Insights & advice
How does prescription drug coverage work in Canada?
April. 2022 – 15 min read
You can’t always rely on your government healthcare to cover your prescription drugs
You can get coverage through workplace benefits, or through an association, your spouse’s employer or an individual health insurance plan
Not all prescription drugs are always covered by government or private plans
According to a survey by StatsCan, 55% of Canadians aged between 18 and 79 have used a prescription drug in the last month – and nearly a quarter take 3 or more medications per month.
In fact, medication is the one of the largest spending categories in Canadian healthcare, according to the Canadian Institute for Health Information, who calculated this number by combining both public and private expenditure. Averaged out across the population, this translates to $1,114 per Canadian in 2021.
That’s up 3% from the year before. But what is covered by your government healthcare and what is your responsibility to pay out-of-pocket? And how do individual health insurance plans or workplace benefits fit in?
It’s complicated, which is why we’ve put together this guide to how prescription drug coverage works in Canada.
What’s in this article?
- How does prescription drug coverage work in Canada?
- How does individual health insurance help cover prescription drugs?
- Which prescription drugs are usually covered by individual health insurance?
- What’s the difference between prescription drugs and over-the-counter drugs?
- Which drugs aren't covered by provincial health insurance?
- Name brand versus generic
- What's next?
How does prescription drug coverage work in Canada?
Here’s an easy way to remember it:
If you’re in a Canadian hospital (and you’re eligible for government healthcare) prescription drugs are provided at no cost to you, under the Canada Health Act.
If you’re not in hospital, however, it’s up to your province or territory to establish prescription drug coverage.
Outside of Quebec, some Canadians may have effectively no prescription drug coverageFootnote * through provincial/territorial healthcare. Sometimes, this gap is covered by workplace benefits. For those who aren’t covered by workplace benefits, like retirees or freelancers, another way to help protect your family is through an individual plan.
In Quebec, residents are obligated to have coverage through their workplace, an association you’re a member of or a spouse’s workplace, if available. Otherwise, they must have prescription drug coverage provided under the Régie de l’assurance maladie du Québec (RAMQ) basic prescription drug insurance plan. Individual health insurance provides supplemental coverage to the prescription drug coverage provided through the RAMQ drug public plan.
Individual health insurance doesn’t remove your obligation to have drug coverage through the RAMQ drug public plan, through your employer or an association you are a member of or through the employer of your spouse.
How does individual insurance help cover prescription drugs?
An individual health insurance plan that includes prescription drug coverage can help mitigate the cost of some medicationsFootnote *. (Prescriptions drugs may be offered as part of your workplace benefits. If you’re a Canada Life customer, you can sign into your account to learn more. )
Quebec handles prescription drug coverage in a unique way, so the below doesn’t apply if you live there. Here’s how it works outside of Quebec, if you don’t have workplace benefits or benefits through an association:
Your individual health insurance would have a “drug maximum.” This is the maximum amount your insurance policy will cover, usually each year. With Canada Life’s individual health insurance, Freedom to ChooseTM health and dental insurance, this can range from $500 to $250,000 per person per calendar year.
You will likely have a “co-pay,” which is the difference between how much your plan will pay out and how much the prescription drug costs. For exampleFootnote **: If your plan covers prescription drugs up to 70%, you will pay the remaining 30% out-of-pocket. That means a $10 prescription will cost you $3, while your insurance will cover $7 – as long as you haven’t exceeded your annual plan maximum, of course.
While government healthcare covers medication you need when you’re in hospital, many Canadians have to pay-out-of-pocket for prescription drugs you may need to treat an illness or manage chronic conditions. FYI: Some plans will cover pre-existing conditions but others may not.
You may also have a “deductible,” which is a fixed amount you need to pay-out-of-pocket before your individual health insurance will begin to cover your prescription drug expenses.
Which prescription drugs are usually covered by individual health insurance?
There are 3 criteria a drug must meet in order to be covered by your insurance:
- It must be prescribed by a doctor, dentist or psychiatrist.
- It must be medically necessary.
- It must have a Drug Identification Number (DIN.) This is an 8-digit code that means it has been authorized for use by Health Canada.
Not all drugs that meet these criteria are covered, however. While individual health insurance plans differ, here’s a list of prescription drugs that are almost always covered:
- Drugs that manage high blood pressure or hypertensions
- Drugs that manage diabetes, including insulin
- Drugs that manage high cholesterol
Medical cannabis is covered by some prescription drug plans, including some offered by Canada Life.
What’s the difference between prescription drugs and over-the-counter drugs?
Prescription drugs are medications that you get when a doctor prescribes them. Over-the-counter drugs can be bought without a prescription. An example of this is the difference between migraine medication your doctor prescribes and ibuprofen you may be able to pick up at the drugstore without a prescription
Which drugs aren’t covered by individual health insurance?
Again, plans can be different, but you usually find that these drugs aren’t covered:
- Drugs that help you stop smoking
- Drugs for fertility treatment
- Drugs for erectile dysfunction
Name brand vs generic
When a drug is first invented, it is usually released by a manufacturer as a “brand name” product. After the patent expires, other manufacturers are able to release their own copies using the same active ingredient(s.). This is known as a generic drug, which are usually lower cost than the brand name version.
If you have workplace benefits, see if your coverage includes prescription drugs
Check your eligibility under your province or territory’s drug program
If you don’t have effective prescription drug coverageFootnote *, get a quote to see how much Freedom to Choose health and dental insurance including prescription drug coverage could cost you
This information is general in nature, and is intended for informational purposes only. For specific situations you should consult the appropriate legal, accounting or tax advisor.
- Footnote *
- * Note: If you are a Quebec resident, Freedom to Choose health and dental insurance provides supplemental coverage to the prescription drug coverage provided under the Régie de l’assurance maladie du Québec (RAMQ) basic prescription drug insurance plan. Freedom to Choose health and dental insurance doesn’t remove your obligation to have drug coverage through the RAMQ drug public plan, through your employer or an association you are a member of or through the employer of your spouse.
- Footnote **
- ** The above example is for illustrative purposes only. Situations may vary, depending on your specific circumstances and provincial/territorial healthcare.