Application for Financial Hardship Unlocking for Medical Expenses

Introduction and overview

What you need to apply for financial hardship unlocking for medical expenses

When your application is approved

Filling out Form FHU 1 – Medical Expenses

Introduction and overview

This User Guide helps you apply to unlock and take out money from your Ontario locked-in account (locked-in retirement account (LIRA), life income fund (LIF) or locked-in retirement income fund (LRIF)) based on financial hardship for medical expenses.

This User Guide is only a guideline. If this User Guide conflicts with the rules in the Financial Services Regulatory Authority of Ontario Act, 2016 (FSRA Act), the Pension Benefits Act or the regulations made under either of them, the FSRA Act, Pension Benefits Act or regulations govern.

There are four types of financial hardship unlocking allowed for Ontario locked-in accounts:

  1. for medical expenses;
  2. for arrears of rent or default of debt secured on a main home (such as a mortgage);
  3. for payment of first and last months’ rent for a main home; and
  4. for low expected income.

This User Guide is for unlocking because of medical expenses. If you want to apply for another type of financial hardship unlocking, you must apply separately using a different form. You can find User Guides for the different types of financial hardship unlocking and applications on the Financial Services Regulatory Authority of Ontario (FSRA) website.

You must apply to the financial institution that holds and administers your locked-in account. Your financial institution could be one of the following:

  • a bank
  • a life insurance company
  • a credit union
  • a caisse populaire
  • a trust company

If you have invested the money in your locked-in account through a financial advisor, you should ask your advisor if you should make your application:

  • through them; or
  • directly to the financial institution that holds your locked-in account.

You cannot make your application to FSRA.

Your financial institution is responsible for answering questions about your locked-in account and your unlocking application.

What you need to apply for financial hardship unlocking for medical expenses

You must have money in an Ontario locked-in account that you own

There are three different types of locked-in accounts:

  1. LIRAs
  2. LIFs
  3. LRIFs

Your money must be in one of these accounts. If your money is still in your pension plan, you cannot take it out due to financial hardship.

You must be the owner of the locked-in account to apply for financial hardship unlocking. The locked-in account must be in your name, not in your spouse’s name. If you are not sure, ask your financial institution or financial advisor.

Your money must be subject to the Ontario Pension Benefits Act

The money in your locked-in account must be subject to the Ontario Pension Benefits Act. It cannot be subject to federal pension law or the pension law of another province. If the money is not subject to the Ontario Pension Benefits Act, your application will be refused. Ask your financial institution whether your locked-in account is subject to the Ontario Pension Benefits Act.

Use Form FHU 1 Application for Medical Expenses

You must apply to your financial institution using the application form approved by FSRA. The application for medical expenses must use the Form FHU 1 for the year you apply. If you apply in 2024, use the 2024 form. You cannot use a previous year’s form.

Please contact your financial institution for an application form. Forms and other information about financial hardship unlocking can also be found on FSRA’s website.

One application per year, per type of unlocking, per account, per eligible person

Every application for medical expenses must be for the medical expenses related to an individual person. If you want to apply for the medical expenses related to more than one person, you must make a separate application for each person’s medical expenses.

For any locked-in account you own, you can only apply one time during the calendar year to unlock money for the medical expenses of an eligible person. An eligible person is someone who:

  1. is suffering from an illness or physical disability; and
  2. is you (the owner of the locked-in account), your spouse or a dependant of either you or your spouse.

Deadlines for the application

There are a number of important deadlines to be aware of:

  • 60 day time limit for submitting the application: Once you sign the application (and your spouse signs the consent, if applicable), you have 60 days to submit it to your financial institution. If you submit it after 60 days from the date you signed it, you will have to fill out another application.
  • 30 day time limit for payment by financial institutions: Your financial institution must review your application to see if it meets the requirements for financial hardship unlocking for medical expenses. If the requirements are met, your financial institution must:
    • approve the application; and
    • make payment to you within 30 days from the day it received the completed application.

Minimum and maximum amounts you may apply for

For all applications, the minimum amount you must apply for is $500.00. If you apply for less than $500.00, your financial institution will refuse your application.

The maximum amount you can apply to unlock for medical expenses is described later in this User Guide. You cannot apply for an amount greater than the maximum amount. If you do apply for an amount greater than the maximum, your financial institution should advise you to revise your application.

Your financial institution is not permitted to pay you an amount greater than the maximum amount allowed.

Please see Question 3 in Part 2 of this User Guide below for more information about the maximum amount you may apply to unlock for medical expenses.

