As Published in FORUM Magazine – January 2000
International health insurance plans – A global market opportunity
“An article written for insurance agents and brokers around the world”
Reproduced with permission from FORUM Magazine.
by: David Tompkins
Do you have any clients who live in Hong Kong? What about that lucky client who is retiring to the Caribbean or who has a daughter leaving Canada to study or work? How about that group benefits client who is sending a key employee abroad for the next three years? Let’s face it, more and more Canadians are moving and living out of the country.
Falling ill in some far-off land is distressing enough without worrying about who will pay your bills, which can run into the hundreds of thousands of dollars. Some medical facilities are reluctant to provide treatment without receiving an ironclad promise to be paid, or a cash down-payment. If, while living overseas, your clients happen to fall ill or be injured, they will require medical travel insurance, and maybe even evacuation.
International health insurance is an often-overlooked but growing market. With increased travel, open borders and a global marketplace, the need for health insurance that will cover a person worldwide can be vital.
You may not realize it, but you probably have a few personal and group clients in need of international health insurance. Let’s face it, except for extended health benefits such as drugs and paramedical services such as physiotherapy, Canadians are used to having our health insurance handled by the government; while our neighbours to the south are accustomed to selling health insurance that covers the same ground as our provincial health plans. Once you leave Canada you are not covered by your provincial health plan, for the most part. If you become a non-resident and leave Canada permanently you have to take charge of your health insurance.
When you think international health insurance, you can’t just think of Canadians. Remember that a great number of Canadians hold more than just one passport and may be living overseas either temporarily or permanently. Also, you don’t have to limit yourself to selling health plans to Canadians only. With the Internet, you can find clients of almost every nationality.
Expats (expatriates) are sometimes able to become part of the local government health plan if they satisfy certain residency and immigration requirements. However, such government plans, especially in second- and third-world countries, are often inadequate and come complete with long waiting lists, coverage of only the basic medical needs and a lack of portability. And self-insuring is ill-advised as even the smallest illness or injury can easily bankrupt a person. All of this points to the need for expatriates to purchase adequate health and emergency medical evacuation coverage that suits both their needs and their budget.
We also shouldn’t forget the market for the citizens of less-developed countries. There is a large international health insurance market for nationals living in the second- and especially third-world; where government-operated plans are poorly run, or essentially non-existent. With the collapse of many economies, especially in the Asian crisis, state-run health systems have been suffering as tax revenues have dried up. Many people in these areas also want to be able to obtain medical treatment outside of their country – U.S. facilities attract thousands of patients from both the third- and the developed-world.
So what is international or “expat” health insurance? Put simply, it is insurance to cover a person for their health expenses while living abroad. There are two types of plans, “in-patient” and more comprehensive “in-patient and outpatient” plans. In-patient expenses are primarily incurred while in a hospital – including accommodation and surgeon’s, anesthetist’s and physician’s charges. Consultations in radiology, pathology, oncology and radiotherapy are also included. The more enhanced plans also cover some outpatient charges like specialist’s fees (including therapies like acupuncture, osteopathy, physiotherapy, homeopathy), as well as primary consultations and primary care, including a certain amount of prescribed drugs. Local road ambulance is usually included in most basic plans while nursing at home and emergency dentistry are generally options.
For those who want more, a comprehensive plan would cover the in-patient care as described above, along with a wide array of outpatient care. Such expenses include: psychiatry, organ transplants, rehabilitation, home nursing, childbirth, home delivery, general practitioner’s consultations, eye & ear specialists, other specialists such as dietetic guidance, vaccinations, lab tests and analysis, x-rays, Scans, EKGs, hearing aids, physiotherapy, chiropractors, osteopathy and a certain amount of prescribed drugs. If your client is accustomed to using a government-sponsored plan such as Canada’s, they may want to purchase such a comprehensive plan.
Almost all in-patient and combined in and outpatient plans either include, or have the option of adding, emergency travel medical and evacuation coverage. This coverage is highly recommended and the cost is usually quite reasonable. We have all heard of people who have been injured or taken ill overseas or in the U.S. and have quickly racked up $100,000 in medical bills. In one such case, a Canadian client of mine was travelling in Mexico and suffered a heart attack. He was rushed to the local medical facility to be stabilized and then evacuated in a specially designed medical jet to the United States for treatment. After a few weeks of successful treatment, the total cost was close to a third of a million dollars Cdn. The insurance company paid it all, except for a very small portion covered by the province.
