Medically Necessary

Medically necessary describes any service, treatment, or supply required to diagnose, treat, or manage a health condition, rather than for convenience, appearance, or personal preference. Insurers use this term to determine whether a claim qualifies for payment under your policy.

How It Works

Insurers apply the medically necessary standard to decide whether a claim qualifies for payment under a policy, and even a prescribed service or item must still meet the insurer's own criteria for necessity and frequency before it is reimbursed. In Canada's public system, the Canada Health Act requires provincial and territorial plans to cover all medically necessary hospital, physician, and certain surgical-dental services, known as insured health services, but the Act does not define necessity itself, leaving each province and territory to decide which services it considers medically necessary and will cover. Hospital services are insured only when they are needed to maintain health, prevent disease, or diagnose or treat an injury, illness, or disability. In practice, the term has come to refer almost exclusively to care provided by a physician or within a hospital setting, so services a reasonable person might consider necessary but delivered outside those settings are typically not publicly covered.

Example:

In Canada, a hospital stay and the physician care to treat a broken leg count as medically necessary, so they are covered by your provincial health plan. The physiotherapy you need once the cast comes off may also be deemed medically necessary and reimbursable under a private health or dental plan, though it must still satisfy that plan's criteria for necessity and frequency. A purely cosmetic procedure, by contrast, would not qualify.

What to Watch For:

Being prescribed an item or service does not guarantee payment, because it must still meet the insurer's criteria for necessity and frequency, so always check the coverage rules first. Cosmetic procedures and preferred hospital accommodation, unless prescribed by a physician, are not insured under provincial and territorial plans and must be paid out of pocket or through private health insurance. Be cautious as well about buying products or services that are not medically necessary in order to receive an incentive or reward, as this is considered abuse of a benefit plan.