How does insurance reimbursement work in Canada?

9 minute read Published on May 17, 2024 by BrokerLink Communications

A person in suit in his office showing an insurance policy and pointing with a pen where the policyholder must to sign.

The way insurance pays for medical services involves doctors, patients, and insurance companies working together. Doctors or patients send a bill to the health insurance company for the care received. Knowing how the health insurance payment process works is important for doctors who want to be paid and for patients who need to know what they have to pay for. If you want to understand how healthcare reimbursement works in Canada, let’s get into it.

What is Canadian healthcare reimbursement?

In Canada, the system that pays for healthcare is called Medicare, and it’s part of the country’s public healthcare system. This means everyone in Canada can get important medical help without worrying about how much money they have. This system is different from places like the United States, where private insurance plays a big role. In Canada, the government takes care of funding and running healthcare. Let’s take a closer look at how Canada pays for healthcare, including how it gets money, how it’s managed, and how doctors get paid.

Funding and administration

In Canada, healthcare is paid for with money from taxes, both from the national government and from each province or territory. The national government helps out through something called the Canada Health Transfer, which gives money to provinces and territories to help pay for medical services. This system is made to follow the rules of the Canada Health Act, which makes sure healthcare is available to everyone, covers a wide range of services, works across all provinces and territories, is run by the public sector, and is based on people’s needs, not how much money they have.

Each province or territory gets to manage its own healthcare plan following these rules but can also adjust things to suit local needs better and what’s important locally. This means that even though Canada has a general way of doing healthcare, the exact services you get, what’s included for free, and how doctors get paid can be a bit different depending on where you are in Canada.

Reimbursement to healthcare providers

In Canada’s healthcare system, there’s a way to make sure hospitals, doctors, and other medical folks get paid for helping patients:

Fee-for-service for doctors

Doctors usually get paid through something called fee-for-service. This means they send a bill for each thing they do for a patient, like check-ups, tests, or treatments. How much they get paid for each service is something the government and doctor groups agree on, making sure it’s fair based on how complex or necessary the service is.

Global budgets for hospitals

Hospitals get their money differently through global budgets. This is a big lump sum of money given to hospitals by the government for the whole year. It’s supposed to pay for everything the hospital needs to run, like staff salaries and medical supplies. Hospitals need to use this money wisely to take care of all their patients’ needs without running out.

This system of paying for healthcare helps keep medical services going strong in Canada, making sure doctors and hospitals can keep providing good care to everyone without charging patients directly when they need help.

Sources of insurance reimbursement in Canada

In Canada, the money to cover healthcare costs mainly comes from two places: the government’s healthcare system and private insurance companies. This mix helps make sure that people can get the basic health services they need while also having the option to get more coverage from private insurance for extra things. But, there are some health services that people might have to pay for themselves. Here’s a quick look at how each part helps pay for healthcare in Canada:

Public healthcare system (Medicare)

Canada’s main way of paying for healthcare is through a public system everyone calls Medicare. It’s paid for with money from taxes that both the national government and the governments in each province or territory put in. The national government helps out the provinces and territories with money through something called the Canada Health Transfer.

Each province and territory has its own health insurance plan. These plans pay doctors and hospitals for the medical care they give to people living there. The care has to be something really needed, like hospital stays or doctor visits. The rules for these plans are based on the Canada Health Act, which makes sure that everyone who’s eligible can get the important healthcare they need without having to pay right when they get the care.

Private insurance

Besides the public healthcare system, lots of Canadians also have private health insurance. This extra insurance helps pay for things that the public system doesn’t cover, like medicine (when you’re not in the hospital), teeth cleaning, eye checks, and special treatments like physiotherapy or chiropractor visits. People often get this private insurance through their jobs, or they can buy it themselves.

This private insurance is like a bonus on top of the public system. It helps cover costs for things that aren’t included in public healthcare, so people don’t have to pay as much out of their own pocket. Plus, it gives them more choices, like going to private clinics if they want to skip the long lines for some services in the public system.

Out-of-pocket payments

In Canada, people can get many health services for free without paying extra, thanks to public healthcare. But what’s included for free can be different depending on where you live in Canada, and not everything is covered. Stuff like medicine when you’re not in the hospital, dentist visits, physiotherapy, and eye check-ups might not be paid for by the public system. So, people might need private insurance or have to pay themselves for these things.

What is a health reimbursement arrangement?

In Canada, there’s a thing called a Health Reimbursement Arrangement (HRA), but people usually talk about it as part of Health Spending Accounts (HSAs). It’s a special account where employers put money that employees can use to pay for medical costs that their regular health insurance doesn’t cover. This could be for things like dentist visits, glasses, medicine, and more. The cool part is that the money the employer puts into this account doesn’t count as income for the employee, so they don’t have to pay taxes on it. It’s a handy way for employees to get extra health benefits without the extra tax.

