More Canadians are working past 65 and delaying their retirement plans for greater security. Here’s why putting your dreams on hold could hurt you — and what to do about it

How delaying retirement could impact your benefits

Many group insurance policies terminate at age 65, which typically impacts disability and life insurance benefits. So, if you stay with your employer after age 65, your benefits could expire at a time when you may need them the most.

“A lot of group policies state that coverage for benefits automatically terminates at age 65,” Rajiv Haté, a senior lawyer at Kotak Personal Injury Law told BNN Bloomberg. “Usually that is with respect to disability and life insurance, but sometimes it can even extend into health and dental benefits as well.”

Say, for example, you’re 66 years of age and have been working at the same company for 20 years, with full benefits. You’re injured on the job and make a claim, only to find out your insurance expired when you turned 65 and the insurer denies your claim. Since you don’t have coverage, there’s not much you (or even a lawyer) can do about it.

Whether your health and dental benefits expire will depend on your employer’s policy. Some policies will continue past age 65, so long as you’re paying your premiums. Others will end at age 65, though there may be an option to convert it to private coverage.

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How to mitigate those risks

That doesn’t mean you’re out of luck if you want (or need) to work past age 65. While you’re still covered by provincial healthcare, a lot of out-of-pocket expenses aren’t covered, which is where private health insurance can help.

If you are planning to work into your golden years, it’s a good idea to check with your employer and insurance provider whether your benefits will automatically end at age 65. Ask for a copy of the policy and find out if you have alternative options.

For example, you may be able to buy extra coverage under your employer’s plan or convert it into a private policy. You could try to extend your coverage to age 70, or even 75. An extension typically comes with higher premiums, but it could be worthwhile for anyone intending to work past age 65.

With health and dental, Haté recommends this approach; even if your premiums are higher, you likely wouldn’t have to take a medical exam. On the other hand, if you purchase a brand new policy, you may be required to take a medical exam and, because of your age and any underlying conditions, your premiums could be much higher or worse, you could be denied coverage altogether.

If you’re not nearing retirement age any time soon or, like many Canadians, you don’t receive group benefits, you might want to take matters into your own hands. If you work for a small business or run a small business, a Health Spending Account (HAS) is a tax-advantaged option that can help you save for healthcare expenses — but you’ll need to follow specific CRA rules.

You could even start putting money aside in a high-interest savings account as an emergency healthcare fund. That way, if a major medical expense comes up that isn’t covered by provincial health insurance (for example, you need a root canal or have to pay for expensive medications) then you won’t be scrambling to come up with the cash.

Sources

1. Statistics Canada: Employment by choice and necessity among Canadian-born and immigrant seniors (April 24, 2024)

2. Youtube: More Canadians are working past retirement age by BNN Bloomberg (October 2024)

3. Government of Canada: Warning: Buyer beware when it comes to Health Spending Accounts