Medical insurance is a key issue for any expat, but having a plan for emergencies is especially important in China. Foreigners transferring to Beijing for work usually have medical insurance covered by their employer, either as an extension of their primary policy or with coverage tailored to living in China. Students, depending on their program, may also be covered by or offered coverage by their educational institution.
However, a significant number of expats aren’t covered at all. In a 2014 online survey conducted by insurer NOW Health International, a quarter of the 209 respondents living in United Arab Emirates, China (including Hong Kong), Singapore, and Thailand reported having no medical insurance.
“[They] believed that such cover was unnecessary because they were currently healthy and would not fall ill. However, as costs for medical care in popular expat locations have undergone double-digit inflation in recent years, they risk facing large bills if they are proved over-optimistic,” says the report.
“Be wary of brokers who offer deals that sound too good to be true – they usually are”
Understanding Medical Insurance
Tony Motola is the president and co-founder of Waterstreet Asia Consultants, a Shanghai-based insurance broker founded in 1999 with a focus on serving clients. Motola has over 20 years of experience helping expats find medical insurance and is a regular speaker at International Newcomers Network (INN) meetings.
There are essentially two types of medical insurance, he explains. “There are government or social programs subsidized through the tax pool and private medical insurance delivered either through commercial insurance or charitable organizations,” says Motola.
“The process for buying insurance is two-fold. Clients get insurance through a group – typically a company or a union – or buy individually. There are also combinations of government insurance such as Medicare in the US and private insurance. You often see this with expats in China.”
Groups that are more likely to look at individual plans include entrepreneurs and their families; individuals traveling, studying, or engaging in short-term consulting projects in China; family members who are visiting, studying, or interning in China for several months; and small and medium-sized enterprises employing foreign nationals with medical needs not covered by the state-provided shebao (social insurance) or yibao (medical insurance) system.
There are three essential questions to consider:
1. What do I need? This includes an assessment of your current health status and family health history. “For example, someone who has three generations of breast cancer would want a plan that covers mammograms, screenings, and surgery,” says Motola.
2. What do I want? “This means vision, dental care, maternity – the riders, the frills.”
3. What can I afford? “Usually what people would like to have is not what they can afford. If they see that a plan will come to USD 4,000; 5,000; 6,000; or 7,000 per year, people suddenly say ‘How can I change that?’”
Milliner Elisabeth Koch and her husband, Albert van Lawick van Pabst, are both entrepreneurs from the Netherlands. Koch runs her own hat-making business in Beijing while van Lawick van Pabst is the founder of a tech investment firm. They pay for insurance out-of-pocket to cover them and their two young children.
Originally, the family had insurance through UK-based Aon through van Lawick van Pabst’s employer. When he became an entrepreneur, they switched to Dutch insurer Oom after hearing about it through word-of-mouth.
“The price is quite high and increases every year, but they cover everything for us. There is an ‘own risk’ of EUR 250 per person per year on top of the annual policy,” says Koch. The “own risk” excess (essentially a deductible) is unique to the Dutch healthcare system.
Evaluating Brokers and Insurance Companies
The simplest way to compare medical insurance plans is through a broker like Waterstreet Asia, Pacific Prime, or Abacare (see Resources). In a nutshell, a broker acts on behalf of the client to find the best insurance plan for their needs. Brokers are usually compensated through commissions taken from the premiums charged to policyholders (i.e. you) by the insurance company, so their services are free for clients. Be sure to seek out an advisor who specializes in medical insurance for expats living in China.
“Be wary of brokers who offer deals that sound too good to be true – they usually are,” says Michael Ray, a senior consultant at insurance broker Pacific Prime. “Don’t end up on another company’s corporate policy. These might sound like a great deal and cover you for outpatient visits, but in the case of a large claim such as a medical emergency, the insurer could ask you to prove you work for the company to which the policy belongs. You then find you are not really covered and have a huge hospital bill to pay. I have spoken to a few clients on this type of policy who were not even aware that they were.”
Though both brokers and agents act as a bridge between the client and the insurer, an agent usually represents an insurance company like Cigna, Aon, Allianz, Bupa, IMS, or Aetna. Both agents and brokers must be legally licensed to work in China.
If you currently have medical insurance but are looking to change plans, your current insurer would be the most logical place to start. However, the insurance company may not extend coverage to China or limit the list of hospitals you can go to. If you’re set on going to a particular facility, check the hospital or clinic’s website for a list of insurers they currently have direct billing relationships with.
Tony Motola urges readers to examine an insurance company’s history and industry rating from US-based rating company A. M. Best before making any decisions. “You want an A. M. Best rating of at least an ‘A.’ That means an operating history of 25 years or more, very good financials, and management meeting certain standards of professional criteria,” he says.
