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What is a Canadian healthcare loan?
When it comes to healthcare, most Canadians think themselves very lucky to have a largely public system, but the reality is a little different from perception. Whilst many aspects of healthcare are covered by provinces’ public plans, many aren’t, and the split is around 70:30 public:private expenditure. This is actually about average among OECD nations, and helps to explain why 17% of Canadians have gone into debt to pay for medical expenses – despite having access to a public healthcare plan, and despite a record 64% having access to private healthcare insurance as well. On average, Canadians hold $8,100 in healthcare debt.
So there are plenty of people struggling to cover their medical costs. And this is where healthcare loans come in: people can borrow the money they need to cover out-of-pocket healthcare expenses; they can then repay the loan over time, in affordable installments, and crucially after they have received the care they need. There is no need to delay medical care in order to try and save the necessary cash. Healthcare loans thus provide a vital route to timely care for those unable to afford large medical bills upfront.
Who can get a healthcare loan in Canada?
Healthcare loans have many of the same eligibility requirements as other types of personal loan. The basics are simple; borrowers must:
- Be age of majority in their province
- Hold valid, government-issued I.D.
- Be able to show proof of address
- Have an active bank account in their name
Secondary requirements also exist, but these vary from lender to lender. They may relate to:
- Credit score
- Employment type
- Income
- Existing debt levels
- Assets
As with other types of personal loan, those with good credit, permanent employment and a low debt utilization ratio will find it easier to qualify for healthcare loans than other borrowers; there are however options for all types of borrowers, if you shop around.
What can a healthcare loan in Canada be used for?
Healthcare loans can be used to cover all manner of medical costs, including dental work, prescriptions, mental health care costs, consultations, hospital charges, physiotherapy, elective surgery, aesthetic medical procedures, and much more. There are no limits on which medical procedures can be paid for with loan funds, and loans from as little as $300 to as much as $35,000 are available on an unsecured basis.
Does having insurance affect my Canadian healthcare loan options?
27 million Canadians have some form of private health insurance, but that doesn’t mean they don’t still need financial assistance with healthcare costs. Insurance has its limits: only specific expenses are eligible; there are deductibles and co-pay to cover; many plans have caps on how much can be claimed (both over a certain time period and within certain treatment types); and many require users to pay for their expenses out-of-pocket, and wait for reimbursement. All of this means insurance, while valuable, leaves plenty of difficulties for those short on cash.
The good news is that having extended healthcare coverage does not impact your ability to access healthcare loans. Lenders recognize that many situations are not covered by private insurance. And if you need a loan simply to cover costs while you wait for reimbursement, this may even make it easier for you to access funds – as lenders will know you are due an influx of cash from your insurer, that can be used to pay off your loan.
Will getting a healthcare loan in Canada affect my insurance?
No, having or getting a healthcare loan will not affect your insurance. The two tools do not interact with each other.
Can I use a healthcare loan in Canada to cover my healthcare insurance premiums?
Private health insurance plans cost between $75 and $150 per month on average, and this is a big outlay for those not receiving coverage via their employer. But having coverage can save you significantly more than this, if you have high medical costs (either ongoing or one-off). For example, if your monthly prescriptions cost you upwards of several hundred dollars, but an insurance plan that covers 95% of prescription costs is available for a premium of $75 a month, then you are probably better off using the money to purchase coverage.
It is thankfully possible to borrow funds via a healthcare loan to pay for healthcare insurance premiums, rather than to pay for healthcare expenses directly. But you need to be sure of your numbers: your monthly loan repayments need to be affordable, and crucially less than you would be paying for your healthcare costs directly.
Written by:
Amy Orr
Amy Orr is a professional writer and editor with over 10 years of experience in the Canadian, U.S. and U.K. financial markets. She has written for numerous publications on topics as diverse as economic literacy, corporate finance, and technical analysis of numerical data. Prior to transitioning to full-time writing, she worked in the hedge fund sector. Her academic background is astrophysics, and she has a Masters in Finance from the University of Edinburgh Business School.
Reviewed by:
Jenna West
Jenna West is Smarter Loans' in-house financial writer and content director. She has been covering the Canadian FinTech and finance industry since 2017, including financial trends analysis, industry surveys, regulatory updates and changes in Canadian consumer behaviour when it comes to finance.
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