditions then you probably want to get a guaranteed health insurance plan, which will cover those existing conditions.
  3. If you do not have pre-existing conditions than you can apply for a medically underwritten health plan.
  4. Mitigate your risk (see below)!

Group Conversion Insurance

There are group conversion plans available if you have just lost your employee benefits. The key here is that you must apply for group conversion insurance (such as Manulife’s FollowMe) within 60 days of losing your benefits. It does not matter what province you live in, nor does it matter which insurance company provided your employee benefits.

The strength of a group conversion plan is that it is guaranteed issue. Consequently there are no medical questions and pre-existing conditions (e.g. taking regular medications) are automatically covered. Oftentimes this is exactly what a retiring employee is looking for in a medical plan.

Mitigation of Risk

It is important to understand the concept of risk mitigation, whereby a person’s particular health condition is lumped in together with the health of many other people. With a traditional group insurance plan, risk is mitigated among all covered employees.

It is advantageous to mitigate risk since you can make many claims and not have your premiums being increased as a result. There are usually small yearly premium increases which are applied to all covered persons, as opposed to hefty increases applied on a claimant by claimant basis.

How risk is mitigated with individual health insurance plans is specific to the insurance company and medical plan. Some plans mitigate risk among all covered persons, while other plans will single you out for a rate increase if you make claims.

Pre-Existing Conditions and Medical Benefits

Oftentimes a retiree will have some pre-existing conditions. These range from relatively minor ailments which may require medication to life threatening conditions that can be expensive to treat.

If you have pre-existing conditions and do not qualify for a group conversion plan it is still possible to get medical coverage via a guaranteed health insurance plan. There are no medical questions and acceptance is guaranteed.

The downturn to guaranteed health insurance when compared to medically underwritten plans is that it can be more expensive and have lower overall maximums.

If you do not have any serious pre-existing conditions, or if you are not concerned with getting pre-existing conditions covered for that matter, then you can apply for a health plan that is medically underwritten. Medically underwritten plans require the applicant to answer a medical questionnaire. The insurance company audits the applicant’s medical history and then either approves the application, rejects the application or replies with a counter-offer. Counter-offers usually involve modified coverage whereby some (or all) pre-existing conditions are excluded. 

Retirees and Life Insurance

While this blog article concentrates on medical benefits, it is important to note that retiring employees can also lose their life insurance coverage since it was bundled into their group insurance plan.

If you are a retiree and want to continue having life insurance coverage then it is possible to convert that life insurance plan into a no medical life insurance plan.


Retirees do have options when it comes to medical benefits. The options available depend upon whether or not they had recent employee benefits, as well as the existence of pre-existing conditions.

If you would like more information please feel free to call us toll-free (1-800-474-4474) to talk to one of our licensed, experienced Canadian insurance brokers!

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