Is individual health insurance worth it in Canada? Break-even maths for a real household budget

An individual health and dental plan in Canada is worth it financially when the reimbursements you can reasonably expect, plus the protection against a large bill, are worth more to you than the premiums. For many healthy adults with low, predictable costs, paying the dentist and pharmacy directly is cheaper on average. For households with known recurring costs, such as regular medication, children's dental care or ongoing therapy, a mid-level plan often roughly breaks even and adds protection. The deciding question is usually not the average year but the bad year. This guide gives a break-even formula and three worked examples.

This is part of the plan choice checklist guide. All figures are illustrative; insurers' actual premiums differ.

The break-even formula

For any plan:

Plan pays = sum over benefits of min(coinsurance % x (expenses - deductible), maximum)

Break-even: plan pays = yearly premium

If your expected reimbursements are below the premium, you are paying for protection. That can still be sensible, but you should know how much you are paying for it.

A quick rule of thumb: with 80% coinsurance and no deductible, you need eligible expenses of about premium / 0.8 to break even, provided you stay under all maximums. A $1,600 yearly premium needs about $2,000 of eligible expenses.

Example 1: single, healthy, 30

Expected yearly costs (illustrative): two dental cleanings $500, eye exam $110, a few prescriptions $120. Total $730.

A basic plan costs $70 a month ($840 a year) and pays 80% of drugs and dental to $500, and an eye exam every two years (so, on average, half a $110 exam a year).

Drugs: 80% x $120 = $96
Dental: 80% x $500 = $400
Eye exam: $55 on average
Plan pays about $551, against an $840 premium.

Expected loss: about $290 a year. The plan mostly buys protection against a dental emergency, capped at $500 of dental benefit anyway. Many people in this position self-insure: set aside $70 a month in a savings account. If this person's adjusted family net income is under $90,000 and they have no access to private dental coverage, the Canadian Dental Care Plan may cover the cleanings instead, but only if they do not buy a private dental plan.

Example 2: family of four, two children

Expected yearly costs: four dental check-ups $1,200, one child's fillings $400, glasses for two $600, prescriptions $500, physio $500. Total $3,200.

A family plan costs $260 a month ($3,120 a year): 80% drugs, 80% basic dental to $1,000 per person, $250 glasses per person every two years, 80% paramedical to $500.

Drugs: $400
Dental: 80% x $1,600 = $1,280
Glasses: 2 x $250 = $500 (this year)
Physio: $400
Plan pays $2,580 against $3,120.

Expected loss: about $540 this year. In the alternate year without glasses, expenses fall to $2,600 and the plan pays $2,080, so the loss widens to about $1,040. The value rises sharply if a child needs orthodontics and the plan covers it, or if anyone develops a condition with ongoing medication. A family with no group access might compare this plan with a cheaper dental-only plan plus self-funding vision.

Example 3: couple, 58, one regular medication

Expected costs: a long-term brand-name prescription at $250 a month ($3,000), dental $1,400, physio $600. Total $5,000.

The couple can choose:

Guaranteed-issue conversion plan, $240 a month ($2,880): 80% drugs to $1,500 a year, 70% dental to $750 per person, no paramedical. Pays $1,500 + $980 = $2,480. Total cost $2,880 + $2,520 = $5,400.
Underwritten plan, $210 a month ($2,520), but excluding the condition behind the medication for two years. Pays 80% dental $1,120 and 80% physio $480 = $1,600. Total cost $2,520 + $3,400 = $5,920.
No plan: $5,000, but no protection against a second medication or a major dental bill.

Here, on the numbers alone, no plan looks cheapest in an average year. But at 58, the risk of new medications is real, and a provincial income-based drug program may set a deductible that caps their exposure anyway. The right answer may be the conversion plan, or no plan plus registering for the provincial program; see losing group benefits and provincial drug programs compared.

The tax credit narrows the gap slightly

Both premiums and unreimbursed expenses count toward the federal medical expense tax credit, so the credit does not favour one route much. With net income of $70,000 (threshold $2,100 at 3%), a household paying $5,400 in premiums and unreimbursed costs gets 14% x $3,300 = $462 federal credit for 2026; paying $5,000 directly gets 14% x $2,900 = $406. Self-employed people may instead deduct premiums from business income, which changes the comparison more; see self-employed health and dental plans and the tax credit worked example.

When insurance is worth it even if you lose money on average

You could not pay a sudden $3,000 to $10,000 bill without debt.
You have a condition that may need costly drugs, and the plan has a high or no drug maximum.
You are healthy now and want underwritten coverage in place before anything changes.
Your province's public drug program has a high deductible relative to your income.

Mistakes to avoid

Counting benefits you won't use, such as a vision benefit when nobody wears glasses.
Ignoring maximums. A plan paying "80%" pays nothing beyond its cap.
Buying private dental coverage when CDCP would apply.
Comparing only one year. Glasses, some dental work and age bands follow two- to five-year cycles.

Frequently asked questions

Is it better to put the premium in a savings account?

For predictable, small costs, often yes. Insurance only adds value for costs you cannot predict or absorb.

What about a high-deductible plan for catastrophic drug costs?

Few individual plans in Canada are sold that way; provincial income-based programs play much of that role. Check yours before buying.

Do plans pay more after the first year?

Some individual plans increase dental benefits after one or two years of coverage, and many delay major dental benefits. Read the schedule.

Sources

Canadian Life and Health Insurance Association — understanding health insurance
Canada Revenue Agency — medical expense tax credit
Canadian Dental Care Plan on Canada.ca — eligibility before buying dental coverage
Financial Consumer Agency of Canada — budgeting and emergency savings