When your application is approved

Payment

The money must be paid to you in one lump sum. It cannot be paid monthly or in any other manner. It cannot be transferred to another tax-deferred account, such as a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF).

Withholding tax and other deductions

The amount you are approved to unlock will be reduced by income tax. This is required by the Canada Revenue Agency (CRA).

Your financial institution may also charge an administrative fee for your application, which will be deducted from any amount paid to you.

For example, you apply and are approved to unlock $20,000.00. Your financial institution must deduct 30 percent ($6,000.00) for income tax and pay it to the CRA. If your financial institution charges you a $50.00 fee, that amount will also be deducted. Therefore, in this example you end up receiving $13,950.00.

To receive a greater amount in cash than what you would have received after deductions, apply to take out a greater amount. But you cannot apply to take out an amount greater than:

  • the maximum amount allowed; or
  • the amount in your account.

Eligibility for other government benefits

When you take out money from your locked-in account, that money could be considered as income. This could affect your eligibility for benefits under a government program, such as social assistance. Contact the government agency or department that administers the program or provides these benefits if you have questions about the impact on your benefits.

Loss of creditor protection

Money in your locked-in account cannot be seized by your creditors. If you take out money from your locked-in account, that money is no longer protected and may be seized by your creditors.

Privacy

Your financial institution must tell you the purpose for collecting, using or disclosing any of your personal information.

Filling out Form FHU 1 – Medical Expenses

General Information about Form FHU 1

To unlock money for medical expenses, you may make one application during a calendar year for each person who has an illness or physical disability. The person must be:

  • you (the owner of the locked-in account);
  • your spouse; or
  • a dependant of either you or your spouse.

A physician or dentist must verify in writing that the person has an illness or physical disability. The physician or dentist can do this by completing Part 5 of the application form or providing a document that contains the same information as Part 5.

If you have already applied this calendar year to unlock money from this locked-in account for a particular person’s medical expenses, you cannot apply again for that person’s medical expenses during this calendar year from that locked-in account. You may apply during the same calendar year for a different person’s medical expenses, but you must apply using a separate Form FHU 1 for that person. An application is considered to be made in the year in which the financial institution receives the completed application.

You may apply to unlock and take out money from the same locked-in account for different kinds of financial hardship. You can do this in the same year, but you must use different unlocking forms.

The medical expenses must be either:

  • Expenses for medical or dental goods and services that:
    • have already been charged in the past; or
    • will be charged in the next 12 months.
  • Expenses for changes to your main home or your dependant’s main home that:
    • have already been charged in the past; or
    • will be charged in the next 12 months.
  • The changes to the main home must be needed due to the illness or physical disability of either:
    • you (the owner of the locked-in account);
    • your spouse; or
    • a dependant of either you or your spouse.
  • Additional expenses that have already been charged in the construction of the owner’s or dependant’s principal residence (main home). The expenses must be needed due to the illness or physical disability of either:
    • you (the owner of the locked-in account);
    • your spouse; or
    • a dependant of either you or your spouse.

A physician or dentist must certify that the expenses are or were necessary for the person’s treatment. Medical expenses also include expenses to treat a person’s mental illness.

A main home is a person’s primary place of residence. It is where the person lives when the unlocking application is signed. Some types of main homes include:

  • a house;
  • a condominium unit;
  • an apartment or other unit in a multi-residential property;
  • a non-seasonal mobile home;
  • a trailer; or
  • a houseboat.

A person can have only one main home for the purpose of this application.

Expenses for changes to a main home, or expenses for construction of a main home that could qualify as medical expenses include:

  • a ramp for wheelchair access;
  • installation of bars in a bath tub or shower stall; or
  • a stair-lift.

Part 1 – Information About the Owner of the Ontario Locked-in Account

Question 1: Fill in the information about yourself in each box.

Question 2: Fill in the name of the financial institution that holds your locked-in account. This may be a bank, insurance company, or credit union. Fill in the number of the account. This is the number of the account that you want to take money out of.

Information about your spouse

Question 3: Fill in the information about your spouse (if applicable) in each box.

A “spouse” is defined in the Pension Benefits Act as either of two persons who:

  • are married to each other, or
  • are not married to each other and are living together in a conjugal relationship,
    • continuously for a period of not less than three years, or
    • in a relationship of some permanence, if they are the parents of a child as set out in section 4 of the Children’s Law Reform Act.

