The US-Canada border is one of the friendliest in the world. As a result, many people move back and forth across the border. I am one of those people. I grew up in Canada, went to university and worked in the US, moved back to Canada for a few years, and now live back in the US.
It’s important for people considering moving across the border to understand the difference between the two countries' personal tax systems and other factors impacting cost of living.
I’ve been writing a series of posts on the topic.
In my first post I wrote about the differences in tax agencies, impact of moving, filing status, and income tax rates.
In my second post I explained deductions and credits, which can be a confusing concept especially when comparing Canada and the US.
In my third post I wrote about a significant difference for those earning between $50,000 and $120,000 per year: payroll tax.
In this post I’ll take a break from tax-specific topics to discuss differences in health care and other insurance. While not specifically a tax topic, it's an area impacted significantly by government and an important cost-of-living consideration. It’s not enough compare taxes only when figuring out differences in discretionary income.
Differences in health care and insurance is a big deal. My family went from having free primary health care in Alberta to paying over $400/month for less coverage and a $10,000 deductible (meaning I pay out of pocket all health care expenses up to $10,000 per year). Family plans covering maternity and with a lower deductible can easily climb over $1000/month.
Thankfully we have been healthy, so our costs above the $400/month are minimal, but even broken bones, stitches, or minor surgeries could quickly change that.
Health Care in the US
Health care premiums vary widely across the US and have been complicated by the “Affordable” Care Act (ACA, or Obamacare - the quotes are my addition). As a side note, I work with a company that provides group health insurance to their employees, and their premiums doubled when Obamacare took effect.
If moving to the US, I recommend reviewing the healthcare.gov website and finding a reputable health insurance broker to help explore your options. Health insurance brokers are free and very helpful. I found my broker through Dave Ramsey’s ELP program.
Despite the cost (or arguably because of it), the service and quality of care in the US is generally excellent. Unlike in Canada, health care providers compete against other. My wife had two babies in the US and one in Canada. While the Canada experience was fine (we left with a healthy baby, which is the most important thing), she shared a room and received friendly but minimal service. Both times in the US she had a large private room and exceptional service.
Health Care in Canada
Health care in Canada is administered as a monopoly by each province.
There were no premiums for primary care when I lived in Alberta. Alberta is now in the process of reinstating premiums, but they are still almost nothing compared to the US. Those making less than $50,000/year still won’t pay any premiums, and premiums gradually rise to a maximum of $1000/year based on income. Each province in Canada is different, but premiums are roughly comparable across the country.
Canada gets a lot of criticism for wait times and general lack of service. I have heard far-removed horror stories of people suffering and dying while waiting for procedures. However, I and people I know don’t have many complaints. Yes, ER wait times are long, and it can take a long time to get things like MRI’s for non-urgent matters, but I believe people generally get what they need. My mom survived cancer, and she received great service during her many treatments.
When talking about health care in Canada, most people refer to primary health care. It includes basic necessities like doctor visits, surgeries, baby deliveries, cancer treatment, etc. It does not include prescription drugs, dental, vision, etc.
If moving to Canada, go to the health care website for the province you’re moving to and become familiar with residency requirements and waiting periods. Most importantly, enjoy the lower or nonexistent premiums!
Home and Auto Insurance
I will only briefly touch on auto and home insurance. I mention it because my savings in the US made up some of the difference in health care costs. I’m not familiar with the insurance market in other parts of Canada or the US, so I can only speak from my own experience. My combined auto and home premiums went from over $300/month in Canada to less than $100/month in the US (for the same two vehicles and a bigger house in the US).
When comparing costs, I recommend getting quotes from a good broker in the area you’re moving to. Again, Dave Ramsey’s ELP program is helpful in the US.
Health care and other insurance aren’t tax topics, but they are significant costs you should consider along with tax when comparing cost of living between countries.
Disclaimer: I am a CPA in both Canada (Chartered Professional Accountant) and the US (Certified Public Accountant), but I am not a tax or insurance expert or a certified financial planner. This post is not meant to be professional advice. My goal is not to write a definitive guide. Rather, my goal is to give you a starting point for your own further research and/or discussions with your tax and other advisors.