Almost all the evacuation options include a global service network in association with a specialist evacuation partner, such as SOS and Medex. The plans provide for immediate transportation from any location in the world to the nearest centre of medical excellence for in-patient treatment of emergency conditions and also generally cover the cost of return fare to your country of residence after recovery. If the expatriate ultimately dies, their physical remains can be transported home for no charge.
Almost all the plans in the marketplace have deductibles. These range from $250 up to $10,000. Deductibles obviously help lower the premium cost to the client, but a surprising number of people prefer large deductibles – because they only want to be covered for catastrophic claims.
Some providers have plans that cover a client worldwide. Other insurance companies have specific plans for people who do not wish to be able to seek treatment in the U.S., with a lower premium resulting. In some cases, the premium will be dependent on the geographic area that one resides in. As one would expect, the United States and Canada are seen as high medical expense zones, with premiums reflecting this reality. Still, if one is dealing with an American client, he or she will almost certainly want to have the option of receiving treatment in the U.S.
All health plans have policy maximums. These generally range from $800,000 US per policy year to $5 Million US per lifetime; though it is quite unusual for a person to claim over $800,000 US in a one-year period.
All expatriate health plans have some restrictions and exclusions. Some common exclusions are for pre-existing conditions known at time of application. Some carriers will offer some pre-existing coverage once the plan has been in force for a certain number of years. A few insurance companies offer the chance to apply with medical evidence and will either decline an application completely, exclude a given illness or, in most cases, offer full pre-existing conditions coverage. One should avoid health plans that don’t have any medical underwriting because if a client becomes ill he or she will want to know what they are and are not covered for.
Other general exclusions are cosmetic treatment, sexually transmitted diseases, abuse of alcohol, self-inflicted injuries, the standard war and riot clauses and naturally occurring conditions like menopause. Some plans will only cover accidents in the first month, unless the client was replacing another international health plan.
Most plans do not cover maternity or childbirth. However, there are a few health schemes that will cover a delivery, with a waiting period of ten to twelve months after the policy is put in force. An elective caesarean is usually covered up to a certain maximum. One should caution that a complicated pregnancy is very expensive and unwise to self-insure. People who are pregnant and covered by a health plan currently should not change insurance carriers until the pregnancy is over. One should also check that the child will be covered immediately after birth. Some plans only cover newborns after ten to fifteen days; but others cover all children under nine for free, with newborns covered from birth.
Another feature that clients often require is portability. Many expatriates require health insurance that will stay with them regardless of where they travel or move, as it is not uncommon for a person to move from one home or work site to another. But only a few plans will continue to cover a person who moves back to their home country, especially if that is the United States.
The obvious determinate of an expatriate’s premium is age, not gender. Most plans have premium bands of five years, with coverage available up to age 100 and premiums for people over 65 are often priced on the basis of the application. Another factor in the price can be whether the expatriate wants worldwide coverage excluding or including the U.S. and Canada. Because of the high price of health care in the United States, the price for expatriate coverage including these two countries can as much as triple. Despite the added cost, such a plan is recommended for offshore residents who travel to the U.S. or Canada for extended periods.
Administration and service after the expatriate has taken out a plan are crucial elements. Almost all the expatriate plans offered in the marketplace are payable in US dollars, though some carriers do offer payment of premiums and coverage in several different commonly used currencies. Most offshore clients prefer to pay their premiums and be quoted in American dollars as, more often than not, they are paid in US dollars as well. All plans offer the choice to pay premiums by credit card, wire or cheque, and some even allow the client to pay online.
With Canada’s expanding role in the global marketplace, the role of group health insurance market is a significant market that you may be overlooking. This is topic for another article because it also encompasses international life, long term disability and dental coverage for multinational companies both in and outside of Canada. Expatriates can obtain information on a variety of plans using the Internet. Offshore clients have to realise that purchasing health coverage is a vital part of their financial security. Neglecting such a vital safety net can result in financial ruin.
David G. Tompkins, BA, CLU, runs Expat Financial web site- owned and operated by TFG Global Insurance Solutions Ltd. – a local and international insurance agency. He can be reached via https://expatfinancial.com or 800-232-9415