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THE QUESTION
I’m 60 years outdated and work within the retail business. With the excessive price of residing these previous few years, I’ve needed to dip into my financial savings to make ends meet. This implies I must hold working nicely previous age 65 and never retire as I had initially deliberate. My situation is advantages. I’ve well being and incapacity advantages by way of my employer group insurance coverage plan which is able to finish after I flip 65. What’s the easiest way to increase these advantages and ensure I proceed to have entry to them whereas nonetheless working previous age 65? I depend on them for my costly prescription drugs and likewise for incapacity advantages.
THE FIRST ANSWER
Nainesh Kotak, founder, Kotak Private Damage Legislation, Mississauga
Sadly, your state of affairs is turning into a extra frequent actuality with greater than 900,000 Canadians working previous the age of 65 as of 2023. It is very important be aware that the majority group incapacity advantages terminate at retirement, or age 65, sometimes utilizing the sooner date. Canada Pension Plan Incapacity Advantages additionally terminate at age 65. Prolonged healthcare, dental and prescription drug protection insurance policies might proceed so long as an individual is employed. In the end, it’s essential to make sure that you become familiar together with your advantages insurance policies to make sure you are conscious of those provisions.
Extending both incapacity protection or healthcare protection previous the age of 65 is a dialog that ought to happen together with your insurer and your employer. It might be attainable to transform your group insurance coverage advantages to a non-public coverage with a purpose to preserve protection. If that’s not an choice, it might grow to be needed to buy your individual non-public coverage to make sure continued protection. Sadly, acquiring incapacity or prolonged healthcare protection nearer to retirement age usually ends in a lot larger premiums than common.
When initially negotiating employment contracts, it’s possible you’ll choose to discount for advantages previous age 65, or ask whether or not a bunch coverage will be transformed to a person one at age 65. In case your employer supplies completely different profit plans as a part of a bunch coverage, larger premium plans might present for these advantages to proceed previous age 65. Because of this, planning prematurely is a very powerful consideration when planning to work previous retirement age.
THE SECOND ANSWER
Alecia Henderson, senior vice-president of profit providers, NFP, an Aon Firm, Kitchener
The state of affairs you describe is turning into extra frequent for Canadians. Thankfully, there are a number of methods to assist bridge protection gaps since you plan to work past age 65. To probably increase your retirement earnings, contemplate deferring your Canada Pension Plan (CPP) and Outdated Age Safety (OAS) advantages till age 70 or till you absolutely retire. By delaying till age 70, OAS can improve by as much as 36 per cent and CPP by as a lot as 42 per cent. Delaying may scale back your tax burden, particularly in case your retirement earnings falls right into a decrease tax bracket. Take into account that OAS advantages could also be topic to clawback above sure earnings ranges.
For prescription drug protection, most provinces provide expanded advantages for these over 65. For instance, Ontario’s Drug Profit (ODB) program covers greater than 5,000 drugs, with an Distinctive Entry Program for some drugs not sometimes coated by ODB. On the federal stage, the Canadian Dental Care Plan (CDCP) affords dental protection for Canadians over 65 with a family earnings lower than $90,000 who lack different protection, which will be particularly useful as group dental protection ends.
Chances are you’ll wish to discover supplemental well being and dental insurance coverage choices designed for individuals leaving group plans, which might help fill gaps in authorities protection. Take into account that long-term incapacity protection past age 65 is uncommon in group plans, and particular person insurance policies will be pricey. We suggest talking with a monetary or insurance coverage adviser who might help you intend in your well being and earnings wants within the years to return.
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