Protect your snowbird clients before they head south

By Rosemary McCracken | September 21 2011 06:37PM

As your snowbird clients get ready to fly off to warmer winter climes, you’ll need to make sure they’ve made proper preparations for their time outside Canada. The most important thing they’ll need is adequate medical coverage.An RBC Insurance/Ipsos Reid survey in May found that only 62% of Canadian travellers aged 55 and older purchased travel insurance for visits to the U.S., and that 40% of this age group don’t take the time to understand what their travel insurance covers as they prepare for their trips.

Many people think they’ll be covered under their provincial health plans, but this is just not so. “The portability principle of the Canada Health Act, with a few exceptions, is not being met by most provinces,” says Michael Mackenzie, executive director of the Canadian Snowbird Association, a non-profit organization representing Canadian travellers.

The maximum amounts the provinces currently pay per day toward medical expenses incurred outside Canada are:

British Columbia $75
Alberta $100
Saskatchewan $100
Manitoba $250-$570
Ontario $400
Quebec $100
New Brunswick $100
Nova Scotia $525
Newfoundland and Labrador $350-$465
Prince Edward Island $1,055
Yukon $1,605
Northwest Territories $1,283
Nunavut $1,269

With hospital stays in the U.S. costing around $10,000 a day, your clients clearly need to have travel medical insurance to cover the gap between what the provinces will pay and what their medical bills may be. Those who don’t will be gambling with their life savings.

Some travellers may think they are covered by their credit cards or under their employee benefits, but they need to determine whether there are ceilings to the amount of coverage provided, limits to lengths of stay outside Canada and age cut-offs.

“Some credit cards are now offering very good coverage,” said Tim Bzowey, vice president, travel, at RBC Insurance, “but most people don’t know exactly what this coverage is because they were not actively purchasing travel coverage when they applied for their cards. And employee plans may have restrictions, and many do not pay upfront; the traveller pays the hospital bill and is reimbursed later. This could mean taking out a bank loan.”

Clients who find gaps in the coverage provided by their credit cards or employee plans, or those with no coverage at all, will need to purchase travel medical insurance.

Some insurers may have cut-off ages after which travellers cannot purchase coverage. “RBC Insurance does not have a cut-off age,” Mr. Bzowey said, “but coverage may be modified by pre-existing health conditions. A traveller with a heart condition, for example, may not be covered if he or she has a health episode related to that condition while away from Canada, but they will be covered in other areas. There are many things that can happen while travelling, so a pre-existing condition is not a reason for foregoing travel insurance.”

You or your client can also try shopping around. Some insurers may offer coverage for medical conditions that aren’t covered by others. And some have plans with more relaxed terms for pre-existing conditions, for example insuring travellers with certain medical conditions if there have been no changes in the condition for 365 days.

You’ll also need to ascertain exactly what the policy covers, Mr. Bzowey said. Does it include air ambulance with medical support so that your client can return to Canada? Does it pay for the living expenses of the spouse or the travel companion while the client is in hospital abroad, and for this person’s return airfare?

“You’ll need to find out if the plan has a deductible and how much it is,” he added. “And you’ll need to know what support is available from the insurer if the client becomes ill or has an accident. We have a 1-800 number the insured person can call from any place in the world. We’ll direct him to appropriate hospitals and health-care professionals at his travel destination. Outside Canada, quality care is highly variable, and in some places it may be difficult to find English- or French-speaking health-care professionals.”

Trip cancellation

Your client should also have trip cancellation and trip interruption insurance in place that will refund the travel investment should he or she need to cancel the vacation or have to return home earlier than planned. This may be included with medical coverage in the travel insurance package. If not, it can be purchased separately.

When footloose snowbirds return to Canada, they’ll likely want to continue their travels within their own country. But many won’t be packing travel insurance. The RBC/Ipsos Reid survey found that 76% of the Canadians polled don’t believe they need to purchase travel insurance when travelling to another Canadian province because their health plans will cover their medical costs.

Basic emergency medical costs, including hospital stays in other provinces, are covered up to the home province’s maximum fee schedule. But, if your client falls ill in another province with higher rates, and on top of that if specialists are called in, the home province may not cover the difference.

“Another big area of concern,” Mr. Bzowey noted, “is ambulance transportation, both ground and air, which is only covered in the home province. Transporting a patient by air ambulance with medical support from Halifax to Calgary will cost $32,000. As well, X-rays, prescription drugs and emergency dental work in other provinces are not covered by provincial plans. Coverage can also include a travel companion’s expenses and transportation of a family member to the travel destination.

“Cost is nominal and well worth it,” he added.