If you have a spouse and you are living separate and apart from your spouse due to a breakdown in your spousal relationship, then:

  • your spouse is not required to consent to your unlocking application; but
  • you must still fill in the information about your spouse in question 3.

Spouses living in different residences may still be spouses for the purpose of this application. If your spouse is living elsewhere because of:

  • their work;
  • they are looking after a relative or friend;
  • for health reasons; or
  • for other reasons that are not related to your spousal relationship,

that does not mean you are living separate and apart due to a breakdown in your spousal relationship.

It is possible that you may have “more than one spouse”. That is, you could be separated from your spouse while still married. At the same time, you could be living common law with another person who meets the definition of spouse. If that is your situation, you should fill in the information about the spouse you are living with when you apply. In this example, this is your common law spouse. The money can only be unlocked and taken out if that person provides their consent to your application (see Part 4).

Part 2 – Medical Expenses

Question 1: Who has the illness or physical disability? You must check either:

  • “Yourself” (the owner of the locked-in account);
  • “Your spouse”; or
  • “Your dependant or your spouse’s dependant”.

For the purpose of this application, a “dependant” includes:

  • any person who was dependent on you (the owner of the locked-in account) for support; or
  • any person who was dependent on your spouse for support.

The dependant must have been dependent on you or your spouse for support:

  • during the calendar year in which you sign the application; or
  • during the calendar year before the year you sign the application.

A dependant does not have to live at your home. For example, the dependant may be living in a short or long-term care home.

If you checked, “Your dependant or your spouse’s dependant”, fill in the information about the dependant in each box.

Question 2: Other than this Application, have you applied during 2024 to take out money from this locked-in account for medical expenses for the person identified in Question 1? If you answered ‘yes’, you cannot apply again in 2024 for medical expenses for this person this year.

Question 3: What is the maximum amount you can take out?

The maximum amount you can unlock and take out is the smaller of the amounts entered in boxes 3a and 3b.

The amount in box 3a for 2024 is $34,250.

In box 3b, fill in the sum of:

  • The total amount of medical expenses already charged for the person identified in Question 1. This includes any expenses already charged for changes to your main home or your dependant’s main home and any additional expenses to construct your main home or your dependant’s main home, that are needed because of your, your spouse’s or your dependant’s illness or disability.

    plus

  • an estimate of the total amount of medical expenses for that person for the next 12 months (if any). This includes expenses that will be charged in the next 12 months to change your main home or a dependant’s main home, that are needed because of your, your spouse’s or your dependant’s illness or disability.

Enter the smaller amount of box 3a or box 3b in box 3c. This is the maximum amount that you may apply to take out for medical expenses.

Examples:

Alice owns an Ontario locked-in account and has medical expenses of $20,000 in 2024. Alice is not claiming for additional medical expenses for the next 12 months. The amount Alice would enter in box 3b is $20,000. The smaller amount of box 3a and box 3b is $20,000, so Alice must enter that amount in box 3c.

Brittany owns an Ontario locked-account and has medical expenses of $15,000 in 2024. Brittany is also claiming an additional $19,000 in medical expenses for the next 12 months. The total amount Brittany would enter in box 3b is $34,000. The smaller amount of box 3a and box 3b is $34,000, and they must enter that amount in box 3c.

Question 4: How much money are you applying to take out from this locked-in account?

You do not have to apply for the maximum amount you are entitled to take out.

For example, if Alice from the examples above decides to take out the maximum, Alice will enter $20,000 in box 4. If Brittany only wants to take out $18,000, then Brittany will enter $18,000.00 in box 4 (but after Brittany gives the application to the financial institution, Brittany cannot change the application to ask for a greater amount).

You cannot apply for an amount that is: 

  • greater than the amount in your locked-in account as of the date you apply;
  • greater than the maximum amount you are allowed to take out (box 3c); or
  • less than $500.00.

Remember that the amount you apply for will be reduced by withholding tax. It may be reduced further by an administrative fee.

Question 5: What main home has been or will be changed?

If your medical expenses include changes to:

  • your main home; or
  • the dependant’s main home;

fill in the information about that residence in each box.

Additional documents:

You must give your financial institution a statement about the medical expenses. The statement must be from a physician or dentist. Please refer to Part 5 of this User’s Guide for more information.

You must give your financial institution copies of receipts or estimates to account for all medical expenses you are claiming. This includes all past goods and services purchased to treat the person’s illness or physical disability. It also includes estimates of the person’s expected medical expenses for the 12 months after the date you sign the application.

