Financial Planning for Ontario Snowbirds: What You Need to Know

The Snowbird Lifestyle Is More Complicated Than Booking a Flight

Every fall, I have conversations with clients in London, Ontario who are getting ready to head south for the winter. Florida, Arizona, Texas, the Carolinas. They have been doing it for years, or they are thinking about doing it for the first time. Either way, the financial planning side of the snowbird lifestyle catches most people off guard.

Spending winters in the US is not just a travel decision. It is a tax decision, a health insurance decision, an estate planning decision, and a currency decision. Get any of these wrong and you could face unexpected tax bills, denied insurance claims, or complications that take years to sort out.

This guide covers the key financial planning considerations for Ontario retirees who spend part of the year in the United States. These are the things I walk through with my own clients, and the issues that come up most often.

The 182-Day Rule and US Tax Residency

This is the rule that trips people up the most. If you spend 183 days or more in the United States during a calendar year, you are considered a US tax resident under the substantial presence test. That means the IRS expects you to file a US tax return and potentially pay US income tax on your worldwide income.

But it is more nuanced than simply counting days. The IRS uses a weighted formula called the substantial presence test that looks at three years:

Current year: Count every day you were in the US
Previous year: Count one-third of the days you were in the US
Two years prior: Count one-sixth of the days you were in the US

If the total of those weighted days equals 183 or more, and you were in the US for at least 31 days in the current year, you meet the substantial presence test.

Here is a practical example. Say you spend 150 days in the US this year, 150 days last year, and 150 days the year before. That is 150 + 50 + 25 = 225 weighted days. You would meet the substantial presence test even though you never spent more than 150 days in the US in any single year.

How to Protect Yourself: Form 8840

If you meet the substantial presence test but want to remain a Canadian tax resident (which you do), you need to file IRS Form 8840, Closer Connection Exception Statement, every year. This form tells the IRS that despite spending significant time in the US, your closer connection is to Canada. You support this by showing that your permanent home, family, bank accounts, driver's licence, health coverage, social ties, and voter registration are all in Canada.

Filing Form 8840 is not optional if you are anywhere close to the threshold. It is your defence against being classified as a US tax resident. Miss a year, and you could have a serious problem.

Most Ontario snowbirds I work with keep their US stays to around 5 months (roughly 150 days) per calendar year. That gives a comfortable margin under the 183-day threshold while still allowing a full winter away.

OHIP Coverage: The 153-Day Requirement

On the Canadian side, Ontario has its own residency requirement for health coverage. To maintain your OHIP eligibility, you must be physically present in Ontario for at least 153 days in any 12-month period. That translates to roughly 5 months of the year in Ontario.

If you are absent from Ontario for more than 212 days in a 12-month period, you risk losing your OHIP coverage entirely. Losing OHIP is not just an inconvenience. Reinstating it requires a 3-month waiting period during which you have no provincial health coverage at all.

This creates a tight window for snowbirds. You need to be in the US fewer than 183 days to avoid US tax residency, and you need to be in Ontario at least 153 days to keep OHIP. In practice, this means most snowbirds can realistically spend about 5 to 6 months away each year. Plan your departure and return dates carefully, and keep records. A simple calendar or travel log showing your dates is enough.

OHIP Does Not Cover You in the US

This is critical. OHIP provides very limited coverage outside of Canada. If you are hospitalized in the US, OHIP pays a flat rate that covers only a tiny fraction of actual US hospital costs. A single night in a US hospital can cost $10,000 to $50,000 or more. An air ambulance back to Canada can cost $25,000 to $100,000.

OHIP will not save you. You absolutely need private travel health insurance for every day you are in the United States. This is non-negotiable.

Travel Health Insurance

Travel health insurance is the most important purchase a snowbird makes. Without it, a single medical event in the US could wipe out your retirement savings.

What to Look For

Coverage amount: Minimum $1 million, but $5 million is better given US healthcare costs
Pre-existing condition coverage: Most policies have a stability clause requiring that pre-existing conditions be stable for 90 to 180 days before departure. Read this clause carefully. If you had a medication change, a new diagnosis, or a test result that led to further investigation within the stability window, your claim could be denied
Trip length: Make sure the policy covers the full duration of your stay, not just 30 or 60 days
Emergency evacuation: Coverage for air ambulance back to Canada
Policy exclusions: Understand what is not covered, especially related to alcohol, adventure activities, and mental health
Top-up coverage: If you have some coverage through a former employer's retiree benefits plan, understand what it covers and buy a top-up policy for the gap

The Pre-Existing Condition Trap

This is where I see the most problems. A client's doctor adjusts their blood pressure medication in September. They leave for Florida in November. In January, they have a cardiac event. The insurer reviews the medical records, sees the medication change within the stability window, and denies the claim. The client is now facing a $200,000 hospital bill.

