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‘Full Coverage’ Voluntary Health Insurance (semi-private room plan): use an excess to enjoy more affordable premiums.
As the saying goes, if you have hair, who would want to be bald? By the same token, if you can afford private healthcare, who would want to queue for public healthcare? The problem is, where does the money come from? Although private healthcare in Hong Kong is of a high standard, it is expensive and generally unaffordable for ordinary people without medical insurance. However, medical insurance itself is also an expense, and with the relatively extensive details of product coverage, many consumers worry that they may not receive sufficient compensation even after purchasing a policy, leaving them hesitant. In response, some insurance companies have launched medical insurance plans with “full coverage”, making it easier for policyholders to understand the protection provided. Among the recently popular Voluntary Health Insurance Scheme (VHIS) products, which are recognised by the Food and Health Bureau as tax-deductible, some insurance companies have also launched “full coverage” plans offering different deductible (also known as an excess) options. Compared with plans without a deductible, the former offer more affordable premiums. With the economy unstable and the market outlook uncertain, when choosing a product, you should consider not only your personal needs but also calculate carefully and compare prices more wisely!
“Full coverage” pays sufficiently Choose a plan with a deductible Reduce premiums by nearly 60%
Unlike traditional medical insurance, which sets a separate claim limit for each item, such as surgeons’ fees, operating theatre fees and miscellaneous expenses, “full coverage” plans provide full reimbursement for multiple items. They are mainly subject to annual and lifetime benefit limits, and claims may be paid if they are medically necessary and the expenses are reasonable and customary. 10Life consulted several specialist doctors about a range of common illnesses and injuries of varying severity that concern consumers, in order to understand their estimated medical expenses and calculate the estimated coverage ratios of medical insurance. Among the “full coverage” VHIS products, FWDvPrime Medical Plan, AIA Voluntary Health Insurance Prime Scheme, AXA, ManulifeManulife and BupaBupa all provide very high levels of coverage. Their average coverage ratios for 12 cases involving illnesses and injuries such as cancer, angioplasty, stroke and dialysis were all close to 100% (see Chart 1 and Note 2).
However, the ward class of most “full coverage” VHIS products is semi-private or even private, and premiums are generally not low. Chart 1 compares six recently popular products. Assuming that a 35-year-old non-smoker chooses a semi-private VHIS plan, the average annual premium from age 35 to 44, without a deductible, ranges from approximately HK$11,000 to HK$16,000. Given the long-term need for medical care, in addition to the premium at the time of taking out the policy, you should also consider your future ability to afford it. Medical insurance premiums generally increase annually. For a semi-private VHIS plan without a deductible, the annual premium at age 65 is at least approximately HK$35,000 this year, excluding medical inflation. If medical inflation is 5% per year, the annual premium at age 65 in 30 years could exceed HK$150,000.
If you wish to take out a “full coverage” VHIS plan while easing the burden of paying premiums, you may consider plans with a deductible. A deductible means that the customer must pay part of the eligible medical expenses before the remaining medical expenses can be claimed from the insurance company. Based on the example above and Chart 1, if consumers choose a flexible VHIS plan with a deductible of HK$20,000 to HK$40,000 (semi-private ward), the average annual premium for people aged 35 to 44 is currently approximately HK$5,000 to just over HK$7,000. At the time of publication, the lowest-priced product was FWDvPrime Medical Plan, with a premium of only HK$5,421, followed by AIA Voluntary Health Insurance Prime Scheme, with a premium of HK$5,680. Both have a deductible of HK$25,000. In addition, given the intense competition in the VHIS market, some insurance companies may offer limited-time discounts. Consumers should look out for these when taking out a policy, as the first-year premium may be even lower.
