Medical insurance could be treated as a tool to transfer risk of paying expensive medical expenses to insurance companies. It primarily provides protection for inpatient medical and surgical expenses caused by illness or injury.
Types of Medical Insurance
In Hong Kong, medical insurance on the market can be divided into three categories:
1. Hospitalization Insurance
Mainly covers medical and surgical expenses during hospitalization, and only some outpatient or day case procedure expenses. Benefit items include room and board, miscellaneous expenses, attending doctor’s visit fee, surgeon’s fee, anaesthetist’s fee, and intensive care, etc. Some plans also include Supplementary Major Medical (SMM) , which helps to keep your out-of-pocket expenses to a minimum.
|Room and Board||The daily room rent and meal expenses charged by the hospital|
|Intensive care||The cost of staying in the intensive care unit during hospitalization|
|Hospital miscellaneous expenses||Includes fee of X-ray, electrocardiogram and other examination and laboratory, as well as the cost of medicines, psychotherapy and blood transfusions during hospitalization, etc.|
|Attending doctor’s visit fee||The actual cost of visit by the attending doctor during hospitalization|
|Specialist’s fee||The cost of treatment by a specialist doctor during hospitalization, with written referral or testifying statement by the attending doctor or registered medical practitioner|
|Surgeon’s fee||The fees charged by a qualified surgeon for surgery performed on the insured person; The reimbursement is determined based on the complexity of the surgery|
|Anesthetist fees||The actual cost of anesthesia services required during surgery; The anesthetist fee is generally a percentage of the surgeon’s fee|
|Operating room||The actual cost of using the operating room, treatment room and related equipment during surgery ; The operating room fee is generally a percentage of the surgeon’s fee|
Follow-up treatment and care
Traditional medical insurance generally focuses on protecting the insured person’s inpatient medical expenses.
But considering follow-up treatment and care after the surgery may be important for recovery, some insurance companies offer coverage for pre- and post-hospitalisation treatment, as well as auxiliary treatments such as home nursing, rehabilitative care and physiotherapy. Such acts provide more comprehensive protection for insured.
Treatment at day case procedure centers
As medical technology advances, more and more treatments can be performed at day case procedure centers, which is also a lot cheaper than traditional hospitalization treatments. Therefore, more insurance companies are expanding protection to cover surgeries, treatments, and examinations performed at day case procedure centers.
2. Outpatient Visit Coverage
It mainly covers outpatient fees such as general practitioner and specialist’s consultation fees, medication, and laboratory fees. Some also include Chinese medicine, bone-setting, physiotherapy, chiropractic, etc.
Most insurance companies offer outpatient coverage for their own-designated doctor networks; if the insured person visits a doctor outside the network, they may need to share part of the cost. The coverage is generally 80% of the outpatient fee within the benefit limit.
3. Hospital Cash
This type of plan provides cash compensation based on the insured person’s number of hospitalization days. It could compensate for the insured person’s loss of income during hospitalization. The insured person can use the cash freely.
In simple terms, if a person purchases hospital cash protection of HK$500 per day and stays in the hospital for five days, he/she will receive a cash compensation of HK$2,500.
Hospital cash insurance can be purchased based on individual needs, but note that it cannot cover most hospitalization and surgical expenses and cannot replace the function of medical insurance.
Main Features of Medical Insurance
1. Reimbursement of the Actual Medical Cost
Medical insurance mainly provides reimbursement to the actual medical cost that the insured paid.
Insurance companies will make claims based on the items and benefit limits specified in the Benefit Schedule, and the insured can only receive reimbursement for actual medical expenses.
2. Lifetime Renewal
Medical insurance is renewed annually. Insurance companies usually consider the policyholder‘s or the entire risk pool’s claims history as a factor in deciding whether to renew your policy.
Therefore, when purchasing insurance, it is important to check whether the plan provides a “guaranteed lifetime renewal” clause. If the insurance company does not renew the policy and the policyholder needs to reapply, there may be a risk of increased premiums or policy rejection if their health condition has changed.
In addition, it is important to understand the definition of “lifetime coverage”. Does it only cover up to 100 years old, or does it truly cover a person’s entire life, including beyond 100 years old and until death.
3. Annual Benefit Limit per Illness or Injury
Traditional medical insurance generally calculates reimbursement based on an “benefit limit per illness or injury”. For example, if the benefit limit for cancer is one million dollars. Once that limit is used up. Regardless of how many years the cancer treatment continues, all medical expenses related to Cancer would not be reimbursed.