RBC Insurance medical coverage for travel within Canada costs $63 for a 10-to-16-day trip for a person aged 60, $79 for a 70-year-old, and $124 for an 80-year-old.

Length of time outside Canada

Canadian provinces allow their residents to be away for different lengths of time before their health coverage expires and they need to re-apply for it. “Newfoundland residents can be away for eight months,” said Mr. Mackenzie. “Ontario residents can be away for seven months. Quebec residents can be away for six months, but the province doesn’t count trips of 21 days or less. Manitoba allows residents to be away for six months, but after three months they need to apply for a certificate from Manitoba Health confirming that they are still in good standing. And all provinces have one-offs, allowing residents to be away for longer periods every few years – but these are all over the map. You’ll need to check what’s in place in your client’s province.”

After ensuring that they have adequate medical coverage, one of the biggest issues Canadian snowbirds need to address is the length of time they spend in the U.S. every year. According to Mr. Mackenzie, about 200,000 Canadians spend six months outside of Canada every year and about 75% of them go to Florida. But they need to keep careful track of their time away from home because they cannot spend unlimited time south of the border.

Canadians are considered resident aliens in the U.S. if they pass the “substantial presence” test for a calendar year. And if they do, they’ll have to file a U.S. tax return and they’ll be taxed in the U.S. on their worldwide income. They’ll pass this test if they are in the U.S. for at least 31 days during the current year and 183 days during a three-year period that includes the current year and the two previous years. To calculate this, they’ll need to count all the days spent in the U.S. in the current year, one-third of the days in the previous year and one-sixth of the days in the year before that.

The onus is on your client to keep well within this time frame as American authorities are currently tracking the presence of foreigners in the country.

“If you have a client who flies down to his U.S. vacation spot, the U.S. government will know when he arrived and when he left,” Mr. Mackenzie said. “We’re not sure how up-to-speed they are about people who arrive by car, but we recommend that snowbirds carry a folder with them showing that they have a stronger presence in Canada than in the U.S. and therefore will return to Canada: copies of deeds to their homes in Canada, bank accounts, bills, etc. And a no-brainer is a return plane ticket, although some people insist on buying one-way tickets, thinking they can purchase cheaper flights home in the U.S.

“Some snowbirds enjoy themselves so much,” he added, “that they decide to spend an extra month in the U.S. They may get away with it that year but it will generate an exit flag. And when they return the following year, they could be told to come back in two or three months, or find themselves banned for five years. U.S. border guards have a huge amount of discretion in allowing entry, and it’s a misconception that owning a home in the U.S. will make a difference.”

The CSA (Canadian Snowbird Association) is currently lobbying the U.S. government to establish a four-year Canadian retiree visa for retired Canadians age 55 and older that will allow them to spend unlimited time in the U.S. “They won’t be allowed to work in the U.S., they’ll need their own health insurance and a certain income level,” Mr. Mackenzie said. “Considerable interest in this has been expressed by states that want Canadian snowbird revenue.”

Other considerations

Financial planning in other areas will ensure smooth sailing for your snowbird clients while they are out of Canada.

“Determine how much monthly income your client will need while he’s away and arrange for automatic deposits to be made into his or her bank account. These funds will typically come from a RRIF or a pension plan,” said Sue Neal, Investors Group’s regional director for the downtown Toronto area.

“Double check your client’s banking information,” she added. “Clients will often tell you this is the same as previous years, forgetting that they’ve changed banks or branches in recent months.”

Some clients will pay for their expenses in the U.S. with their Canadian debit cards. Others will open an account at a U.S. bank. The CSA has set up the Snowbird Currency Exchange program ( that allows members and non-members to exchange Canadian dollars for US dollars at a preferred rate, and enjoy the convenience of transferring funds automatically from every Canadian bank to any U.S. bank every month whether they are in the U.S. or in Canada. “We’re buying US dollars in bulk by pooling the funds of all participants,” said Mr. Mackenzie.

Advisors will also need to set up conservative, short-term investments for snowbird clients for both emergencies and opportunities, such as buying a vacation property, Ms. Neal said. “And the client should also carry a credit card with a high limit to cover unforeseen expenses.”

At Investors Group, she said, “advisors have limited trading authority so clients need to authorize any trades. But if they already have the proper mix in their portfolios, we shouldn’t have to touch their long-term investments while they are away.”

Make sure the snowbird client has life insurance in place, she added. “And make sure wills and power of attorney documents are up to date. The client should have a POA document that gives his spouse or travelling companion power to sign on his behalf in the event that he becomes incapacitated while he’s away.”