A trip to the doctor isn’t cheap, especially to an international hospital. Healthcare costs can be a nightmare to settle if you’re uninsured. In most expat remuneration packages, medical insurance is an attractive benefit. Students are usually covered through their institutions of higher learning, while younger students are included in their parents’ insurance.
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.
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 twofold. 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?'”
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.”
Hospitals require a Guarantee of Payment (GOP) from incoming patients and sometimes the insurance company needs to be notified to ensure that the insured gets the medical coverage they require, and the hospital knows that the bill will be settled. Brokers can act as an intermediary between the insurance company and insured.
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 may limit the list of hospitals you can go to. If you’re set on going to a particular facility, check the hospital’s 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
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 a 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 cover it for a limited number of days (usually 30-45).
Additional considerations include coverage for children with special needs, deductible and copayment 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 Raffles Medical 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, email@example.com, 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), firstname.lastname@example.org, 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
This article originally appeared on pages 20-21 of beijingkids Home and Relocation Guide 2016/17. Click here for your free online copy. To find out how you can obtain a hard copy, contact email@example.com.