Health Insurance: How Much Does It Cost?
August 17, 2021
One of the questions we hear the most is about the cost of health insurance. Unfortunately, health insurance isn't cheap nor always easy to understand. Alea experts have gathered all the information you need, to better understand your options and make the right choices for you, your family or your employees. Read on!
Health insurance and healthcare costs 101
Hong Kong’s healthcare system is a two tier healthcare system divided between public and private health sectors. If you opt for public healthcare in Hong Kong, private health insurance isn’t needed as the government provides all public healthcare services for a small nominal fee. The challenge with public healthcare in Hong Kong is that the sector is overstretched, overcrowded and understaffed. This translates into long waiting times and the key reason why people turn themselves to private medical providers.
In Hong Kong's private sector, waiting times are almost non-existent and the level of comfort and servicing are generally quite high. It is highly recommended to have robust medical insurance. Hong Kong has some of the world’s highest healthcare costs, in fact it is the second highest in the world after the USA. It is therefore essential to understand how health insurance costs work.
How are health insurance premiums calculated?
Health insurance premiums vary upon several factors. Here are the key elements anyone considering buying medical insurance should know about.
Age: Premiums are based on age. Simply put, the older you are, the more expensive it is. Older policyholders are required to pay a larger premium for health insurance because they are at greater risk of needing medical services.
Residency: Insurance premiums reflect medical costs where you live and this is why insurance premiums are so high in Hong Kong. Unlike Thailand where private healthcare is inexpensive, Hong Kong is the second most expensive private health market in the world.
Pre-existing conditions: While some insurers simply put exclusions on pre-existing conditions, others may impose a loading to standard premiums (i.e. premium surcharge). Loadings generally vary between 10% to 150%.
A pre-existing condition is any medical condition, disease or illness for which you had symptoms, required treatment, or which you knew of, even if you did not seek treatment for it — and this before the beginning of your health insurance policy.
It is important to note that any medical condition you may have had in your life before purchasing an individual health plan may be considered by the insurance provider as a pre-existing condition. A few examples of pre-existing conditions (this is a simple list of actual cases): ADHD, acne, cholesterol, cancer, hypertension, sleep apnea, eczema, chronic back pain, lupus, asthma, old sport injuries, diabetes, endometriosis.
Insurance coverage area: insurance coverage area refers to the geographic region in which an insurance policy’s benefits apply. The insurance coverage area for a travel health insurance plan, for example, might be defined as “anywhere in the world”, which means that the policyholder can obtain medically necessary treatment anywhere and be entitled to the policy’s benefits, assuming the policy’s other conditions are met. Health insurance costs differ drastically depending on how wide the insurance coverage area is.
Smoking: Being a smoker may be a factor and influence higher premiums. While some Hong Kong local plans have pre-determined smoker and non-smoker premiums, most international medical insurance plans do not discriminate against smokers and therefore do not charge more.
Medical inflation: Increasing costs of healthcare are causing quite a stir around the world. According to the “2020 Global Medical Trends Survey Report” by Willis Towers Watson, the world’s estimated medical inflation rate was set to reach 6.8% for the year 2020 against 6.7% for 2019. In Hong Kong, medical inflation is 8 to 10% on average.
Whether you receive insurance through an employer or buy it on your own: Some large employers negotiate on behalf of their employees top-up coverage or higher level benefits. These plans are usually optional for employees and chosen on a voluntary basis on top of the company’s medical plan. Your employer can negotiate lower premiums with the insurer because of the volume of employees that can decide to purchase the top up. Keep in mind however that while you may pay less, or your employer may absorb part of the premium, you lose such cover if you quit or lose your job (unless there is a guarantee of conversion).
What are my health insurance costs?
Once you know about which factors might affect your health insurance costs, it is essential to think about your total yearly health insurance costs.
Premiums: What you pay for your insurance policy. Premiums can be paid on an annual, semi-annual, quarterly or monthly payment basis.
Deductible: The amount you have to pay before the insurance plan starts to reimburse your medical expenses. With a HK$9,000 annual deductible for example, you pay the first HK$9,000 you spend each year on eligible medical expenses and any exceeding amount is reimbursed under your policy.
