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Differences Between Canadian Medicare vs. U.S. Medicare


The United States and Canada launched their own Medicare programs over 50 years ago, providing health insurance to thousands of people. While the program’s structures are different, there are some similarities. We’ll explain the key differences in both programs, including coverage, plans, and more.

Canadian Medicare vs. United States Medicare

In the mid-1960s, the U.S. and Canada launched their own respective versions of Medicare. Soon after, U.S. lawmakers faced backlash from health care industry groups because of the eligibility requirements. The U.S. health care system mainly provides coverage for seniors and people with specific, serious health conditions. 

Meanwhile, Canada received some praise for its program structure because all Canadians have access to coverage regardless of age or income. One of the downsides to Canada’s health care system is that each province (territory) determines what services are medically necessary.

Funding is another noticeable difference between both programs. American Medicare has a private health care system. It’s a federal program funded through the recipient’s payroll taxes. Citizens have a percentage subtracted from their paychecks that goes toward Medicare. On the other hand, Canada operates on a single-payer system, which means Canada’s health care system is publicly funded.

Is Canadian Medicare Better Than American Medicare?

Compared to Americans, Canadians spend less money on health care expenses, but Canada’s health care system has its own problems. Canada is known for its unfavorable wait times for specialists, elective procedures, and more. Reports show there aren’t enough primary care doctors for the population. For instance and it can take many weeks for patients to see a specialist after receiving a referral from their doctor.

Some patients wait almost four months for treatment from a specialist. Generally, Canadian hospitals prioritize appointments for life-threatening issues. On a positive note, residents can choose their primary doctor.

In America, the debate over Medicare continues to divide lawmakers in Washington D.C. According to the U.S. Census Bureau, 26.1 million Americans didn’t have health insurance at any point during the year 2019. This means 8% of Americans had very limited access to health care.

Is Canadian Medicare Free?

Canadian Medicare is not free. Funding for Canadian Medicare comes from federal and provincial taxes. The government does not cover all medical costs, which could result in higher out-of-pocket costs. Services like dental visits, vision care, and prescription drugs are do not receive coverage. Instead, private or employer-based insurance pays for them. On a positive note, since their health insurance is public, there are no deductibles.

According to Fraser Institute, Canadians spend an average of $5,789 annually on taxes for health care coverage. This is significantly lower than the $10,000 that each American spends on average. Your income determines how much you pay in taxes. People who have higher incomes pay more in taxes, which helps fund health care for families who earn less.

Medical services covered through Canadian tax dollars include:

  • Hospital stays
  • Surgical and maternity services (for example, childbirth, prenatal care and more)
  • Prescription drugs while in the hospital

Why Canadians are eligible for Medicare but NOT premium-free Part A

Canadian residents receive employee benefits through a refundable tax credit called work credits. These credits help people with low incomes. Canada approves work credits for employees who earn at least six credits (1.5 years of work). Since Canadians’ work credits do not transfer over for Medicare, they can enroll but are not eligible for premium-free Part A.

What Does Canadian Medicare Cover that U.S. Medicare Does Not?

Both health systems cover identical services, although prices and treatment are different.

Canadian Supplemental Options vs. Medigap

As we mentioned above, Canada’s health care system doesn’t cover everything. Luckily, residents can purchase supplemental coverage through private insurance companies for extra coverage. These plans are Canada’s equivalent of Medicare Advantage in the States. Canadian employees also have the option of obtaining additional coverage from their employer. Canada’s supplemental plans pay for services such as prescription drugs, routine and enhanced dental procedures, and prescription eyewear.   

In the U.S., private insurance companies sell Medigap coverage, also called Medicare Supplement insurance. Medigap policies help “fill in the gaps” for medical costs not covered by Original Medicare, including coverage for deductibles and coinsurance. While Medigap is available in each state, coverage may be different.

Pharmacare vs. Medicare Part D

Canada is the only country in the world that has universal health care with no universal drug coverage. In order to help residents with medication costs, Canada launched a national prescription drug insurance plan called Pharmacare. Pharmacare gives Canadians access to prescription medication based on their need rather than their ability to pay. The program offers several drug plans but only covers certain prescriptions.

Medicare Part D helps lower drug prices. Out-of-pocket costs include coinsurance, deductibles, premiums, and copayments. This year, the out-of- pocket costs threshold is $6,550.

FAQs

My spouse is Canadian, can they get Medicare under me?
Yes, they are eligible for Medicare under you. If you’ve worked at least 40 quarters, they may be eligible for premium-free Part A.
Will I continue to receive American Medicare benefits if I move to Canada?
No, if you move to Canada you can keep your American Medicare, but it will not cover any care/treatments that you receive outside the United States.
Can you use American Medicare while traveling to Canada?
American Medicare will not cover any services or treatment in Canada. However, it will make an exception if you are traveling a direct route between Alaska and another state, and you visit the nearest hospital.
Does American Medicare cover drugs through a Canadian pharmacy?
No, American Medicare will not cover prescriptions purchased outside of the U.S.
Is there a Special Enrollment Period for Medicare beneficiaries moving to the United States from Canada?
Yes, you qualify for the Special Enrollment Period since you are moving to the U.S. from a foreign country.
Is Medicare in Canada paid through taxes or payroll?
Canada’s health care operates under a single-payer system. This means residents pay for their health insurance through taxes.

How to Enroll in Medicare After Moving to the U.S. from Canada

Enrolling in Parts A and B is easy. Just go to Medicare.gov and fill out the online application. After signing up, you should consider purchasing supplemental coverage like Medicare Advantage, Medigap, and/or Part D to save money in the long run. You can sign up with our licensed agents by calling the number above or filling out our online rate form.

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Lindsay Malzone

Lindsay Malzone is the Medicare expert for MedicareFAQ. She has been working in the Medicare industry since 2017. She is featured in many publications as well as writes regularly for other expert columns regarding Medicare. You can also find her over on our Medicare Channel on YouTube as well as contributing to our Medicare Community on Facebook.

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