We often get asked this question by current expatriates and future global citizens – including clients and non-clients alike. Nobody likes to see their global health insurance premiums increase, but more than likely they will and how much depends on a variety of factors. Note that once you are covered, your medical claims will not impact your renewal premiums. Let’s explore why global health insurance rates increase.
Why do insurance premiums increases?
As most people know that when you live abroad you need to get a high-quality international health policy, but here are some reasons why your premiums will increase every year:
1. You are getting older
For almost all life and health insurance policies purchased by individual expats and global nomads, your global health plans are based on your age and increase as you get older because as you would guess the cost of insuring you gets higher as you age. Like any machine, the more use and the older it is, the more likely it will break down.
An unavoidable cost of growing older is that your global health policy will go up in cost each year or for some at various age bands, usually every 5 years. For age-banded policies, the increase will be much larger than global health plans that increase every year. Most plans we offer have a premium increase each year based on your age at time of renewal.
2. Medical inflation is much higher than normal inflation
You may not realize that many medical costs and inflation increase each year, and at a faster rate than normal inflation. Medical inflation is separate from global price inflation trends – and as a result, it is much higher and ranges from country to country. This is often due to factors such as advances in medical technology and overburdened health care systems.
We have seen that new technologies and medical treatments often cost a lot more and those costs are passed onto the insurer, which passes it on to the clients. Also, expensive medications are becoming the norm, especially biologic medications such as Humira. Some governments in Europe have compelled drug-makers to reduce prices and have also asked for biosimilars, which are less expensive alternatives to brand-name biologic medications.
Our understanding is that the average annual medical inflation across the globe is typically between 7% and 11% – of course this varies depending on where you live. The bottom line is that you can expect that your expat health premiums to cost more each year.
3. Declining Health for Expatriates
The continued increase in chronic conditions that are experienced by populations has a big impact on renewal premiums for international health insurance providers. Many of us are not taking care of our health by eating right, controlling stress and getting enough exercise and this translates into poorer health. We all try to do our part to stay healthy, but the insurance companies have to take a global and regional approach to set their rates.
4. Higher Claims Costs
When you purchase international health insurance, your claims are spread amongst a large pool of other similar clients that your insurer has. Each year the global health insurance company will look at the premiums that they have taken in and the claims and administration costs that they have incurred. This will help them determine just how big an increase their clients need to get. Higher claims equal increased premiums for new and existing clients.
5. Unexpected Events
Yes, conditions like COVID-19 can have a big impact on health insurance premiums. Most expat insurers that we deal with cover Covid-19 like any other medical condition. The costs of an average Covid-19 hospitalization in Canada is more than $23K, but we would estimate that this cost is actually much higher, especially in Asia and the USA. If a person lands themselves in an ICU in the USA with Covid, the costs could easily reach hundreds of thousands of dollars. The risk of a COVID hospitalization has to be taken into account by the insurer whether you are vaccinated or not – we of course strongly recommend that everyone get vaccinated.
6. Plan Improvements
Another factor that we should discuss is plan improvements. Each year as an expat health insurance client, you will receive a renewal from the provider and sometimes they will add general plan improvements that are costed into the policy.
Some Final Thoughts on Premium Increases for Global Citizens
Nobody likes to see their premiums go up each year, but premium increases are often a fact of life that is based on the factors noted above. Some global health insurance companies will raise their prices more than others and sometimes they may even provide a no increase renewal aside from the age-related increase. We don’t recommend changing to a new provider if your existing plan is fully covering your pre-existing medical condition or chronic medical condition as new individual plans all involve medical underwriting.
We recommend that you check out the following related articles on international health insurance premiums.
- Seven Tips for choosing the best international health insurance plan
- Video on “How to Lower your Health Insurance Premiums” and the article as well
- How to save money on your international health insurance premiums
If you are covered by a global benefit plan that is sponsored by an expat employer, the claims experience may have an impact on your company’s global health plan rates.