If you are planning to head south, talk to your doctor well in advance. Make sure any medication changes or investigations happen outside your policy's stability window if possible. And be completely honest on your insurance application. A denied claim because of a non-disclosure is far worse than a higher premium.

Some retirees are surprised to learn that life insurance and travel health insurance work very differently. Life insurance is about protecting your family if something happens to you. Travel health insurance is about protecting your finances while you are alive and recovering.

US Estate Tax Exposure

This is the one that shocks people. As a Canadian, you can be subject to US estate tax on US-situated assets. US-situated assets include:

US real estate: If you own a condo in Florida or a house in Arizona, it is a US-situated asset
US stocks held directly: Individual US stocks like Apple, Microsoft, or Johnson & Johnson held in a non-registered account are US-situated assets
US-based bank accounts: Deposits at US banks above certain thresholds

The US estate tax exemption for non-resident aliens is only $60,000. That is not a typo. While US citizens get an exemption of over $13 million, non-resident aliens (which is what Canadians are for US tax purposes) get just $60,000. After that, the US estate tax rate can be as high as 40 percent.

The Canada-US tax treaty provides some relief. The treaty allows Canadians to claim a pro-rated share of the full US estate tax exemption based on the ratio of their US-situated assets to their worldwide assets. If your worldwide estate is $2 million and your US assets are $500,000, you may get a prorated exemption of roughly $3.3 million. But the calculation is complex, and it does not always fully protect you.

How to Reduce US Estate Tax Risk

Hold US stocks through Canadian-listed ETFs: If you hold a Canadian ETF that owns US stocks (like an S&P 500 ETF listed on the TSX), those are Canadian-situated assets, not US-situated. This is a straightforward way to get US market exposure without the estate tax issue
Consider joint ownership with your spouse: Joint ownership with right of survivorship can defer the US estate tax issue (but not eliminate it)
Rent instead of buying: If the estate tax math is unfavourable, renting in the US avoids the US real estate exposure entirely
Work with a cross-border tax specialist: If you own significant US assets, get professional advice

If you have not reviewed your estate plan recently, our estate planning guide for Ontario families covers the Canadian side of things in detail. Snowbirds with US assets should also review their plans through a cross-border estate planning lens to make sure nothing falls through the cracks.

Currency Risk

When your income is in Canadian dollars and your winter expenses are in US dollars, currency fluctuations can significantly impact your budget. A 10 percent swing in the exchange rate can add thousands of dollars to your winter spending.

Over the past decade, the Canadian dollar has ranged from about $0.68 to $0.83 against the US dollar. If your US winter costs $30,000 USD, that is $36,100 CAD when the dollar is at $0.83, but $44,100 CAD when it is at $0.68. That is an $8,000 difference from currency alone.

Managing Currency Risk

Buy US dollars gradually over the year: Instead of converting a lump sum right before you leave, spread your US dollar purchases over several months to average out the exchange rate
Keep a US dollar bank account: Hold some savings in US dollars so you are not forced to convert at unfavourable rates
Budget conservatively: Plan your snowbird budget assuming a weaker Canadian dollar so you are not caught off guard
Use a Norbert's Gambit strategy: This involves buying a dual-listed stock or ETF in Canadian dollars on the TSX, journaling it to the US side, and selling in US dollars on the NYSE. It is a cost-effective way to convert larger amounts compared to bank exchange rates, which typically mark up the rate by 1.5 to 2.5 percent

US Banking

Opening a US bank account makes life significantly easier as a snowbird. You can pay US bills, hold US dollars, and avoid constant currency conversion fees. Many snowbirds open an account at a US bank with Canadian ties:

TD Bank operates in the US northeast and Florida and is familiar with Canadian snowbirds
RBC Bank (now part of BMO's US operations) has historically served Canadian snowbirds in Florida and Arizona
BMO Harris operates in several US states

Having a US chequing account, a US credit card, and a US mailing address (your winter address) simplifies everything from paying utilities to building a US credit history.

One caution: if your combined US financial accounts exceed $10,000 USD at any point during the year, you are required to file an FBAR (FinCEN Form 114) with the US Treasury. This is a reporting requirement, not a tax. But failing to file carries severe penalties, up to $10,000 USD per violation for non-wilful failures to file. The deadline is April 15, with an automatic extension to October 15.

Impact on OAS and GIS

Your snowbird lifestyle should not affect your Old Age Security payments as long as you maintain Canadian tax residency, which you will if you are following the residency rules above. OAS is portable and will be paid to you regardless of where you spend the winter.

