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THE QUESTION
I’m 60 years old and work in the retail industry. With the high cost of living these past few years, I have had to dip into my savings to make ends meet. This means I will have to keep working well past age 65 and not retire as I had originally planned. My issue is benefits. I have health and disability benefits through my employer group insurance plan which will end when I turn 65. What is the best way to extend these benefits and make sure I continue to have access to them while still working past age 65? I count on them for my expensive prescription medications and also for disability benefits.
THE FIRST ANSWER
Nainesh Kotak, founder, Kotak Personal Injury Law, Mississauga
Unfortunately, your situation is becoming a more common reality with more than 900,000 Canadians working past the age of 65 as of 2023. It is important to note that most group disability benefits terminate at retirement, or age 65, typically using the earlier date. Canada Pension Plan Disability Benefits also terminate at age 65. Extended healthcare, dental and prescription drug coverage policies may continue as long as a person is employed. Ultimately, it is crucial to ensure that you familiarize yourself with your benefits policies to ensure you are aware of these provisions.
Extending either disability coverage or healthcare coverage past the age of 65 is a conversation that should occur with your insurer and your employer. It may be possible to convert your group insurance benefits to a private policy in order to maintain coverage. If that is not an option, it may become necessary to purchase your own private policy to ensure continued coverage. Unfortunately, obtaining disability or extended healthcare coverage closer to retirement age often results in much higher premiums than usual.
When initially negotiating employment contracts, you may opt to bargain for benefits past age 65, or ask whether a group policy can be converted to an individual one at age 65. If your employer provides different benefit plans as part of a group policy, higher premium plans may provide for these benefits to continue past age 65. As a result, planning in advance is the most important consideration when planning to work past retirement age.
THE SECOND ANSWER
Alecia Henderson, senior vice-president of benefit services, NFP, an Aon Company, Kitchener
The situation you describe is becoming more common for Canadians. Fortunately, there are several strategies to help bridge coverage gaps because you plan to work beyond age 65. To potentially boost your retirement income, consider deferring your Canada Pension Plan (CPP) and Old Age Security (OAS) benefits until age 70 or until you fully retire. By delaying until age 70, OAS can increase by up to 36 per cent and CPP by as much as 42 per cent. Delaying can also reduce your tax burden, especially if your retirement income falls into a lower tax bracket. Keep in mind that OAS benefits may be subject to clawback above certain income levels.
For prescription drug coverage, most provinces offer expanded benefits for those over 65. For example, Ontario’s Drug Benefit (ODB) program covers more than 5,000 medications, with an Exceptional Access Program for some medications not typically covered by ODB. At the federal level, the Canadian Dental Care Plan (CDCP) offers dental coverage for Canadians over 65 with a household income less than $90,000 who lack other coverage, which can be especially helpful as group dental coverage ends.
You may want to explore supplemental health and dental insurance options designed for people leaving group plans, which can help fill gaps in government coverage. Keep in mind that long-term disability coverage beyond age 65 is rare in group plans, and individual policies can be costly. We recommend speaking with a financial or insurance adviser who can help you plan for your health and income needs in the years to come.
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