DON’T LET LACK OF PREPARATION RUIN YOUR WINTER GETAWAY TO THE SOUTH
By Olev Edur
s the cold weather approaches, many Canadian snowbirds start migrating to their winter nesting grounds in warm sunny Florida, California, or Arizona. Before you take flight, however, here are three important points to consider.
TRAVEL INSURANCE: BE DILIGENT WITH YOUR APPLICATION.
As most Canadians are aware, the costs of emergency medical treatment in the United States can be financially ruinous, so you need to ensure that you are fully protected before you head south. Such insurance is now available through subsidiaries of most big banks, as well as through Medipac (through the Canadian Snowbird Association (CSA)), Medavie Blue Cross, and others.
You must be careful to ensure the coverage you get meets all your needs (see box for some of the questions you should ask in making policy comparisons).
You also need to be extremely diligent when it comes to answering questions about pre-existing medical conditions and the treatment(s) that have been prescribed for you. A CBC Marketplaceprogram a few years ago found numerous instances of travel insurance refusals and stated: “The travel insurance that millions of people buy may offer no protection at all if they answer a single question incorrectly—no matter how innocent the error—on a medical questionnaire full of convoluted language, confusing clauses, and tricky definitions.” In many cases, the denials related to definitions of “pre-existing” conditions and “treatment.”
“Pre-existing” can mean any condition, whether you knew about it or not. And a condition can “exist” simply because you were once tested for it, whether it was found to exist or not. So, for example, if you’ve ever had your blood pressure tested—a standard procedure for most people—and you are asked if you’ve ever been treated for high blood pressure, answering no could nullify your coverage.
“It all depends on the definitions,” says James Bullock of Gold Cross Insurance in Caledon, ON. “What these applications typically ask is if you’ve been treated for any of the following list of conditions, and if you answer yes to any of them, then you have to answer a second list of questions such as how long ago, how bad, and so on. If you don’t answer yes when you should have, then the contract is void and there’s nothing you can do. A contract is a contract.”
The bottom line is that you must be completely thorough in disclosing everything for which you’ve been treated, even if you think it may be irrelevant or no longer applies. If you are taking any medications, list them all and, if applicable, list any medications you’ve taken in the past. In addition, Bullock suggests that if you have any doubts, write a full explanation on the application, if there’s room, or attach a note. In the latter case, keep a copy of the note for yourself.
And don’t rely on your local travel agent to provide all the right answers about these policies.
“Insurance is complicated, and the government made a big mistake when it allowed travel agents to sell it,” Bullock says. “It started with trip cancellation and baggage insurance, where the losses might have been only $1,000 or so. Now the losses could be a quarter of a million dollars and you’ve got inexperienced people selling it. It’s scary.
“Ideally, you should complete the application with the help of a well-trained expert who can grill you on each question,” Bullock advises. “I’ve been in the insurance business for 45 years, but I won’t do it myself. I go to my local branch of the Canadian Automobile Association; they have people who are well trained to do a good job.”
DON’T STAY TOO LONG—OR VISIT TOO OFTEN.
In some cases, you may inadvertently become a US resident and be faced with a slew of extra paperwork at the very least—and possibly taxes that can’t be recovered via the Canada-US tax treaty (the treaty allows most but not all US taxes to be offset by credits on your Canadian tax return).
The common perception is that as long as you spend less than half of each year in the United States, you won’t be deemed a US resident and have to go through all the hoops and costs of filing a US tax return, but this is wrong. The rules, based on the IRS’s “substantial presence test” (SPT), are much more stringent. The SPT works like this: you add all the days spent in the United States this year, one-third of the days last year, and one-sixth of the days the year before that; if the total is 183 days or more, with at least 31 days in the current year, you’re considered a US resident for tax purposes.
So if, for example, you spend 120 days in the States in each of three succeeding years, that equals 120 plus 40 plus 20, or 180 days in total, and you’re okay; spend 123 days each year (123 plus 41 plus 20.5 equals 184.5) and you’re not.
You’re treated as present in the United States on any day you’re physically present in the country, at any time during the day. However, there are exceptions. You don’t have to count the following as days of presence in the United States for the SPT:
- days you commute to work in the United States from a residence in Canada or Mexico, if you regularly commute from Canada or Mexico
- days you are in the United States for less than 24 hours, when you are in transit between two places outside the United States
- days you are in the United States as a crew member of a foreign vessel
- days you are unable to leave the United States because of a medical condition that develops while you are in the United States
- days you are an exempt individual (government-related individuals, teachers, trainees, students, and professional athletes temporarily in the United States).
There are ways around the SPT, either by claiming a “closer connection” to Canada via Form 8840 or by invoking the tiebreaker tests in the Canada-US tax treaty via Form 8833. But the simplest and cheapest way to avoid having to pursue any of these alternatives is to stay onside of the SPT.
“From our experience, for someone filing resident tax returns in both Canada and the United States, the complexity and cost of preparing one’s US tax returns can easily double or triple the complexity and cost of preparing one’s Canadian tax returns, and in some cases it can be higher orders of magnitude than that,” Ubeika says.
TAKE CARE OF THE HOME FRONT.
Finally, if you’re heading off for an extended sojourn, make sure you take care of all the details on the home front. Here’s a brief checklist of chores to review before you lock the doors and board your flight.
- Have you informed friends or relatives of your travel plans and exchanged phone numbers and addresses where you and your group can be reached at any time in case of emergencies back home?
- Have you arranged for a trusted neighbour, relative, or perhaps a security firm to house-sit or periodically visit the property?
- Have you inspected and if necessary improved your home’s security—door and window locks, alarm systems, outdoor lighting, etc.—and talked to your insurer about any requirements during an extended absence?
- If taking valuables such as cameras or jewellery, have you had them etched or photographed and brought along your ownership documentation? You might also want to store any other valuables in a safety deposit box before leaving.
- Have you paid all bills, cleared up your credit cards, and perhaps made arrangements for automated bank debits of recurring monthly expenses?
- Have you had your subscriptions and services such as mail, newspapers, cable, etc., put on hold or rerouted?
- If you’re travelling by car, have you given your car a complete inspection and made all repairs to avoid problems en route?
- If you’re not taking your car, is it properly stored, with the battery disconnected?
- Have you made a complete final walk-around to ensure all doors and windows are closed and locked, all appliances and electronic devices that won’t be used while you’re gone are unplugged, the fridge is emptied of perishables, and, if advisable, the water is shut off?
Photo: iStock/Maxim Zarya.