In Part Two of his article, Jenkin Au concludes his look at health insurance with an examination of how you can keep the costs down and still maintain high coverage.
As I said at the end of Part One, before we get into how to save money on a plan, we need to understand how it’s calculated.
A premium is the amount that you have to pay every year to the insurance company in order for them to cover you. Because insurance is defined as the equitable exchange of risk for a payment, the insurance companies are undertaking some risk in exchange for your payment. When calculating the premium, it’s quite a different formula for an international plan and a local plan.
A local plan is calculated based on an experience rating – how much risk do you, and you alone, represent? This depends on the status of your health – are you a smoker? Is your profession a risky job? Do you have asthma or a heart condition? All these factors will increase your premium and maybe even make you uninsurable. Experience-rated plans from local insurers can also see premiums jump dramatically if you have a bad year and need to make a number of claims. The insurer may even decide not to renew your coverage if they think it will be too expensive for them.
In comparison, an international medical plan is calculated based on a community rating – how much risk does an aggregate of people in a certain age group represent? The risk is spread out over many different people and is generally much lower. You will be charged the same premium as someone else in the same age bracket, in the same area, and with the same type of coverage. This is why the premiums won’t increase because of your claim history, as well as why you are generally able to renew year after year.
Now that we’ve taken a look at premiums, let’s talk about managing costs. The best way to save money is to utilise something called a deductible – some insurance companies call this an excess. A deductible requires you to pay a pre-defined amount before your plan will begin to cover costs. Hold on though, it’s not as simple as that. There are three types of deductibles that you need to know about which may or may not work better in your favour.
A per-annum deductible is one where you only have to pay the amount once a year. For example, your deductible could be £400 ($600 USD) and you would need to pay that before your benefits cover any other medical costs. There is also a per-condition deductible – this is for every time you seek treatment for a new condition, you will need to make a payment. Finally, there is something known as co-pay or co-insurance – this is where there is a pre-defined percentage of every treatment which you will need to pay and then the insurer will pay the remaining percentage. For example, if seeing the general practitioner requires a 10% co-pay, then you will need to pay 10% of the bill and the insurer will pay the remaining 90%.
How else can you make your premiums lower? What if you don’t want to use deductibles? Sure, there is another way you can make it cheaper: you can limit the areas of coverage. Remember community ratings? If you know for a fact that you won’t be in places like the United States, or Hong Kong, or Dubai, then most plans will let you exclude them and other areas that have high costs for receiving medical attention. Community rating averages the cost of providing healthcare in an area so without that region, the premiums should be lower.
What if you want comprehensive coverage without paying a deductible and without limiting your areas of coverage? Your best bet would be to find a broker who can help you explore your options or to somehow find the cheapest insurance company out there. Short of sitting inside all day to make sure nothing bad happens there’s not much else you can do, but then again people rarely seek out the expat lifestyle because they enjoy a spot of boredom.
Remember, it’s always important to do a little bit more research on your own and speak with some sort of professional. Knowing all your options will be your best bet in acquiring the best insurance policy for your current situation. Speak with some friends or explore some of the forums and get a good feel for other people’s experiences. Just make sure you have solid health insurance coverage so that the occasional accident or illness doesn’t hamper your lifestyle by eating up your finances.