Why is inpatient insurance coverage insufficient? Three key points to understanding health insurance

What is health insurance? Sudden injuries and illnesses often catch people off guard. Faced with a difficult choice between long waiting times at public hospitals and high fees at private hospitals, comprehensive health insurance is an important financial safeguard for the city’s residents. 

According to figures from the Insurance Complaints Bureau, gripes about inpatient health insurance accounted for nearly 54.5% of all complaints in 2023. Much of the dissatisfaction stemmed from policyholders failing to declare their complete medical history when taking out insurance, as well as differences in understanding between insurance companies and policyholders regarding medical needs and coverage terms. It’s true that we all take out health insurance in the hope of being protected when we get sick. But what exactly does a typical health insurance policy cover? When purchasing insurance, how should policyholders understand the key terms and conditions?

Health insurance is a type of reimbursement-based insurance. Its main purpose is to provide you with cover for medical expenses incurred due to illness or accidents, such as those for hospitalisation, surgery or doctors’ ward visits. The policyholder needs to pay the expenses first, and then submits receipts to the insurance company for reimbursement. Health insurance is generally divided into outpatient and inpatient coverage. Outpatient coverage generally covers consultations with general practitioners and specialists, with some plans extending their coverage to include visits to traditional Chinese medicine practitioners, physiotherapists, chiropractors, bone-setters, X-rays and laboratory tests. Meanwhile, inpatient coverage is for expenses incurred during hospitalisation, such as those for accommodation, doctors’ ward visits and surgery.

Many companies provide employer-sponsored health insurance for their employees. But what exactly are the differences between employer-sponsored health insurance, voluntary health insurance and hospital cash insurance? You can refer to the detailed comparison below:

After ascertaining the differences between coverage options, you can check whether a health insurance plan is right for you based on the following three key indicators:

1. Assess the coverage amount and the deductible (out-of-pocket amount)
   First, consider whether the plan’s annual benefit limit and lifetime benefit amount are sufficient to cover the cost of major surgery or long-term treatment. Next, consider the deductible (out-of-pocket amount), which is the amount you need to pay yourself when making a claim. Generally speaking, the higher the deductible, the lower the premium you need to pay. When comparing plans, you can choose the most suitable deductible option based on your budget and existing company health coverage.
    
2. Understand the difference between full coverage and itemised limits
   Traditional health insurance sets individual compensation limits for different items (such as surgical fees, miscellaneous charges and accommodation), which are known as “itemised limits”. Some flexible high-end or voluntary health insurance plans, on the other hand, offer full coverage for reasonable and customary charges. Within the annual coverage limit, most items are not subject to individual limits, providing greater flexibility in claims.
    
3. Leverage the unique advantages of the Voluntary Health Insurance Scheme 
   The Voluntary Health Insurance Scheme (VHIS) is a government-regulated scheme that offers a number of unique advantages worth noting when comparing plans.
   •    Guaranteed renewal: The insurance company must guarantee renewal up to the age of 100 and cannot refuse renewal due to any deterioration in your health condition.
   •    Coverage for unknown pre-existing conditions: VHIS will cover pre-existing conditions that were unknown to you when you took out the policy.
   •    Tax deductible: Premiums paid for VHIS policies, whether for yourself or for specified relatives, are eligible for tax deduction.

Even if you already have company health insurance or voluntary health insurance, these mainly cover the medical bills themselves. However, hospital stays can result in hidden expenses, such as:

• Loss of income: Inability to work during hospitalisation and recovery may lead to an interruption in income.
• Family expenses: Transportation costs for family members travelling to and from the hospital, and even loss of income if they take leave to care for you.
• Additional miscellaneous expenses: Costs associated with purchasing nutritional supplements or hiring a temporary domestic helper or caregiver.

If you aren’t familiar with hospital cash insurance, check out the MSIG CarePlus Hospital Cash Insurance plan to gain comprehensive understanding of its coverage and advantages.

