Pre-Existing Conditions 101: What Is It and What To Know Before Buying Health Insurance
3 December 2021
Looking for practical advice about pre-existing conditions and what it means for you? Alea experts cut through the insurance jargon and explain everything you need to know about health insurance pre-existing conditions: definition, exclusions, moratoriums, premiums loadings, group coverage and risks of non-disclosure.
Why is the coverage of pre-existing conditions such a hot topic in Hong Kong?
In Hong Kong when purchasing health insurance on an individual basis (versus company/employee insurance) insurers discriminate against pre-existing conditions. This is why it is crucial to get the right medical plan when you are young and healthy, as it can just get harder and for some almost impossible later.
If you wait and solely rely on your work medical coverage, you may not be insurable in the future for pre-existing conditions. In fact, if your future pre-existing conditions are serious (e.g. cancer, cardiac problem), you may not be insurable at all. Insurance providers decline to cover high-risk profiles.
What is a pre-existing condition?
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.
How far back do insurance providers go?
This depends on each product and each insurance provider. Some may limit their medical questions to the past 5 or 7 years for example. In that case, you are under no obligation to divulge the details of your medical history before that. Other insurance providers require full medical disclosure since birth.
There is no free lunch. Generally speaking the more expensive the plan, the more flexible the insurance provider on the coverage of pre-existing conditions; and the opposite is true. The less expensive the plan, the less it covers prior health conditions.
How do insurers become aware of my pre-existing condition?
When applying for health insurance coverage, the insurance provider will ask you to complete a thorough medical questionnaire (unless you apply for a moratorium contract). You must answer to the best of your knowledge and disclose any condition prior to the commencement of the insurance plan. If you do not and knowingly hide a condition or withhold information — this goes against the good faith principle and you risk having the insurance contract void or your claim rejected.
How do insurance providers handle pre-existing conditions?
There are 4 ways for the insurer and its underwriting team to handle pre-existing conditions:
- Exclusion of the condition
- Moratorium or waiting period on the condition
- Loading on the condition
- Group coverage
1. The exclusion
The most common way of dealing with pre-existing conditions in Hong Kong is exclusion. It will simply not be covered by your policy: all treatment costs related to the disease will not be reimbursed.
2. The moratorium or waiting period
Some pre-existing conditions happened a long time ago and are not showing symptoms anymore. Therefore, it is sometimes possible to ask the insurance provider to apply for a moratorium. This is a defined period of time during which you will not be covered for costs related to your medical issue. Such waiting periods are usually 2 years. If no symptoms occurred during that time, your condition will be officially covered at the end of it.
3. Premium loading or surcharge
Some insurance providers offer to cover pre-existing conditions in exchange for a higher premium. Because the disease is not a risk anymore but almost certain to happen, the premium cannot be as low as for someone perfectly healthy.
4. Group coverage
One of the main advantages of being covered as an employee under group coverage is the fact that pre-existing conditions are almost always covered.
Moreover, if you leave your job you may ask for the portability of the group coverage so the pre-existing conditions can remain covered. However, beware that you may face a significant increase in your premium and that such portability options converting your group cover into individual cover) are rarely offered by employers in Hong Kong. Portability is also known as "guarantee of conversion".
➜ EXPERT TIPS: Check with your employer to know if pre-existing conditions are covered (especially congenital conditions) and whether there is a guarantee of conversion on your group plan.
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What about unknown pre-existing conditions?
While most comprehensive health international plans cover "unknown" medical conditions, some local basic plans do not.
As for the VHIS government-approved plans that were launched in April 2019, they only cover "unknown" pre-existing conditions over time.
What are the risks of not disclosing your pre-existing conditions?
If you knowingly hide from the insurance provider pre-existing conditions and your insurer finds out (through questions they ask your medical provider for example), here is what can happen:
- The insurance provider can terminate your policy immediately. You lose your health protection and you may be asked to pay back all the medical claims for which you were reimbursed.
- The insurance provider can apply an exclusion retroactively. You remain covered but you are not eligible for past or future claim reimbursements in relation to the condition that is now officially excluded.
- The insurance provider can apply a loading retroactively. You remain covered but you have imposed a surcharge on your premium.
➜ EXPERT TIPS: When applying for health insurance, you should answer the medical questionnaire in good faith and to the best of your knowledge. Not doing so, exposes you to serious consequences. It is also important to note that insurance providers are increasingly scrutinizing claims in relation to pre-existing conditions and whether applicants have completed the application’s medical questionnaires accurately.
Is it true that VHIS plans cover all pre-existing conditions?
That is not true. VHIS plans do not cover "known" pre-existing conditions.
However, VHIS plans cover "unknown" pre-existing conditions over time and within 4 years:
- No coverage the 1st year;
- 25% of the expenses are covered the 2nd year;
- 50% of the expenses are covered the 3rd year;
- 100% of the expenses are covered the 4th year.
You can learn more about VHIS plans here.
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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.