However, the Guaranteed Income Supplement (GIS) is different. GIS is income-tested and requires that you reside in Canada. If you are absent from Canada for more than 6 months, your GIS payments will be suspended. For low-income retirees who depend on GIS, this is an important consideration.

The other risk with OAS is the clawback. If your retirement income strategy is not well designed, RRIF withdrawals, pension income, and other sources can push you above the OAS clawback threshold (approximately $90,997 in net income). Spending winters in the US does not change the clawback calculation, but it is a good reminder to review your income plan. Our OAS optimization guide walks through strategies to minimize or avoid the clawback entirely, and the retirement income plan guide shows how all your income sources fit together.

Keeping Canadian Tax Residency

Maintaining your Canadian tax residency while spending winters in the US is essential. If CRA determines that you have become a non-resident, the tax consequences are significant: a deemed disposition of most of your assets (triggering capital gains), loss of TFSA contribution room, and potential withholding taxes on Canadian income.

To maintain Canadian tax residency, keep your strongest ties to Canada:

Keep your principal residence in Ontario (or maintain a lease if you rent)
Maintain your OHIP coverage
Keep your Ontario driver's licence
Keep your Canadian bank accounts as your primary accounts
File your Canadian tax return as a resident every year
Maintain your social connections: church, clubs, professional memberships
Keep your Canadian passport current
Do not apply for a US green card unless you fully understand the tax consequences

The more ties you maintain to Canada, the stronger your position if CRA ever questions your residency. Most snowbirds who follow the timing rules and keep their primary home in Ontario will not have issues.

Home Insurance While You Are Away

This catches more snowbirds than you might expect. Most home insurance policies in Ontario require that your home be checked regularly while you are away during winter months. The typical requirement is every 24 to 72 hours, depending on your insurer and policy.

If a pipe bursts while you are in Florida and your home has not been checked within the required timeframe, your claim could be denied. Some options:

Arrange for someone to check your home on the schedule your policy requires and keep a log
Shut off the water and drain the pipes before you leave. Many insurers will relax the check-in requirement if the water is shut off
Install a smart water leak detector and thermostat that alerts you remotely
Talk to your insurer before you leave to understand exactly what is required

Review your policy and talk to your insurance broker. Some policies also have specific requirements about maintaining minimum temperatures in the home.

Power of Attorney and Healthcare Directives

Having your power of attorney documents in order is always important, but it becomes more urgent when you are spending months in another country. If you have a medical emergency in the US, your Ontario power of attorney for personal care may not be recognized by US hospitals.

Consider having a US healthcare directive or healthcare power of attorney prepared that is valid in the state where you spend your winters. This is especially important for medical decisions. Your Ontario documents should still be in place as well, but having dual coverage ensures someone can make decisions for you on both sides of the border.

Your financial power of attorney is equally important. If something happens to you in the US and your spouse or child needs to manage your Canadian financial affairs, they need the right documents in place. This is something we address as part of a comprehensive estate plan.

The Snowbird Financial Checklist

Before you head south each year, run through this list:

Travel health insurance: Policy purchased and reviewed, pre-existing condition stability window confirmed
OHIP: Confirmed you will meet the 153-day Ontario residency requirement
US days count: Confirmed you will stay under 183 days (and checked the substantial presence test formula across three years)
Form 8840: Filed for the previous tax year if applicable
FBAR: Filed if US financial accounts exceeded $10,000 USD
Home insurance: Check-in schedule arranged, water shut-off or monitoring in place
Power of attorney: Ontario and US documents current and accessible
Currency: US dollars purchased or available in your US account
Prescriptions: Sufficient supply for your time away, with documentation
Canadian tax return: Filed as a Canadian resident, pension splitting and OAS optimization considered

Why Snowbirds Need a Retirement Plan

The snowbird lifestyle adds layers of complexity to retirement planning that most people do not anticipate. Tax residency rules, insurance requirements, currency management, estate tax exposure, and government benefit eligibility all interact in ways that require careful coordination.

I work with many Ontario retirees who split their time between Canada and the US. The ones who have the smoothest experience are the ones who planned ahead. They know their day counts, their insurance is solid, their estate plan accounts for US assets, and their withdrawal strategy is designed to minimize taxes on both sides of the border.

If you are a snowbird or thinking about becoming one, a comprehensive retirement plan that accounts for the cross-border dimension is worth its weight in gold. Combined with proper tax planning, you can enjoy winters in the sun without worrying about surprises from the CRA or the IRS.

If you are in the London, Ontario area and want to talk through the financial side of the snowbird lifestyle, I am happy to have that conversation. You can learn more about how I work on my about page, or reach out to set up an introductory meeting.