• Daily hospital cash: No matter where you are in the world, if you are hospitalised for medical reasons, you can receive a daily cash benefit of up to HK$1,500 for up to 750 days, effectively alleviating the financial burden of a prolonged hospital stay.
• Double cash benefit: If you are admitted to an intensive care unit (ICU) due to a serious medical condition, the daily cash benefit under your inpatient insurance will be automatically doubled to a maximum of HK$3,000 per day.
• Overseas accident coverage: Hospitalisation or surgery resulting from an accident abroad are also covered.
• Additional allowances (applicable only in Hong Kong):
  o    Emergency outpatient benefit: Covers the cost of emergency outpatient treatment resulting from an accident at a hospital outpatient department or emergency room.
  o    Companion bed allowance: A cash allowance is provided if a family member or friend needs to stay with you in an additional bed.
  o    Transportation/parking allowance: Subsidises transportation or hospital parking costs for each hospital stay.

17-year-old John is hospitalised for 2 days due to severe abdominal pain. His parents take him to the hospital, and his mother opts to stay with John throughout his period of hospitalisation. MSIG’s CarePlus Hospital Cash Insurance provides John with multiple cash allowances to help the family reduce additional financial burdens, including:

• Daily cash benefit: HK$1,000 per day x 2 = HK$2,000
• Transportation and parking fee allowance: HK$100
• Companion bed allowance: HK$200 per day x 2 = HK$400

The total coverage amount is HK$2,500, and the cash benefit has no restrictions on usage. It can be used to cover transportation or to compensate for income loss due to family members taking leave.

Ms Chan, an office clerk, is covered by her company’s group health insurance. For added peace of mind, she also takes out a voluntary health insurance plan with a deductible of HK$20,000. Recently, she was hospitalised for minimally invasive surgery due to acute peritonitis, and incurred medical expenses of HK$80,000. Through a two-step claims process, this combined protection arrangement ensured that Ms Chan didn’t have any out-of-pocket expenses:

• Company health insurance: A claim was made on the company’s health insurance first, with a coverage limit of HK$50,000.
• Individual voluntary health insurance plan: The remaining HK$30,000 in medical expenses was claimed under the individual voluntary health insurance plan. Since the amount paid by the company’s health insurance (HK$50,000) fully covered the deductible of her individual policy (HK$20,000), the voluntary health insurance plan reimbursed the remaining HK$30,000 in full.

In other words, by purchasing her own “top-up” coverage, Ms Chan was able to claim her total medical expenses of HK$80,000 in full, leaving her with no out-of-pocket expenses.

1. Is it better to take out personal health insurance at a younger age?
   Generally speaking, personal health insurance does not cover any conditions that existed before the policy was taken out. If the policyholder is younger, the risk of serious illness is relatively lower, resulting in fewer exclusions and broader medical coverage.
    
2. I already have company health insurance — do I still need to purchase my own additional health insurance plan?
   If you already have health insurance, such as employer-sponsored health insurance, you can discuss with your insurer the option of taking out an additional personal health insurance plan to supplement your existing policy and obtain more comprehensive coverage. There is a range of complementary health insurance plans available on the market, such as MSIG’s MediSure Plus, which is specially designed for people who already have medical coverage. Policyholders can choose different deductible options to enhance their protection while also enjoying a discount on their premium.
    
3. What are the main differences between VHIS and traditional health insurance?
   VHIS is a government-regulated health insurance scheme. Its key features include guaranteed renewal up to the age of 100, coverage for unknown pre-existing conditions with compensation based on different waiting periods and reimbursement rates, and tax-deductible premiums. Traditional health insurance plans, on the other hand, may offer greater flexibility in their design and higher coverage limits.
    
4. What should I pay attention to when taking out health insurance?
   When purchasing health insurance, the policyholder must truthfully declare their medical history, as health insurance generally does not cover illnesses or injuries that existed before the policy was taken out, unless the insurer has expressly agreed to provide coverage in advance. It is also important to read the policy terms and exclusions carefully to avoid unnecessary disputes. Some health insurance plans also include a waiting period. This means that any medical expenses arising from illnesses occurring within a specified period after the policy takes effect will not be covered by the insurance company.

The product information provided above is for reference only. For details on coverage and policy terms, please refer to your insurance policy.