Part 3 – Certification by the Owner of the Locked-in Account

You must sign and date the Certification in Part 3. There is no requirement for a witness to your signature.

Once you sign the application, you have 60 days to give it to your financial institution.

Certification regarding your spousal status:

You must certify your spousal status on the date you sign the application. In Part 3 of the application form, you must check only one of four boxes:

  1. You have a spouse, and your spouse consents to taking out money from your locked-in account.
    (If you select this option, you will need your spouse to complete Part 4.)
  2. You have a spouse, but you and your spouse are living separate and apart due to a breakdown in your spousal relationship.
    (If you select this option, your spouse is NOT required to complete Part 4.)
  3. You have a spouse, but none of the money in your locked-in account is derived, directly or indirectly, from a pension benefit provided in respect of your past or current employment. This applies if all the money in your locked-in account did not come from your own pension plan, but came from the pension plan of your former spouse.
    (If you select this option, your spouse is NOT required to complete Part 4.)

    For example, Jordan is a member of a pension plan and divorces Chris. As part of the divorce, Jordan pays a portion of Jordan’s pension benefits to Chris. Chris gets an Ontario locked-in account to hold that pension money. Chris later marries Avery. Chris then applies to unlock and take out money from Chris’s locked-in account for financial hardship.

    Since the money came from Jordan’s pension plan, Chris’s current spouse Avery is not required to consent to Chris’s application. In Part 3 of the application form, Chris should check the box that says “I have a spouse, but none of the money in my locked-in account is derived, directly or indirectly, from a pension benefit related to my past or current employment.”

  4. You do not have a spouse.

Other certifications:

By signing the application, you also certify that:

  • all the information in the application and any accompanying documents is accurate and complete; and
  • you have not previously applied in 2024 to take out money from this locked-in account for medical expenses for the person you identified as having the illness or physical disability.

Part 4 – Consent of the Owner’s Spouse to the Application

If you have a spouse on the day you sign the Certification in Part 3 of the application, you may only take money from your locked-in account if your spouse consents to the application, unless:

  • you and your spouse are living separate and apart due to a breakdown in your spousal relationship; or
  • all the money in your locked-in account came from the pension plan of your former spouse (see the explanation in Part 3 above).

If your spouse consents, your spouse must fill in Part 4 of the application and sign and date it. There is no requirement for a witness to your spouse’s signature.

If your spouse is not sure about the legal consequences of signing the consent, they should seek legal advice. Your spouse does not have to sign. But if spousal consent is required and your spouse does not consent, the financial institution must refuse your application.

Your spouse must indicate that they understand that:

  • you (the owner of the locked-in account) are making an application to unlock and take out money from the account;
  • if the circumstances require spousal consent, you cannot take out the money from the locked-in account without your spouse’s consent;
  • as long as this money is kept in the locked-in account, your spouse may have a right to a share of this money (this would happen if there is a breakdown in your spousal relationship or if you die); and
  • if any money is taken out from the locked-in account, your spouse may lose any right that they have to a share of the money taken out.

If the financial institution is not satisfied that your spouse understands what they are signing, it may refuse the application. The financial institution may request proof of your spouse’s identity and spousal status.

Part 5 – Statement of a Physician or Dentist

You cannot fill in this Part.

You must give your financial institution a statement about the medical expenses you are claiming. The statement must be signed and dated by either:

  • a medical doctor licensed to practice medicine in Canada; or
  • a dentist licensed to practice dentistry in Canada.

A “physician” does not include:

  • chiropractors;
  • physiotherapists;
  • psychologists;
  • acupuncturists;
  • naturopaths;
  • cosmeticians; and
  • other health services providers who are not medical doctors.

The medical doctor or dentist may either:

  • fill in Part 5 of the application; or
  • provide a letter containing the required information. They must include a statement that they are licensed to practice in Canada and their registration or license number.

The medical doctor or dentist must:

  1. identify the person who has or had the illness or physical disability; and
  2. (a) confirm that certain medical or dental goods or services are or were necessary for that person’s treatment; and/or
    (b) confirm that certain changes to a main home are or were necessary due to the person’s illness or physical disability; and/or
    (c) confirm that additional construction expenses charged in the construction of a main home were necessary due to the person’s illness or physical disability

The statement from the medical doctor or dentist must be complete and must not be signed or dated more than 12 months before the financial institution receives it. If the statement is too old, you will have to provide another statement with the correct date. If you do not, your application will be refused.