Looking again at Chart 1, premiums for plans with a deductible of HK$20,000 to HK$40,000 are considerably lower than those for plans without a deductible. For non-smoking individuals aged 35–44, the difference in premiums can be as much as 60% (Note 4). As medical insurance premiums are not low in old age, choosing a plan with a deductible can help reduce the premium burden in later life. This is because insurance companies are more inclined to support consumers taking out plans with deductibles, particularly “full coverage” products. According to insurers’ claims data, when customers have to pay part of their medical expenses themselves, they use medical services more cautiously, thereby effectively reducing the misuse of medical insurance.
“Full coverage” offers greater advantages for illnesses and injuries involving high medical expenses
Consumers may wonder whether medical insurance is useful if they have to pay premiums as well as the deductible first. This relates to the purpose of buying medical insurance: do you want to cover minor illnesses or major illnesses? For relatively low-cost minor illnesses, such as colonoscopies, haemorrhoid surgery or hospitalisation for a fever, the estimated proportion of compensation may appear low when customers pay the deductible first and then make a medical insurance claim. However, when customers suffer from serious illnesses such as cancer or stroke, or undergo angioplasty, “full coverage” medical insurance with a high annual benefit limit can play a significant role. After deducting the deductible, the medical insurance is expected to cover almost the entire remaining claim amount, as shown in Chart 2. The key point is that treatment for these serious illnesses is extremely expensive, and it is not unusual for annual costs to reach hundreds of thousands of Hong Kong dollars. Without medical insurance, members of the public receiving treatment for serious illnesses in private hospitals may have to exhaust their savings.
For the critical illnesses shown above, such as cancer and stroke, customers of FWDvPrime Medical Plan are expected to have medical expenses of HK$0, with even the deductible waived. As the product waives the deductible for specified critical illnesses, if a customer is diagnosed with a specified critical illness and requires hospitalisation or day surgery, the deductible may be waived (see Note 3). As mentioned above, insurers impose deductibles to reduce the misuse of medical insurance. In fact, misuse is more common in relation to diagnostic tests. By contrast, customers are less likely to misuse insurance when making claims for critical illnesses. Therefore, insurers have begun waiving deductibles for specified critical illnesses, which benefits consumers. Hopefully, more insurers will follow suit and provide similar deductible-waiver protection.
Finally, many customers with employer-provided group medical insurance choose plans with higher deductibles, using their group medical insurance to offset the deductible and substantially reduce the cost of purchasing medical insurance themselves. However, when they retire and no longer have group medical insurance, they may wish to reconsider an option with a lower deductible. The products mentioned in this article all allow customers, at a specified age (usually close to retirement), a one-off opportunity to lower the deductible without undergoing underwriting again. This provides customers with a certain degree of flexibility. You may contact the insurance company or adviser to learn more about the details.
This article compares only the estimated coverage ratios of selected semi-private VHIS plans and the premiums for selected deductible levels. If you wish to compare more products with different deductibles and their key coverage features, you can visit 10Life’s 《產品解碼比較》, and should understand whether the products meet your personal needs before making an appropriate choice.
Compare semi-private VHIS plans, deductible HK$5,000 to HK$20,000
Compare semi-private VHIS plans, deductible HK$20,000 to HK$40,000
Compare semi-private VHIS plans, deductible HK$40,000 to HK$60,000
Notes:
- The above information is provided by 10Life.
- The estimated average coverage above is based on the medical expenses under general circumstances for 12 common illnesses and injuries involving different levels of severity and medical services. 10Life’s actuaries then compared these figures with the claim limits of the medical products to calculate the estimated average coverage. For details, please see 《大眾醫療保險的評分方法》.
- FWDvPrime Medical Plan provides deductible-waiver coverage for specified critical illnesses. This coverage does not form part of the terms and benefits of the VHIS-certified product vPrime Medical Plan. If the medical services received by the insured are related to a specified critical illness, but the symptoms, relevant diagnosis or surgery occur within 90 days from the policy commencement date, FWD will not waive any remaining deductible balance. For details and the definitions of specified critical illnesses, please refer to the relevant product brochure and policy terms.
- The premium differences for the above plans may vary depending on age, gender, deductible and other policy years.
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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