Medical Debt in Canada: How it Happens, and How to Avoid It
By AJ Webber
Medical debt is a growing problem for Canadian households, and it usually starts with a health cost nobody planned for. Health-care costs in Canada have climbed fast since 2022. Statistics Canada’s data shows health and personal care costs are up just over 15% in that time, and dental care and eye care have both jumped 20%. A single dental bill or a new pair of glasses can turn into a balance you’re carrying long after the appointment is over, but there’s a path forward whether you’re trying to avoid that balance or already managing one.
Why Are Health Care Costs Rising So Fast?
Health and personal care spending makes up an increasing portion of a household’s budget.
Health-care services like physio, eye exams, and basic dental work are up 18.5% since June 2022. Overall inflation is up about 11% in that same stretch, so health costs are climbing faster than everyday prices.
That’s close to the jump in food prices, one of the most talked-about costs in any household. Costs that show up once or twice a year are easy to leave out of a budget, even when they add up over time.
How Does Medical Debt Happen?
Some health costs don’t fit into a monthly budget. A major dental procedure or a new health problem can be hard to plan for. It’s common to end up financing the gap, whether that’s a clinic’s own payment plan, a loan through a third-party financing company the clinic partners with, or your existing credit card or line of credit. Ask about the total interest cost before you sign anything, since some of these plans offer 0% financing and others don’t. It’s also worth asking for an itemized bill and checking it for errors, since billing mistakes happen and are easy to miss when you’re already dealing with a health issue.
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What Does Public Health Care Not Cover?
Knowing where the coverage gaps are is the first step to avoiding an unexpected medical bill in the future. Provincial health plans pay for doctor visits and hospital stays. They don’t typically cover most day-to-day health costs. Dental care, vision care, and prescription drugs outside a hospital aren’t included. Neither is physio, chiropractic care, massage therapy, or private counselling, unless it’s part of a specific program. Ambulance fees, hearing aids, and equipment like a CPAP machine are usually paid out of pocket too.
Coverage rules also shift from province to province, so what’s included where you live may not be included somewhere else. Even if your province provides some additional support, it is best to identify your needs and explore additional private insurance or employer plans for extended benefits wherever possible.
Is There Medical Debt Forgiveness In Canada?
There is no medical debt forgiveness in Canada the way there is in some other countries. There’s no government program that wipes out a health-related balance outright. What does exist is debt management: a credit counsellor can help you consolidate your payments, usually lower the interest, and build a repayment plan that actually fits your budget. For most households, that’s a more realistic path than hoping the debt will go away on its own.
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How Much Does Your Health Insurance Actually Cover?
Start with the benefits you may already have through work. Check your annual maximum for dental, vision, and extras like physio or massage. Some have their own separate limits, others lump similar services together. If you’re self-employed or don’t have workplace benefits, it’s worth pricing out a private health and dental plan because the premiums can be claimed when you file your taxes. This matters most if you take regular prescriptions or have kids who’ll need braces.
If you and a spouse both have workplace plans, you can often coordinate benefits between the two to cover more of a claim. Some plans also have waiting periods or exclude pre-existing conditions, so it’s worth reading the fine print before you need it, not after. A health spending account is another option for business owners and employees. Review your coverage every year, since your needs will change over time, and so do the specifics of the plans.
What Federal Programs Can Help Cover the Gap?
Two federal programs can help fill in some of these coverage gaps if you don’t have private insurance or an employer plan. The Canadian Dental Care Plan (CDCP) covers your dentist if you have no private or workplace dental insurance. Your family’s income also needs to be under $90,000. Below $70,000, it covers the full fee. Between $70,000 and $89,999, you pay a co-payment of 40% to 60%, based on your income. Above $90,000, you won’t qualify for the CDCP at all.
National pharmacare currently covers diabetes medications and birth control. It only applies in provinces that have signed on with Ottawa. Check Health Canada’s website to see if your province is included. Most provinces also run their own drug or dental coverage for seniors and lower-income residents. Rules and income cutoffs vary a lot by province. A quick search on your provincial health ministry’s website will show what’s available where you live.
Can You Claim Medical Expenses On Your Taxes?
Yes, medical expenses can be applied as a tax deduction, and many households never do. You can claim medical costs above a set amount. That amount is 3% of your net income, or $2,834 for 2025, whichever is lower. The threshold rises to $2,890 for 2026. Here’s how that plays out in practice: say your family’s eligible medical expenses total $4,500, and 3% of your net income works out to $2,200. Since $2,200 is lower than the $2,834 threshold, you’d subtract $2,200 from $4,500, leaving $2,300 you can claim. Eligible costs include private insurance premiums, dental and vision care, prescriptions, and travel for medical care that isn’t available nearby. It’s usually best claimed by whichever spouse has the lower income, since that’s what the 3% threshold is based on. Keep your receipts throughout the year, so tax time is easier.
Not Sure How to Deal With a Medical Debt?
Medical debt tends to make headlines as an American problem. In Canada it usually shows up folded into a credit card balance or a line of credit rather than as its own crisis, but it’s just as real. A free, confidential session with one of our credit counsellors looks at your whole financial picture to see how best you can manage your money and all of the debts and medical bills you owe. So if you need help or don’t know where to start, reach out to book an appointment. We’re happy to help.
