Is healthcare free in retirement in Canada?

Core healthcare services are publicly funded in Canada, but many common expenses in retirement are not covered, including dental care, prescriptions, vision care, physiotherapy, and mental health services.

What happens to health benefits when you retire early?

When you retire early, employer-provided health and dental benefits typically end. Many early retirees must rely on private insurance or pay out of pocket for uncovered healthcare expenses.

Should early retirees budget for private health insurance?

Yes. Private health insurance can help cover costs like prescriptions and dental care, but plans often have exclusions, annual limits, and premiums that increase with age.

Do healthcare costs increase as you age?

Healthcare costs generally rise with age due to increased medical needs, more frequent prescriptions, dental work, vision care, and higher insurance premiums.

How should healthcare costs be included in early retirement planning?

Healthcare costs should be estimated using historical spending data, adjusted for inflation, and added explicitly to retirement budgets rather than assumed to be minimal or fully covered.

12 Jan 2026 4 min read Personal Finance Basics

One Expense I am Overlooking for Retirement and So Are You - Healthcare

There’s no teaser here - this is a blind spot for me and I am sure for many of you as well.

Despite having a solid budget that we generally stick to, there is one category that regularly pushes us over budget - healthcare.

Living in Canada, we’re fortunate that core healthcare is publicly funded through taxes. Doctor visits, hospital stays, and essential services are covered. But a surprising amount of healthcare spending falls outside that umbrella - dental care, prescriptions, vision, orthodontics, certain tests, physiotherapy, and mental health services, to name a few.

Right now, this hasn’t been a major issue because I have excellent health coverage through work. Depending on the expense, anywhere from 60% to 100% of costs are reimbursed, up to an annual cap of course. That benefit alone saves us thousands of dollars per year.

But there’s an uncomfortable question lurking in the background:

What happens when I retire early and that coverage disappears?

Why This Wasn’t in Our Original Retirement Plan

When we first built our early retirement projections, healthcare costs barely registered. We were younger, healthier, and didn’t have kids. Fast-forward a decade, and things look very different.

As we age, and as our kids grow, healthcare expenses keep rising. Dental visits are more frequent. Vision care becomes routine. Prescriptions appear where there were none before. And unlike many other budget categories, healthcare costs tend to move in one direction only.

To complicate things further, we’ll need to renew our term life insurance at age 48. Based on conversations with my parents, who saw their premiums quadruple in their late 40s (twenty years ago), I fully expect the increase this time around to be even more dramatic.

This is no longer a theoretical problem - it’s a planning gap.

What I’m Doing About Healthcare Spending

Here’s how I plan to tackle this before it quietly derails our early retirement timeline.

1. Review Historical Healthcare Spending

We have over ten years of detailed spending records, which is exactly why I’m a strong advocate for tracking expenses. I want to isolate healthcare costs and understand how they’ve evolved over time.

2. Plot the Trend

I’ll chart healthcare spending year over year and look at the relationship between time and cost growth. Even a rough trendline will be more realistic than assuming flat expenses.

3. Get Quotes for Private Health Insurance

Before guessing, I need real numbers. I’ll get quotes for private health insurance that would replace employer coverage in early retirement. And I need to understand premiums, deductibles, exclusions, and annual caps.

4. Build a Long-Term Average

Using historical data and insurance quotes, I’ll estimate an average monthly healthcare cost for my wife and me over a 30-year retirement horizon. This number, minus private insurance, will be added directly to our retirement budget.

5. Consult Friends and Family

Who better to ask about health and healthcare spending than immediate family and older friends. This is another data point, and more importantly, that will tell me what happens when the kids leave or what happens if they need to be covered to their mid 20s.

6. Invest in Preventative Care

This one is simple but not optional - more exercise, better food, fewer shortcuts. Preventative health won’t eliminate costs, but it can slow their growth and reduce surprises later.

Additional Healthcare Factors Worth Considering

While working through this, a few other considerations stood out that are easy to miss in early retirement planning:

Insurance gaps and exclusions - Private plans often exclude pre-existing conditions, certain medications, or advanced dental work. These gaps need to be modeled explicitly.
Inflation in healthcare costs - Healthcare inflation often outpaces general inflation. Assuming a flat real cost may significantly understate future expenses. I will be assuming an above-average inflation factor for this expense.
Timing risk - A major dental issue or health event early in retirement can have an outsized impact before investment buffers fully mature. This is where it pays off to have some savings.
Out-of-pocket maximums - Understanding worst-case annual costs is just as important as estimating averages.
Geographic flexibility - If relocation is ever part of the plan, provincial coverage differences and insurance pricing should be factored in early.

The Trade-Offs Are Real

I fully expect this exercise to be sobering.

If healthcare costs are higher than anticipated, the solution isn’t to ignore them, it’s to reallocate spending. That may mean reducing discretionary categories elsewhere to avoid delaying early retirement altogether.

If you’re planning to retire early, healthcare expenses deserve attention long before you hand in your notice. The earlier you model them, the more flexibility you’ll have when it actually matters.

This is one cost category you don’t want surprising you later.