Affordable Voluntary Health Insurance for Everyone: Comprehensive Coverage for Major and Minor Illnesses. How to Choose? (Compare Standard Ward Plans for Voluntary Health Insurance)

Is tax saving really that important? Taking out Voluntary Health Insurance Scheme (VHIS) policies can offer a tax deduction of up to HKD 8,000, and insurance companies are seizing the opportunity to heavily promote medical insurance, with tax deduction fever sweeping the city! Many consumers assume that since VHIS meets government-recognised standards, the differences between products should be minimal. Additionally, policyholders can apply for tax deductions on eligible premiums, making VHIS seem like a no-brainer. However, VHIS products are divided into Standard Plans and Flexi Plans, and the differences between them can be significant. For the most commonly purchased Ward Plans, most products impose compensation limits on individual items. When policyholders make claims, they often find themselves restricted, with medical coverage significantly reduced. At 10Life, we understand that everyone wants to save on taxes, but it’s crucial not to rush into purchasing insurance just for tax benefits. Be sure to compare carefully and find a VHIS plan with strong coverage!

 

 

Hong Kong residents are well aware of the long waiting times at public hospitals and the shortage of medical staff, which means patients may not always receive personalised care. On the other hand, private hospitals in Hong Kong are globally renowned for their quality, though their costs are far from affordable. Unless you are extremely wealthy, the average person without medical insurance would not consider staying in a private hospital. Therefore, among medical insurance products, Ward Plans (general wards) with lower entry barriers allow the public to access private hospital services at affordable premiums. These plans have always been the most popular choice among Hong Kong customers.

 

However, the vast majority of VHIS Ward Plans follow the traditional structure of medical insurance, setting compensation limits on various items such as surgeon fees, operating theatre fees, diagnostic imaging test fees, and miscellaneous expenses. This complex product structure makes it easier for insurance companies to control payouts, but it leaves policyholders unable to accurately estimate the actual coverage of their medical insurance. As a result, many consumers hope for straightforward and easy-to-understand medical insurance without the need to calculate each item individually. Insurance companies have since introduced “Full Cover” (also known as “Full Payment” or “Full Reimbursement”) products, which primarily set limits based on annual compensation amounts. As long as claims meet the criteria of “medically necessary” and “reasonable and customary” expenses, the insurance company will fully reimburse the costs. However, “Full Cover” medical insurance is typically limited to higher-end Private or Semi-Private Ward Plans. For the general public, when surveying all VHIS Ward Plans on the market as of 3 July, only AXA Hong Kong and Macau’s Smart Elite Medical Protection (Standard) adopts a “Full Cover” structure (see Note 1).

 

We have conducted an in-depth analysis of different VHIS Ward Plans with “Itemised Limits” and “Full Cover” structures, including products from AIA, AXA Hong Kong and Macau, Bupa, Manulife, and Prudential. We estimated the coverage rates of these products across various injury and illness scenarios of differing severity. These scenarios include the commonly claimed colonoscopy (day treatment), liver cancer treatment (requiring surgery and targeted therapy), which is a major concern for consumers, and day dialysis (blood dialysis), where coverage gaps often appear. 

The data in the chart above shows that for minor injury or illness cases like colonoscopy, the estimated coverage rate of Ward Plans with “Itemised Limits” exceeds 93%. When medical insurance payouts fall short, policyholders may only need to pay out-of-pocket costs of a few hundred to a thousand dollars, while “Full Cover” Ward Plans fully reimburse the costs.

 

 

However, when we examine cases involving prolonged treatment and high medical expenses, the difference in coverage between “Itemised Limits” and “Full Cover” becomes very apparent.

 

For liver cancer treatment (requiring surgery and targeted therapy), the chart above shows that Ward Plans with “Itemised Limits” have an estimated coverage rate of just over 60%. Given the high cost of targeted therapy, policyholders may need to pay out-of-pocket costs ranging from nearly HKD 150,000 to HKD 200,000, whereas “Full Cover” products almost fully reimburse the costs.

 

As for day dialysis (blood dialysis), most patients require ongoing treatment at day clinics throughout the year, making it a long-term commitment. Many Ward Plans with “Itemised Limits” exhibit significant coverage inadequacies for this treatment. Referring to the chart above, the estimated coverage rates for AIA, Manulife, and Prudential are relatively low, ranging from 17% to 26%, with policyholders needing to pay out-of-pocket costs of HKD 230,000 to HKD 260,000. Additionally, Bupa’s coverage for dialysis is even lower, estimated at less than 1%. In contrast, the “Full Cover” plan from AXA Hong Kong and Macau (see Note 1) achieves near-perfect coverage.

 

Some readers may wonder, since VHIS requires a minimum annual compensation of HKD 420,000 for basic plans, and the products mentioned above offer even higher annual compensation limits of HKD 540,000 or more, or even no upper limit, why do they still fall short in covering claims worth hundreds of thousands of dollars? The reality is that for plans with “Itemised Limits,” the annual compensation cap is not the key factor. Insurance companies have meticulously set limits on dozens of items, particularly tightening coverage on high-risk items prone to large claims.

 

Continuing with the above examples, in liver cancer treatment, the cost of targeted therapy is extremely high and falls under prescribed non-surgical cancer treatment. Although the government mandates a minimum coverage of HKD 80,000 for this item, AIA, Manulife, and Prudential exclude prescribed non-surgical cancer treatment from their Supplementary Major Medical (SMM) coverage, limiting the protection for targeted therapy. Another example is dialysis, where many “Itemised Limits” plans set notably low or even no compensation caps for this item. Furthermore, AIA, Bupa, Manulife, and Prudential exclude this item from SMM coverage. In contrast, the “Full Cover” plan from AXA Hong Kong and Macau (see Note 1) excels in coverage for both liver cancer treatment and day dialysis. 

 

How do premiums for “Full Cover” Ward Plans compare? Taking policyholders aged 35-44 as an example, the average annual premium for AXA Hong Kong and Macau’s Smart Elite Medical Protection (Standard) with no deductible is HKD 9,597. If a deductible of HKD 20,000 is chosen, the premium can be reduced to HKD 5,434, with the same rate for both genders. For working individuals who have corporate group medical insurance but are concerned about low coverage, opting for a plan with a deductible can provide enhanced protection against major illnesses at a lower premium.

 

As for other products with “Itemised Limits,” premiums are generally lower than “Full Cover” plans with no deductible. However, it’s worth noting that, except for Bupa’s MyFlexi VHIS Plan - Enhanced Basic, which charges the same premium for both genders (HKD 6,731), the chart above shows that premiums for women are noticeably higher than for men with AIA, Manulife, and Prudential. For instance, women pay up to 51% more than men for AIA’s VHIS Flexi Plan Ward Plan. Women’s premiums for Prudential’s PRUChoice Flexi Medical Plan with Supplementary Medical Plan (Option 2) are priced at HKD 9,231, while women’s premiums for Manulife’s ManuCare Pro VHIS Flexi Plan (Ward) with Enhanced Major Medical Protection are HKD 7,362.

 

Recently, advertisements about tax savings through VHIS have been everywhere, but when buying insurance, the focus should always be on coverage. If you purchase insurance solely for tax savings and later discover inadequate coverage during a serious illness, you may end up losing more than you gain. Lastly, this article only compares a selection of VHIS Ward Plans. For more detailed product comparisons, visit the 10Life website’s Product Decoder.

 

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