Many Canadians are not prepared for unexpected health incidents—a situation largely caused by insufficient savings and confusion over how the country’s complex healthcare system works, according to a new survey from Sun Life.
“The idea of a major health event is something that people don’t want to think about from day to day,” but the study shows that they need to, said Kevin Dougherty, president of Sun Life Financial Canada, in an interview.
Forty percent of Canadians who have experienced a major health challenge say this has caused them financial hardship, according to the 2013 Sun Life Canadian Health Index. Of those, 22% have dipped into their savings, 16% have increased their credit card debt, 13% have used a personal line of credit, and 12% have borrowed money from friends or family. Nine percent have used some or all of their RRSP savings, 3% have remortgaged their home, and another 3% have sold their home.
The survey also shows that 81% of Canadians have not put aside any funds specifically for health expenses. Of those who have, 43% have squirrelled away less than $1,000 in the past year and 44% between $1,000 and $5,000.
“You just don’t think that’s what you would expect in Canada,” Dougherty said, explaining that such a low level of financial preparation is not normal in one of the world’s richest countries.
Those hit the hardest by unexpected health costs are Canadians between the ages of 45 and 54, according to the Sun Life findings. More than half of them struggle to make ends meet after a serious health problem.
These Canadians, also known as the sandwich generation, usually have to care for their kids and for their parents while working and saving for retirement. “This explains why they’re more deeply affected by unplanned healthcare costs,” said Alison Griffiths, a financial columnist and commentator, quoted in a press release. “With job instability and a tough economic climate, many are stretched too thin. A large portion of sandwichers is nearing retirement but may be forced to delay these plans to recoup financial losses.”
Not-so-free healthcare
Apart from lack of savings, another major reason disease takes so many Canadians of all ages by surprise is that they often misunderstand how the country’s complex healthcare system works. Its dependence on multiple payers naturally leaves many patients confused about what portion of the expenses is covered by provinces, personal insurance and employer-sponsored plans—and under what circumstances, the report notes.
Because Canada’s healthcare system is described as free and universal, many falsely assume that they won’t have to pay anything out of pocket for health services. The report shows that 46% don’t expect to pay for prescription drugs, 47% don’t expect to pay for a retirement home residence, and 53% don’t anticipate that they will have to pay for eye care. The numbers get higher with services such as nursing home residence (60%), home care (60%), chiropractic services (63%), hearing aids (64%) and physiotherapy (69%).
But Canada’s healthcare system is not free—Canadians pay for it through taxes and out-of-pocket costs, said Nadeem Esmail, director of health policy studies at the Fraser Institute, in an interview. For example, “new medical technologies that may be key are often not covered by Medicare,” explained Esmail, adding that the current healthcare system is generally mediocre and ill-equipped when it comes to complicated procedures.
Impact on work
Canadians’ lack of preparation in the face of medical incidents has a negative impact not only on their personal lives but also on their jobs, according to the Sun Life survey. As many as 77% say they are experiencing excessive or uncomfortable levels of stress, up from 72% last year. More than half of these respondents say their productivity at work has been affected as a result of this stress. Ten percent say stress has had a significant impact on how productive they are.
Given this connection, what can employers do to help their staff?
Many companies are already offering wellness and prevention programs, so it’s crucial to ensure that workers take advantage of them to the fullest, Dougherty said. “All the tools are available,” he explained.
Another strategy, he added, is “advocating for people to have their medicals every year” since early detection is crucial.
Finally, employers need to clarify that they cannot help with everything and that workers carry a personal responsibility for their own health, Dougherty explained.
The Sun Life Index is based on a survey that polled 2,400 Canadians earlier this year.
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