Conversely, what are the characteristics of an insurance company you’d want to stay away from? “They often have a short operating history of less than 10 years, sign up lots of sales agents with high commissions, and make their financials look good so they can get publicly traded to a bigger company,” says Motola. In other words, these companies are more interested in making a profit than helping clients.
Factors To Consider
Michael Ray from Pacific Prime considers emergency coverage – including inpatient and emergency evacuation – to be the most important benefit for families. Other considerations include vaccination coverage, outpatient coverage, annual health check coverage, and the hospitals covered by the plan. Here’s a quick rundown:
An annual limit is the cap on benefits that your insurer will pay in a year. If the dollar amount of covered hospitalizations, treatments, and prescriptions exceeds the annual limit, you’ll need to pay all healthcare costs for the rest of the year. Annual limits range from USD 100,000 to several million per year depending on the plan. The higher the limit, the more expensive the premium.
Annual Rate Increases
Smaller and mid-range insurers with less financial stability usually have more erratic rate increases. Some even increase the premium in response to claims. Larger, more reputable insurers have more gradual increases, both annually and with age. “Watch out for age brackets,” says Ray. “You may find a large increase when you turn 50 if the insurer’s age brackets are 45-49, 50-54, etc.”
Medical care for children (including checkups and immunizations) is often included, but confirm this with your insurer. Families with older children who may or may not live at home as dependents may be included, but check if there are any age caps and details of the “global” part of “global insurance coverage” if your kids don’t live in China.
Some insurers offer a family discount, which can be especially cost-effective for large families. No-claims discounts or first-year discounts are sometimes also offered, but keep in mind that a 10 percent first-year discount carries a 10 percent plus age plus annual increase at renewal.
Couples planning to conceive should note that most insurers require a waiting period of 10-12 months of paid maternity insurance before pregnancy, birth, and/or newborn coverage kick in.
Evacuation is an essential consideration. Take a moment to think about the cost of out-of-pocket repatriation in case of an emergency. Evacuation would cover transport for essential surgery, medical treatments unavailable here, or a health epidemic. Check whether the plan covers return transportation to Beijing. Insurance for evacuation can be overkill if your primary policy covers most or all possibilities, so make sure it complements rather than overlaps existing coverage. Note that medical evacuation doesn’t necessarily cover treatment in your home country or third location like Hong Kong.
Consider how often you or your dependents are likely to visit the doctor in a given year. Policies with high deductibles to minimize the cost of monthly premiums may not be the most cost-effective if you’re only planning to see doctor twice a year.
Some insurers will cover certain pre-existing medical conditions, but the trade-off is a higher premium. Coverage for high blood pressure or cholesterol may seem expensive, but keep in mind you’d also be covered for heart attacks.
International travel goes hand-in-hand with living in Beijing; getting travel insurance is important as a backup on your rider. This is often available as a small package when you have visitors, either through your current insurance plan or through an international hospital or clinic membership. US citizens should note that many global policies don’t cover treatment in the US or only for a limited number of days (usually 30-45). See US Coverage for more info.
Ask yourself if you need coverage for elective treatment or only emergency treatment. “If the client wants the option to travel to the US for planned surgery, then the cost can be 1.5 times – or more – the cost of a ‘worldwide excluding the USA’ plan,” says Ray. Many such plans offer emergency inpatient treatment in the US.
For expats who already have medical insurance through their company and don’t have to join the existing policy, options for US coverage usually come down to budget. If you can afford it, it’s best to have a plan that covers elective treatment in the US. Otherwise, having a “worldwide excluding US” plan with emergency US inpatient coverage is the next best thing; however, this won’t cover emergency outpatient treatment, which can be very expensive.
“Another option for coverage would be an annual travel policy that will cover trips to the US,” says Ray. For instance, Pacific Prime offers a comprehensive option from an international insurer that offers unlimited inpatient, outpatient and evacuation coverage anywhere in the US for around USD 130 per child, USD 200 for adults, and USD 267 for medical and evacuation coverage. The disadvantage that it doesn’t offer the fapiao that most companies require for reimbursement in China, so may need to pay out-of-pocket.
For families currently without medical insurance, there are many aspects to consider that will affect the premium. Age is the biggest factor; rates for younger clients will be much lower than for older clients. Premiums range from a few thousand RMB per person to tens of thousands for full coverage. “Generally the cost will be between RMB 10,000 and RMB 60,000 depending on age and options chosen,” says Ray.
