Understanding How Extended Health Care Insurance Premiums Increase Over Time

When shopping for Extended Health Care Insurance, many people ask: How much will my premiums increase each year as I age? It’s an important question because health insurance is a long-term commitment and understanding how costs change over time can help you plan your finances.

Why Do Premiums Increase Over Time?

Health insurance premiums don’t remain static—they tend to rise for several key reasons:

• Age-Based Pricing: Insurers group policyholders into age brackets, which are typically five-year intervals (e.g., under 45, 45-49, 50-54, 55-59, etc.). As you move into a higher age bracket, your premiums increase because older individuals tend to require more medical care.
• Medical Inflation: Health care costs rise every year, often at a rate faster than general inflation. While general inflation (CPI) might be 2-3% per year, medical inflation in Canada has averaged 4.8% per year over the last decade, and in some cases, can range between 8-12% for certain medical services. Prescription drugs, hospital services, and medical treatments all become more expensive over time, and insurers adjust premiums accordingly.
• Plan Sustainability: Insurers must ensure that enough premiums are collected to cover the expected claims of policyholders. If claims increase, insurers may adjust rates for everyone in the plan.

How Much Do Premiums Increase Per Year?

Premium increases vary depending on the insurance company and plan type, but there are some general patterns:

• Age-Related Increases: The biggest jumps in premiums typically occur when moving from one age bracket to another. For example, someone turning 45 or 60 will typically see a more significant increase compared to someone aging from 51 to 52.
• Annual Inflation Adjustments: In addition to age-based increases, insurers adjust premiums annually for inflation. With medical inflation in Canada averaging 4.8% per year, insurers pass these costs on to consumers.
• Premium Stabilization at Certain Ages: In some plans, premiums stabilize around 65 because government-funded senior benefits (such as drug coverage) reduce what the insurer has to pay. Some insurers level off premiums at 85 or 90, while others continue increasing them indefinitely.

Guaranteed Issue vs. Medically Underwritten Plans

Not all health insurance plans follow the same pricing structure. There are two main types:

• Guaranteed Issue Plans (e.g., Health Coverage Choice plans) – No medical questions are asked. Because insurers don’t know your health history, they assume a higher risk and charge higher premiums.
• Medically Underwritten Plans (e.g., Personal Health Insurance) – Applicants answer health questions. Insurers can exclude pre-existing conditions but, in return, offer lower premiums and better coverage.

Real-World Examples of Premium Increases

Here’s what a typical premium increase might look like for someone buying a medically underwritten plan:

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For Guaranteed Issue plans, premiums are 30-50% higher than medically underwritten plans because they accept all applicants regardless of health status.

What Can You Do to Manage Rising Premiums?

If you’re concerned about increasing health insurance costs, here are a few strategies:

• Apply for Medically Underwritten Plans While You're Healthy – You’ll get better coverage at a lower cost compared to Guaranteed Issue plans.
• Review Your Coverage Needs – If your plan includes benefits you don’t need (e.g., dental), consider removing those benefits (if your plan allows it), or moving to a new plan that doesn’t include the benefits you don’t need.
• Shop Around – Different insurers have different pricing models. If your premiums have increased significantly, it may be worth comparing options. Services like Aeva.ca can help with this.

Conclusion

Premium increases are a normal part of Extended Health Care Insurance. While the exact amount varies, you can generally expect:

1. Small annual increases due to medical inflation (average 4.8% per year in Canada, sometimes higher for specific medical services).
2. Larger increases when moving into a new age bracket (e.g., 45, 60).
3. Potential stabilization at age 65 (government benefits) or 85+ (insurer pricing caps).

Understanding these patterns helps you plan ahead, choose the right type of insurance, and avoid surprises as your premiums change over time.

Professional licensed advisors at Aeva are available to assist you with your health care options. If you're unsure which plan suits your needs best, an advisor can help you navigate your options and find the best balance of coverage and cost.