However, in recent years, medical insurance, including VHIS, has adopted a new claim mechanism that calculates reimbursement based on the “benefit limit per illness or injury per policy year”.
Using the example above, the “benefit limit per illness or injury” is still one million dollars, but the difference is that the benefit amount will be “reset” once per policy year. In other words, although the one million dollar reimbursement amount has been used up, the coverage amount will be “reset” at the beginning of the next policy year and every subsequent policy year. It has greatly improved the effectiveness of long-term illness coverage.
When purchasing insurance, it is important to pay attention to the Area of Coverage, whether it is limited to Hong Kong, Asia, or worldwide coverage.
Additionally, when applying for insurance, insurance companies will require the applicant to fill out a residency questionnaire to determine their long-term place of residence.
If the policyholder plans to change their place of residence for an extended period due to immigration or business trips, they must report this to the insurance company. The insurance company will evaluate the new place of residence and may require additional premiums, reduce coverage amounts, or even terminate the policy.
“Co-insurance” and “deductible” are some of the expenses that policyholders may need to pay out-of-pocket.
When a policyholder makes a claim to the insurance company, they may need to share the cost or pay a certain amount upfront (or a percentage of the medical expenses), and the insurance company will then reimburse the remaining expenses.
Co-insurance and deductibles are mechanisms used to control insurance premiums. Policyholders do not have the right to control the percentage of co-insurance, it is defined in the individual benefit items of the policy.
As for deductibles, policyholders can choose according to their individual circumstances. The higher the deductible, the lower the premium.
For medical insurance, which generally does not have a savings component, the premium would increase with age. Insurance companies would also adjust premiums based on medical data, claims, and operation of the company.
Different Types of Medical Insurance
There are different types of medical insurance plans available in the market. In addition to traditional medical insurance, there is the “Voluntary Health Insurance Scheme (VHIS)”, which was launched by the Hong Kong government’s Health Bureau on April 1, 2019, to regulate private/ personal medical insurance products offered by participating insurance companies.
As the name suggests, VHIS is voluntary and not mandatory. Policyholders of the VHIS could also enjoy tax deductions under the Inland Revenue Ordinance (Chapter 112). VHIS can be divided into two types: (1) Standard Plan and (2) Flexi Plan, which includes plans with or without deductibles.
The “Standard Plan” meets only the minimum requirements of the scheme, but must provide 12 “basic protections,” including room and board, miscellaneous expenses, attending doctor’s visit, specialist, intensive care, surgeon, anesthetist’s fee, operating theatre charges, prescribed diagnostic imaging tests, prescribed non-surgical cancer treatment, pre- and post-confinement/day case procedure, and psychiatric treatments.
The annual benefit limit for each policy year must be HK$420,000 or above.
👉🏼If you want to learn more about the coverage of the Standard Plan, refer to this.
The “Flexi Plan” is a plan made based on the Standard Plan and offers better protection items and higher benefit limits. It includes Supplementary Major Medical (SMM), rehabilitative care, post-confinement daily home nursing, hospital companion bed, outpatient kidney dialysis,
accident and emergency outpatient treatments, and more. For example, the annual benefit limit for a general ward can be as high as HK$600,000 to over HK$1 million.
In recent years, many companies have launched “high-end VHIS” plans, which provide even greater protection to consumers and have deductibles, with benefit amounts reaching millions of dollars.
👉🏼If you want to learn more about the coverage of the Flexi Plan, refer to this page.
👉🏼If you want to learn more about the coverage of high-end VHIS, you can refer to this page.
Who needs personal medical insurance?
Generally, anyone who values their health and wants access to private and quality medical treatment should consider purchasing personal medical insurance or hospitalization insurance.
With the rapid advancement of medical technology, illnesses such as cancer that were once considered incurable may now be treated effectively with new therapies, but at a high cost. Medical insurance can provide a financial protection net to help cover these costs.
When considering whether to purchase medical insurance, there are two key points to consider:
1. Do you already have a group medical insurance policy through your employer?
If so, review the coverage and benefits to see if it meets your current needs. If it doesn’t, you may want to consider purchasing a personal medical insurance. We recommend purchasing a high-end medical insurance as a Top-up coverage.
If you don’t have one, consider buying one. If not, you will lose all the protection if you leave your current employer.
2. Aside from premiums and coverage, also consider your current health status and any potential health risks.
If you have a family history of certain illnesses or have a higher risk of developing certain health conditions, it may be beneficial to purchase medical insurance sooner rather than later to avoid any potential exclusions or premium loadings.