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Voluntary Health Insurance Scheme Full Coverage Plans Grow Stronger, with Annual Policy Claim Limits Reaching New Highs.
The Government introduced VHIS last year, setting standardised terms for Standard Plans and increasing market transparency. However, the VHIS Standard Plan only sets out the minimum requirements for medical insurance, allowing policyholders to enjoy tax deductions, while offering only basic coverage. On this basis, insurers have competed to launch Flexi Plans with better coverage. Therefore, the real battleground lies in Flexi Plans. This year, “full coverage” (see Note 2) Flexi Plans have been launched one after another. As the saying goes, competition drives progress. Insurers can be said to be growing stronger with each challenge. The coverage of newly launched VHIS plans, particularly their annual benefit limits, has repeatedly reached new highs, while further enhancements have been made based on the distinctive features of VHIS. This article compares the “full coverage” VHIS Flexi Plans offered by AIA, HSBC LifeHSBC Life, AXA, BupaBupa and ManulifeManulife.
VHIS annual benefit limits reach as high as HK$40 million
Traditional medical insurance sets benefit limits for each item, placing numerous restrictions on policyholders when making claims. However, “full coverage” VHIS plans, commonly known as “all-inclusive” plans, basically pay the full medical expenses for multiple covered items, subject mainly to the annual benefit limit and lifetime benefit limit. Among these, the annual benefit limit is particularly important. Consider that when people unfortunately suffer from a serious illness, they may need to incur substantial medical expenses within a short period. In addition, under the pressure of medical inflation, new medical technologies and medicines often come with astronomical price tags. Consumers should therefore consider whether the annual benefit limit of a “full coverage” plan is sufficient.
Even for the same product, the annual benefit limit may vary depending on the geographical area of cover and ward class. Among the current “full coverage” VHIS plans, the highest annual benefit limit for a private ward plan is offered by HSBC Life, at HK$40 million (worldwide coverage), making it attractive to senior executives. For semi-private ward plans, which are popular among the middle class, HSBC Life and Bupa both offer annual benefit limits as high as HK$25 million (with Asia as the geographical area of cover). For standard ward plans targeting the general public, HSBC Life and AXA both offer an annual benefit limit of HK$5 million (with Greater China/Asia as the geographical area of cover). As shown in Chart 1, newly launched products this year have continued to break records for annual benefit limits.
[Chart 1]
Choose the geographical area of cover and ward class first
When taking out a “full coverage” VHIS plan, you must first choose options such as the geographical area of cover (for example, worldwide, Asia or Greater China), ward class (for example, private, semi-private or standard ward) and deductible. Consumers should note that products may not offer all of these options. According to Chart 2, HSBC Life offers the widest range of options, covering both the high-end worldwide private ward plan and the more affordable Greater China standard ward plan, as well as different deductible levels.
[Chart 2]
Enhancing VHIS features: specified non-surgical cancer treatments and unknown pre-existing conditions
There is no doubt that “full coverage” sets a relatively high standard for medical insurance. To stand out, insurers have attempted to enhance their products within the VHIS framework. One major feature of VHIS is the minimum requirement for specified non-surgical cancer treatments. Non-surgical cancer treatments refer to chemotherapy and targeted drugs, with the latter having potentially unlimited costs. However, the benefit limit under the Standard Plan is only HK$80,000 per policy year. As shown in Chart 3, the “full coverage” VHIS plans offered by AIA and Manulife have set benefit limits of HK$2 million and HK$2.5 million respectively, while HSBC Life, AXA and Bupa fully cover the costs of relevant non-surgical cancer treatments.
VHIS requires insurers to cover unknown pre-existing conditions. The minimum requirement is to pay 25% of the benefit amount in the second year, 50% in the third year and the full 100% only in the fourth year. Insurers have enhanced this coverage further. For example, HSBC Life and AXA will pay the full benefit amount once the policy takes effect, without requiring policyholders to wait four years.
In addition, many insurers define a standard ward as a room with more than two beds. However, some private hospitals currently have standard wards with only two beds, such as Gleneagles Hospital Hong Kong. If a policyholder takes out a standard ward plan and intends to stay in a standard ward when ill, but the hospital can only arrange a standard ward with two beds, could this lead to a dispute when a claim is made? HSBC Life therefore defines a standard ward as “a room designated by the hospital as a standard ward”, which is a more flexible wording.
[Chart 3]
Use deductibles effectively to reduce premiums
“Full coverage” medical insurance, together with high annual and lifetime benefit limits, gives policyholders greater peace of mind when making claims. When analysing medical insurance coverage, 10Life also calculated the estimated medical coverage ratios of the following “full coverage” VHIS plans (see Chart 4 and Note 2), all of which exceed 99.6%. This means that, across 12 medical conditions and injuries of concern, including cancer, angioplasty and haemodialysis, the products’ average estimated coverage ratios are very high and close to full reimbursement.
Generally speaking, premiums for “full coverage” medical insurance are not particularly inexpensive. To reduce premiums, you can choose a plan with a deductible, meaning that the policyholder must first bear part of the medical expenses. If you have employer-sponsored group medical insurance, the deductible may be covered by that group insurance. In particular, senior executives and professionals can choose medical insurance with a higher deductible based on the coverage provided by their group medical insurance.
Most insurers in the market offer plans covering Asia with semi-private ward accommodation, so we compare premiums for plans in this category. As shown in Chart 4, for a 40-year-old non-smoking policyholder, the annual premium for a plan with no deductible is approximately HK$13,300 to HK$15,800. The higher the deductible selected, the lower the premium. For example, premiums for plans with deductibles exceeding HK$50,000 can be less than HK$5,000. Among the VHIS plans below, HSBC Life and Bupa offer this option.
[Chart 4]
Some consumers are concerned that if they choose a product with a high deductible, they will no longer have group medical insurance after retirement to cover the deductible. In fact, all the products mentioned in this article allow customers, at a specified age (usually close to retirement), a one-off opportunity to reduce or remove the deductible without undergoing underwriting again. This provides customers with a certain degree of flexibility. You may contact the insurer or adviser to understand the relevant details.
Finally, please remember to understand whether a product meets your needs and affordability before taking out a policy. You can browse 10Life’s “Product Decoder Comparison” to compare various VHIS products on the market, analyse their key coverage features and make an appropriate choice.
[ Compare VHIS private ward plans, adults ]
[ Compare VHIS semi-private ward plans, adults ]
[ Compare VHIS standard ward plans, adults ]
[ Compare VHIS private ward plans, children ]
[ Compare VHIS semi-private ward plans, children ]
[ Compare VHIS standard ward plans, children ]
Notes:
- The above information is provided by 10Life for reference only and does not constitute a sales offer. The above information was updated on 17 August 2020.
- “Full coverage” means that the insurer will pay the full amount of eligible medical expenses and other expenses after deducting the deductible (if any), subject to the annual benefit limit, lifetime benefit limit and other relevant conditions. Claims must meet the requirements of “medical necessity”, and the expenses must be “reasonable and customary”.
- The estimated medical coverage above is based on medical expenses under normal circumstances for 12 common medical conditions and injuries involving different levels of medical services. 10Life’s actuaries then compared these expenses with the benefit limits of the medical insurance products to calculate the estimated average coverage. For details, please refer to “Scoring Methodology for Mass-Market Medical Insurance”.
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.
10Life Editorial Team
Our team of professional content researchers focussing on insurance
10Life Editorial Team
Our team of professional content researchers focussing on insurance
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