Voluntary Health Insurance Scheme (VHIS): 5 Major Pitfalls to Watch Out For! What Should You Pay Attention to Regarding Congenital Diseases, Tax Deductions, Coverage Rates, and Pre-existing Conditions?

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The introduction of the Voluntary Health Insurance Scheme (VHIS) may lead many citizens to assume that it is government-certified and thus safe to purchase without much consideration. However, is this truly the case? What are the key points to note before purchasing VHIS? Are you aware of the waiting period for full 100% claims coverage under the "unknown pre-existing conditions" clause? Are you also aware that there are other market products offering higher coverage for congenital critical illnesses compared to VHIS?

VHIS Products Are Not Launched by the Government

Although VHIS is a policy under the government’s initiative, many may mistakenly believe that the insurance products are directly offered by the government. In reality, VHIS is merely a framework led by the government. If an insurance product from a company meets the conditions set by the Food and Health Bureau and receives approval, it can be labelled as a "certified product."

Since the pricing of insurance products is determined by the free market, the government does not participate in setting premiums. Additionally, insurance companies may conduct underwriting on applicants, meaning the government cannot guarantee that individuals with pre-existing conditions will definitely be able to obtain coverage.

VHIS Does Not Mean No Out-of-Pocket Expenses After Hospitalisation – Coverage May Be as Low as 30%

After purchasing VHIS, do not assume that you can be admitted to a private hospital without incurring any costs. Like other medical insurance plans, VHIS operates on a reimbursement basis, with claim limits set for each expense item. Similar to other medical insurance, it does not cover "non-medically necessary" treatments or "known pre-existing conditions."

Moreover, we have found that the coverage ratio of the current VHIS "Standard Plan" is lower than many products available in the market. For severe injuries or illnesses, the coverage ratio can be as low as approximately 30%, meaning policyholders may still need to bear a significant portion of hospitalisation expenses out of pocket.

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According to information available, the Food and Health Bureau will initially certify the "Standard Plan" during the early stages of the scheme. If you are seeking broader coverage, it may be wise to wait until more "Flexi Plans" are introduced later, allowing for a more thorough comparison before purchasing.

Tax Deductions May Not Be as Significant as Expected

The tax deduction for VHIS is often cited as $8,000, but do not misunderstand this as saving $8,000 in taxes. The $8,000 is a tax allowance, and the actual tax savings are calculated as "up to $8,000 x marginal tax rate."

A Legislative Council research report clearly states:

The actual amount of tax relief depends on the policyholder’s income level and premium. For instance, high-income individuals taxed at the highest rate of 17% who purchase a VHIS policy worth HKD 8,000 can enjoy a maximum tax relief of HKD 1,360 per year. However, for low-income individuals taxed at a 2% rate who purchase a VHIS policy worth HKD 2,000, the tax deduction may only amount to HKD 40.

"Unknown Pre-existing Conditions" Are Hard to Define and Require 4 Years for 100% Coverage

One of the selling points of VHIS is its coverage of "unknown pre-existing conditions." As long as the insured’s condition is deemed "unnoticeable and reasonably unnoticeable," compensation can be claimed even if the condition existed before purchasing VHIS.

However, the interpretation of "unnoticeable and reasonably unnoticeable" can be quite broad. For example, if someone has diabetes without knowing it and only experiences frequent thirst, would thirst be considered "reasonably unnoticeable"? Currently, there is no clear answer.

Additionally, the compensation amount is reduced in the initial years: no compensation is provided in the first year of coverage, 25% compensation in the second year, 50% in the third year, and full coverage (100% compensation) only from the fourth year onwards. Readers should take note of this detail.

Congenital Conditions Are Only Covered If They Manifest After Age 8

Most medical insurance plans currently do not cover congenital conditions, but VHIS includes them within its scope of coverage. However, readers should pay attention to the specifics: the relevant congenital condition must manifest after the age of 8 to be covered. Despite this, some doctors have pointed out that most severe congenital conditions occur before the age of 8, suggesting that this provision may not effectively protect individuals with congenital illnesses. Conditions such as endocardial cushion defect and Down syndrome, for instance, manifest in over 90% of cases before the age of 1, while blood-related disorders like haemophilia and leukaemia also typically appear before age 8.

Furthermore, we have found that a small number of medical insurance products in the market already cover congenital conditions, with coverage levels sometimes exceeding that of VHIS. For instance, some plans cover congenital conditions manifesting from age 0. Readers are advised to take note and explore other products to assess their needs.

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.

Last updated: 9 Apr 2026

10Life Editorial Team

Our team of professional content researchers focussing on insurance

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10Life Editorial Team

Our team of professional content researchers focussing on insurance

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《Voluntary Health Insurance Scheme (VHIS): 5 Common Pitfalls! Beware of "Unknown Pre-existing Conditions" – Claims May Be Denied!》

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