How does Obamacare – also known as the Affordable Care Act (ACA) – factor into the equation for US nationals living in China? “That is a tricky question,” says Ray. “From the information we have, if you are a US citizen living outside the US and do not spend more than 35 days per year in the US, then you are exempt from the ACA.” Other exemptions include American expats living and working in another country and paying taxes in that country, and American expats on Medicare or veterans’ benefits.
If this is a concern, Ray advises readers to speak to a US tax expert. Currently, Pacific Prime is aware of one insurer that is fully ACA-compliant and -approved. For more info, contact Ray.
Additional considerations include coverage for children with special needs, deductible and co-payment options, dental and visual insurance, coverage for second opinions on major treatments, and emergency protocols (e.g. whether pre-authorization is required).
In addition to health insurance, international hospitals such Beijing United Family Hospital or primary care clinics such as International SOS Beijing Clinic have memberships that offer patients additional discounts and extra services for an annual fee. These memberships can supplement company-sponsored insurance packages; they can also be appealing for expats who select packages based on low upfront fees or those who must pay for treatment out-of-pocket.
Founded in Hong Kong, Abacare is a broker specializing in finding health insurance plans for individual expats and international companies. Beijing contact: Ann Lee, 135 5281 6708, firstname.lastname@example.org, www.abacare.com
UK-owned Pacific Price is a leading broker for expat individuals and families worldwide. The company has six offices worldwide, with over 120 staff in mainland China. Pacific Prime works with over 40 leading international insurers, including Bupa, Allianz, Cigna, AXA, and more. Contact: Senior Consultant Michael Ray, 21 2426 6503 (direct line in Shanghai), 181 2129 8641 (mobile), email@example.com, WeChat and Skype: mray_pacificprime, www.pacificprime.cn/en
Waterstreet Asia Consultants
Founded in 1999, Waterstreet Asia specializes in employee benefits, risk management, and healthcare. Contact: President and Co-Founder Tony Motola, 8751 1820 (Beijing), 186 1198 2854 (mobile), www.navigatortravelinsurance.com
• Plan: The “option” you choose from the insurer. For example, you can take an “inpatient-only” plan or a more comprehensive plan that includes options like outpatient coverage, dental, health checks, maternity, etc. Insurers have different names for their plans. Sometimes options can be added or removed, and sometimes they’re built in.
• Policy: Once you’ve decided on a plan, the insurance package you buy is referred to as the “policy,” which includes the information pack and an insurance card. The terms “plan” and “policy” are often used interchangeably.
• Premium: The amount paid for an insurance policy. In China, most insurers require annual payment; some allow semi-annual or quarterly, but these options carry a surcharge. Chinese regulations don’t allow the use of international credit cards for monthly payments.
• Direct billing: An arrangement where you show your insurance card for outpatient treatment and the cost is billed directly to the insurer. This is only available for outpatient treatment; inpatient treatment should always be pre-authorized with the insurer. Direct billing is offered by all licensed international insurers in China.
• Inpatient: Any treatment that the patient is admitted into hospital for, including medication, surgery, anesthetic and physician fees, and more. Both emergency and planned surgery are covered. Plans from reputable insurers also tend to cover emergency evacuation, cancer coverage, emergency or serious (acute) cases of chronic conditions, and other benefits.
• Outpatient: An optional addition to inpatient coverage that usually covers day-to-day doctor and specialist visits and prescribed medication. Often includes physio and chiropractor visits and sometimes acupuncture, traditional Chinese medicine, and other such treatments.
• Pre-existing medical condition: Any illness, injury, ailment that exists or existed before underwriting. These may be excluded from coverage, covered at an extra cost, or – if you’re lucky – covered at no extra cost. If the PE is serious or recent, this can cause the application to be declined. This doesn’t affect your eligibility to apply to other insurers. Some brokers offer options with guaranteed coverage, regardless of PEs.
• Elective treatment: Treatment you choose to have (as opposed to emergency treatment).
• Evacuation (evac or medivac): Emergency transportation by land or air to the nearest hospital with adequate facilities.
• Repatriation (repat): Transport to the patient’s home country. Often this will be in the form of a economy ticket following an emergency inpatient visit since emergency repatriation isn’t usually logistically feasible.
• Excess (UK) or deductible (US): The amount of money that needs to be paid out-of-pocket by the policy holder before insurance kicks in. The higher the deductible, the lower the premium. It’s often better to have a higher deductible on inpatient treatment and a lower one on outpatient since you’re much more likely to use the outpatient benefit.
Source: Pacific Prime
This article originally appeared on page 50-53 of the beijingkids September 2015 issue. Click here to read the issue for free on Issuu.com. To find out how you can get your own copy, email firstname.lastname@example.org.
Photos: Pictures of money, sinclair.sharon28 (flickr)