TRAVEL INSURANCE

Ian Callaway

QI live in the Province of XXXX and my friend lives in the Territory of YYYY. We are planning a North American Adventure Tour and wanted to know how long we can be away before losing our government medical-insurance coverage? We heard it was 6 months away from Canada and no longer than 6 months in the USA.

Under the Canada Health Act, the 13 provincial and territorial health-care insurance plans must meet five core standards: Accessibility; Comprehensiveness; Portability; Public Administration; and Universality.

While Accessibility and Universality require all eligible Canadian residents reasonable access to medically necessary services, “medically necessary

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Northwest Territoryu

British Columbiau

Saskatchewanu

Manitobau

Nunavutu

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Nova Scotiau

Prince Edward Islandu

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services” are not defined under the Canada Health Act—each province or territory prescribes what constitutes their comprehensiveness. There are five overlapping parts to your question.

1. How Long Can I Be Away? Many incorrectly assume that the maximum time someone can be away is “6 months.” The correct answer, however, is “it depends.”

It is a smorgasbord across Canada’s 13 medical-plan jurisdictions applying 8 different out-of-jurisdiction coverage

periods. Even then, some jurisdictions use “days” and others “months” when applying either a “calendar year” or a “12-month period.”

So, to answer your question, both of you will have different outof-jurisdiction coverage periods that if exceeded, mean you would be a Canadian medical plan “Ex-Patriot” without medical coverage and have to re-apply to join any Canadian medical insurance plan and observe a 90-day wait period. 2. Can I Extend My Medical Plan

Coverage? On a case-by-case basis, each of Canada’s 13 medical plan jurisdictions “may” extend their medical plan coverage, but not beyond 2 years. 3. How Much Am I Protected with

My Government Medical Plan? Whether travelling to another province/ territory or out of Canada, the Canada Health Act permits each province/ territory to set its reimbursement rates and scope of “comprehensiveness” for medical emergencies.

In the event of an out-of-homeprovince/territory accident, sickness, or unexpected medical emergency, without travel insurance each traveller becomes financially exposed to the reimbursement dollar differential coverages for those “medically necessary services” between his or her home province/territory and the province/territory delivering those services.

As a case example within Canada, one province will reimburse

Days in USA

only $75 per day for “Emergency Hospitalization” while one province that delivers that emergency hospitalization charges $897.50 for an “ER Outpatient Visit,” $4350 per day for a “Ward Rate Hospitalization,” and $18,540 per day in the ICU.

When travelling beyond Canada, any travellers needing “Emergency Services” and not having travel insurance will be subject to the local going rate, which in the case of the United States is demonstrably higher and payable in US currency.

4. What if My Government

Health Plan Expires? A core travel insurance requirement is the maintenance of each traveller’s provincial/territorial government health plan.

If the provincial/territorial government medical health plan coverage has expired, even due to having exceeded the minimum annual residency requirements, private travel insurers may void their coverage, cap the maximum benefits payable, or apply a co-insurance formula on the contractual grounds of that traveller not having maintained the contractually required continuous provincial/territorial medical coverage. 5. USA: The Magic “182 Days” There is widespread misinformation about Canadians being allowed to visit the USA for up to 6 months. Subtle, but significant, it’s not “6-months” but a continuous or accumulation of “182 days” within each “Calendar Year,” rather than over any 12-month period.

The tipping point after exceeding 182 days is that the USA’s Internal Revenue Service (IRS) may require the traveller to pay US taxes because he or she may now be deemed for taxation purposes to be a US resident known as a Resident Alien.

To determine if a traveller can be considered a US Resident Alien for taxation purposes, the IRS applies a formula known as the “Substantial Presence Test” based on each January 1 to December 31 calendar year.

The two components in the “Substantial Presence Test” formula are 1. in the current calendar year, there must be 31 days or more spent in the USA, and 2. in the preceding 3 years, the formula’s tipping point totals 183 days.

The computation of “182 days” is not as straightforward as you might think because the formula factors in both the number of days in the current year and the number of days spent within the USA over the preceding 3 years. The examples below illustrate different scenarios and outcomes based around the 182 days. s Ian Callaway, MA, MEd, RHU, BCFE, is an Insurance Benefits Analyst based in Vancouver.