Coinsurance, deductibles and annual maximums in Canadian health plans, with worked numbers

What a Canadian health or dental plan pays on a claim is decided by a short chain of rules: first the deductible (what you pay before the plan starts), then the coinsurance (the percentage the plan pays of what is left), then any per-visit or per-item limit, and finally the annual or lifetime maximum. Drug benefits may add a dispensing fee cap or a generic substitution rule; dental benefits pay from a fee guide. Two plans that both say "80%" can reimburse very different amounts once these rules apply. This guide shows the calculation order with worked examples so you can read any plan summary.

It is part of the plan choice checklist guide. All numbers are illustrative.

The terms

Term	Meaning	Typical design
Deductible	Amount you pay each year (or per claim) before the plan pays	$0 to a few hundred dollars, per person or per family
Coinsurance	Share of the eligible amount the plan pays	50% to 100%; often 80% for drugs and basic dental
Eligible amount	The part of a bill the plan recognizes	Dentist's fee up to the fee guide; drug cost up to "reasonable and customary" levels
Per-visit limit	Most the plan pays for one appointment	For example $40 or $60 per massage visit
Annual maximum	Most the plan pays per benefit year	Per person, per practitioner type, or combined
Lifetime maximum	Most the plan ever pays for a benefit	Common for orthodontics
Dispensing fee cap	Maximum pharmacist fee the plan reimburses	Pharmacy fees above the cap are yours
Generic substitution	Plan pays only the generic price unless the prescriber writes "no substitution" with justification	Common in group and individual plans

Calculation order

For each claim, plans generally apply:

Eligible amount = lower of the bill and the recognized amount (fee guide, reasonable and customary, generic price).
Subtract any remaining deductible.
Multiply by coinsurance.
Apply per-visit limit.
Apply the remaining annual or lifetime maximum.

Worked example 1: physiotherapy

Plan: $25 annual deductible, 80% coinsurance, no per-visit limit, $500 per year for physiotherapy. You attend 10 sessions at $120 each.

Eligible: $1,200
After deductible: $1,200 - $25 = $1,175
Coinsurance: 80% x $1,175 = $940
Annual maximum: $500
Plan pays $500. You pay $700.

The maximum, not the 80%, decides the result: by the fifth session the maximum is used up. In the plan comparison tool, you would enter $1,200 as expenses, $260 as your share (deductible plus 20% coinsurance), and $500 as the maximum.

Worked example 2: massage therapy with a per-visit limit

Plan: 100% coinsurance, $40 per visit, $400 per year. Eight 60-minute visits at $120.

Per visit: lower of 100% x $120 and $40 = $40
Eight visits: $320, within the $400 maximum
Plan pays $320. You pay $640.

"100%" sounds generous, but the per-visit cap turns it into 33%.

Worked example 3: a prescription

Plan: 80% drug coinsurance, generic substitution, dispensing fee cap of $8 per prescription. Your prescription: brand drug $90, generic equivalent $30, pharmacy dispensing fee $12. Your prescriber did not specify "no substitution".

Recognized drug cost: generic price $30
Recognized dispensing fee: $8
Eligible: $38
Plan pays 80% x $38 = $30.40
If you take the brand: you pay $90 + $12 - $30.40 = $71.60
If you take the generic: you pay $30 + $12 - $30.40 = $11.60

Worked example 4: dental with a fee guide

Plan: 80% basic dental, pays according to the provincial fee guide, $1,000 annual maximum. Your dentist charges $260 for a filling; the fee guide amount is $225.

Eligible: $225
Plan pays 80% x $225 = $180
You pay $80 ($45 above the guide + 20% of $225)

If the plan uses the previous year's fee guide, the eligible amount may be lower still.

Per person, per family and combined maximums

A $1,500 per person dental maximum is very different from $1,500 per family.
A combined paramedical maximum (for example $1,000 shared across physiotherapy, massage, chiropractor and psychologist) runs out quickly if you use several.
Some plans reset maximums on 1 January; others on the policy anniversary. Time elective care accordingly.

How to read a plan summary in five minutes

Highlight every percentage and every dollar cap.
Note whether each cap is per visit, per year, per person, per family or lifetime.
Check how drugs are priced (generic substitution, formulary, prior authorization).
Check the dental fee guide year and recall frequency.
Do one worked example for the service you use most, as above.

Mistakes to avoid

Reading only the coinsurance. Caps usually matter more.
Booking expensive therapy late in the year after the maximum is used.
Assuming brand-name drugs are reimbursed at the same rate as generics.
Forgetting the deductible resets at the start of each benefit year.

Frequently asked questions

Does the deductible apply to every benefit?

Not always. Some plans apply it only to drugs and paramedical services, or have separate deductibles for dental.

What does "reasonable and customary" mean?

It is the insurer's view of a normal charge for a service in your area. Amounts above it are not reimbursed.

Can I ask the insurer what it will pay before treatment?

Yes. For dental, ask your dentist to submit a predetermination; for other services, call the insurer or check its member portal.

Sources

Canadian Life and Health Insurance Association — understanding health benefits
Health Canada — generic drugs and drug approvals
Canadian Dental Association — links to provincial fee guides
OmbudService for Life and Health Insurance — disputes about reimbursements