A Surrey, B.C., couple's vacation nightmare should serve as a lesson for the millions of Canadians who need health insurance every year when they travel.

Whether the policy is for need or comfort and security, it's crucial that people pay close attention to the type of travel insurance they buy.

It's all due to something called a "first payer" clause, and a completely legal, standard insurance industry practice called "subrogation."

A practice, it turns out, that in at least some instances makes it possible to waste your money on too much insurance.

3 weeks of sun turns dark

Mel Milaney, 67, and her husband, Tom, 64, booked a three-week trip to the Caribbean and Florida in November 2012. 

They looked at buying travel insurance through their group health insurance provider at home, Pacific Blue Cross, but decided to go with a policy from RBC Insurance because it was slightly cheaper.

While in Fort Lauderdale, Mel fell gravely ill with a kidney infection.

"She actually went septic. She actually died twice. Once on the operating table and once in the ICU," says Tom.

Mel spent 10 days in hospital, five of those in an induced coma. She had to be flown home by air ambulance.

The bill came to more than $200,000 US. Fortunately for the Milaneys, it was covered by their RBC travel insurance.

Months later though, the Milaneys got a shock.

RBC had passed much of the bill along to Pacific Blue Cross.

Milaney says that ultimately RBC recovered $97,954.19 from the other insurer.

Here's the rub: Pacific Blue Cross, like many insurers, has a lifetime maximum coverage amount for its extended health plans.  

In Mel's case, that lifetime maximum is $500,000.

If she exhausts that amount, she would be without extended coverage for the rest of her life.

Less protection for life

Both Milaneys suffer from serious, chronic illnesses. Mel has diabetes and Tom has multiple sclerosis. Their combined drug costs alone total approximately $4,000 per month, a figure that is expected to rise as they get older.    

Beyond the drugs, the Milaneys' Pacific Blue Cross coverage includes dental, vision, physiotherapy and medical devices.

"Those things also are staggeringly expensive." says Steve Morgan, a professor at the University of British Columbia's School of Population and Public Health.  

"So, for people with chronic needs for things that don't fall under the core of the Canada Health Act, running into your lifetime maximum with a private insurer can be a big deal," says Morgan.

And yet, even after buying separate travel insurance, this single health emergency alone has burned through nearly one-fifth of Mel's lifetime maximum.  

Read the fine print

In the fine print of the policy the Milaneys purchased from RBC, it states: "Any of our policies are excess insurance and are the last payers. All other sources of recovery, indemnity payments or insurance coverage must be exhausted before any payments will be made under any of our policies."

This is what is referred to as a "first payer" clause. Policies with this type of clause are sometimes called "excess" or "supplemental" insurance. And this is where subrogation comes in.

"Insurers (such as home, auto and travel health insurers) will seek cost-sharing through other available insurance policies. This is the process of subrogation." says Anne Williams, manager of communications and community for Pacific Blue Cross in an email to CBC News.

"If a member of a group health plan (Pacific Blue Cross or another) buys supplemental travel insurance from another insurance carrier, and then makes a claim, that carrier can legally seek cost-sharing from the member's group coverage, up to a certain percentage."

Tom Milaney had never heard of a first payer clause before and says he didn't realize the insurance they bought from RBC was supplemental.  

"We just told [RBC], 'This is where we're going for three or four weeks' and they said, 'This is what it will cost you," he says.  

"I never thought they could take it from the lifetime [coverage] amount. It just never dawned on me."

In a statement, RBC said it can't comment on particular client details. 

"We're very sorry to hear about the difficult circumstances for this couple." said Greg Skinner, RBC senior manager for communications. 

"There are many different insurance plans available with varying degrees of coverage. It's very important that clients understand their existing coverage as well as the details of the policy they are purchasing so that they can choose the one that is right for them," Skinner says.

Skinner also points out RBC's policy states for people with lifetime coverage amounts like the Milaneys, RBC will only "co-ordinate payment," or recover funds from a claim in excess of $50,000. Meaning no matter how big the claim, the Milaneys would have been left with at least $50,000 in their extended health coverage. 

Millions of Canadians need to know

A survey done by the Conference Board of Canada found Canadians made an estimated 27.6 million overnight leisure trips outside the country in 2014. Almost three-quarters of those travellers had private health insurance on their last outbound trip.

Had the Milaneys not gone with RBC and instead bought travel insurance from their extended health-care provider, Pacific Blue Cross, a claim would not have affected their coverage.

"In essence, the member's group health lifetime coverage is protected," says Pacific Blue Cross's Anne Williams.  

Tom Milaney says that is exactly what they'll do for all future trips.  

"I guess buyer beware. If we didn't catch this, it [their lifetime coverage amount] could all be gone. One more serious travel incident and they would have taken all the money," he says.

"You have to be really careful."

Follow Aaron Saltzman on Twitter

If you have a consumer issue, contact Aaron Saltzman at aaron.saltzman@cbc.ca