Copayment & coinsurance: What you pay out-of-pocket for each medical claim. While copayment/copay is a fixed amount (e.g. HK$20 or HK$50), coinsurance is a percentage (e.g. 10% or 20%).
How much does health insurance really cost?
There is no free lunch. Comprehensive medical benefits are a lot more expensive than basic medical benefits. If you are being quoted a plan that is substantially less expensive, then you are getting less and should ask questions. Be very careful with the plan’s sub-limits as they may not be sufficient for private medical costs in Hong Kong.
Too many people simply presume their health insurance plan is good enough when in fact it only covers you for 10% or 20% of inpatient costs. We at Alea have witnessed many instances in which the patient has to pay 80% of the total hospital bill out-of-pocket when in fact he or she thought his/her medical insurance would pay that 80%!
Here are some examples of Inpatient + Outpatient coverage for a Worldwide coverage excluding USA, with full reimbursement, and Evacuation/Repatriation, Private Room level - no deductible or coinsurance:
|Ages \ Benefits||Inpatient||Outpatient||Total per person|
- The above approximate premiums are in HKD and were calculated on December 2, 2020.
- This comparison chart is for information only and does not carry responsibility.
- Premiums may not include the Hong Kong mandatory insurance levy of 0.085%.
To maximize your coverage and reimbursements, you can purchase individual insurance with a high deductible that is paid by the proof of reimbursement from your employee medical benefits. That way, you maximize coverage and reduce out-of-pocket expenses.
It is important to remember that In Hong Kong, insurers discriminate against pre-existing conditions. That is why it is crucial to get the right medical plan when you are young and healthy, in order to lock coverage for life and be covered for unknown or future conditions.
Employee medical benefits generally cover pre-existing conditions but you usually lose such coverage when leaving your job. It means that you may not be insurable in the future for pre-existing conditions if you solely rely on this coverage. Indeed, insurance providers can decline to cover high-risk profiles.
How to reduce my health insurance costs?
Every day, our advisors help people and companies find the right insurance, at the right price. There are actually a number of ways to help reduce how much you pay on your medical insurance.
For information on how to reduce your health insurance costs, read our exclusive guide here.
Can I get any family discounts?
Some insurance products offer family discounts or free coverage for kids below the age of 10.
For example, Bupa Global covers two children aged up to 10 at no extra cost.
Cigna offers family discounts between 10% and 20%.
The insurance provider April HK offers a family discount of 5% for 2 members, 7.5% for 3 members, 10% for 4 members and 15% for 5 or plus family members – and this, even if family members are on different levels of cover.
Plus, some offshore insurance providers cover the 3rd and 4th child for free.
Do you have questions? Our experts work with over 20 health insurance providers and advise people, families and companies every day. Alea advisors know which options are the right ones for you, based on your needs and budget. Just contact us to get unbiased advice with free personalized quotes.
What about health insurance for companies?
Employee health insurance is a great way to attract and retain employees, especially in Hong Kong, where the private health system is the second most expensive in the world after the United States.
The more employees you have, the cheaper the premiums would be. Large companies (over 10 employees) usually have a larger margin of negotiation on the premiums.
Group health insurance can cover employees and may also cover dependents (spouse and children). Covering dependents costs more and therefore is an HR decision.
Group health insurance premiums vary greatly upon the extent of coverage offered to staff and dependents. Hospital/inpatient, outpatient, dental, worldwide evacuation, annual physical exam, and maternity are the standard benefits available in Hong Kong. Companies can choose to provide higher-end cover with few sub-limits, which entails that their employees won’t have to pay out-of-pocket, use any top-up medical plan they hold, or seek services in the public sector where HA charges and fees are much lower.
In Hong Kong, doctors’ fees in the private medical sector are correlated to the hospital room type: the more expensive the room, the more expensive all the other fees. You can learn more about private hospital room fees here. Companies can therefore choose employee medical benefits that are for private, semi-private or ward level rooms. The less expensive the room level, the less expensive the insurance premiums.
An advisor will be in touch to answer all your questions!
This article was independently written by Alea and is not sponsored. It is informative only and not intended to be a substitute for professional advice and should never be relied upon for specific advice.