Why is healthcare reimbursement necessary in Canada?

Healthcare reimbursement is a crucial component of Canada’s healthcare system, ensuring that the costs of delivering medical services are covered. This system plays a vital role in maintaining the health and well-being of Canadians by providing necessary financial mechanisms. Here are several reasons why healthcare reimbursement is necessary in Canada:

Supports universal healthcare access

In Canada, everyone is supposed to get the medical care they need without having to pay when they go to the doctor or hospital. The reimbursement system helps make this possible by paying healthcare providers for their services, keeping healthcare free at the point of use.

Enables high-quality care

The money from this system also pays for the buildings, the healthcare workers, and the equipment needed for top-notch medical care. When healthcare providers know they will get paid, they’re more likely to keep up high standards.

Keeps healthcare fair

Canada’s system tries to make sure everyone gets the care they need, no matter how much money they have or where they live. This means people in small communities or rural areas have the same access to doctors and treatments as those in big cities.

What is the difference between payment and reimbursement?

Payment is when you buy something or pay for a service right when it happens, like buying a toy or paying a doctor during your visit. Reimbursement is when someone else, like an insurance company or your job, pays you back for money you’ve already spent. In healthcare, if your insurance doesn’t cover your doctor’s visit, you pay yourself (payment). Later, if your insurance says they’ll cover it, they give you the money back (reimbursement).

Claims process in the public healthcare system (Medicare)

When you use the public health system in Canada (like Medicare) for things you really need like seeing a doctor, staying in the hospital, or getting surgery, you don’t have to worry about paying right away or asking for your money back later. Here’s how it works:

Service delivery

You go to the doctor or hospital and get the medical help you need. It’s that simple.

Identification and verification

When you get there, you show your health insurance card from your province or territory, such as your Nova Scotia health card. This proves you’re covered for free healthcare.

Direct billing

Instead of you paying upfront, your doctor sends the bill straight to the healthcare plan of your province or territory. This allows you to walk in and out of your appointment without ever touching your wallet—well, except to pull out your health card for identification.

Reimbursement to providers

Say goodbye to filling out forms for a reimbursement of your own money! Since your doctor billed your province’s health care plan directly, the health authority checks the bill to make sure everything’s correct and then pays the doctor directly based on set prices for the services.

This easy process means you don’t have to deal with paying upfront or filling out forms to get your money back for basic healthcare services.

Claims process for services covered by private insurance

For health stuff that the public system in Canada doesn’t cover or for extra coverage beyond what Medicare gives, here’s how you deal with private insurance:

Payment for services

You might have to pay yourself when you get the service or pick up your prescription and then ask your private insurance to pay you back.

Sending in a claim

You fill out a form for your insurance, saying what you got and how much it cost, and send it with the bill and any other proof they need.

Waiting on approval

Your private health insurance company looks over your claim to make sure it fits what your plan covers. This might take some time, depending on what you’re asking for and if you gave them all the info they need.


If the insurance says yes, they’ll send you money back for what you spent, or sometimes the insurer pays the healthcare provider directly. How much money you’ll get back depends on your insurance plan and what type of medical service you need.

Dealing with private insurance in Canada can take more steps and effort than just using the public healthcare system, especially since you need to know what your insurance covers, send in claims, and sometimes follow up to get your money back.

What can I do if my healthcare reimbursement claim is rejected?

If your claim for getting money back from healthcare costs is turned down, whether by Canada’s public system or, more likely, by a private health insurer, don’t panic. If you’ve found yourself facing healthcare reimbursement rejections, here’s what you can do:

Understand why

First, look at the letter advising they will not cover the procedure or claim to see why they said that. It might be because what you asked for isn’t covered, or maybe there was a mistake on your form.

Talk to your insurance

If something is not clear, gather all the information that you can by speaking with your insurance company to understand why they are denying your claim so you can gather more information if necessary.

Appeal if you disagree

If you think they’re wrong, you can fight the decision. Check your insurance papers on how to argue your case. You’ll likely need to write them a letter saying why you think you should get the money and include any proof, like doctor’s notes. Make sure you do this within their time limits.

Get some help

If it’s all too much, there are groups and people who can help you understand and go through the process, like patient advocacy groups or healthcare navigators.

Keep track of everything

Save all emails, letters, and notes from calls with your insurance company about this. These records can be super important if you need more information for your insurer or from your medical professional.

Act quickly and follow the rules

Doing things fast and by what your insurance asks for can help you get a better result.

In conclusion

Healthcare reimbursement is an important part of Canada’s healthcare system, helping to cover the costs of medical services. For reimbursement, you submit a claim to your insurance company after you pay, and your insurer then checks your claim based on your policy’s rules and pays back the amount covered. Knowing the details of your insurance policy, like what it covers and how to file a claim, is key to getting the most out of your insurance and keeping your expenses in check.