Choosing your health insurance cover is one of the most important decisions you face when you decide to relocate overseas. And this choice presents a real dilemma. There are two extremes. Full international health cover is very expensive. Lack of health cover can be catastrophic. Luckily there are middle paths that can be taken. But as a general rule – if you can afford full health cover, take it out. It is worth it for peace of mind.
The people we spoke to in the research for this book had very firm, and very different, views on health insurance. They ranged from a blanket - “I can’t afford it, so I don’t worry about it.” To the more hopeful - “I will just go back to Australia if I get really sick or need an operation.” To the downright negative – “It is not worth having it. My friend died while the insurer argued with the doctor about whether she needed to be medically evacuated.” And the cynical – “They never pay up. You can be sure of one thing if you are over 60 – anything that goes wrong with you will be considered a ‘pre-existing condition’.”
At least half the people interviewed had no health insurance at all. Of the remainder, a few had international health insurance policies but most relied on travel insurance policies for peace of mind.
Let us look at the options. There are essentially three broad categories, in order of expense.
- An international health insurance policy
- A travel insurance policy
- No insurance, usually with the intention of returning to Australia and relying on Medicare and, in some cases, private Australian health insurance cover.
International Health Insurance
This is the gold plated option for health cover. It doesn’t come cheap. It can cost over $15,000 a year per person or as little as $2,000, depending on the level of cover chosen, the size of the excess, and the level of co-payment.
The two key pieces of advice for anyone seeking to purchase international health cover is – shop around and read the fine print of the product disclosure statements.
The big Australian health insurers each offer international products. You may feel more comfortable dealing with an insurer who has been efficient – and paid up – in the past. But remember that there is a big international market out there for expatriate health insurance and it is very competitive. So do shop around. There are internet sites such as medibroker that provide broking services and comparisons of dozens of different health insurers. There are big UK based companies like Health Care International and BUPA who provide a comprehensive range of health insurance packages.
Choosing the cheapest option may not be the best idea. You need an insurer with a good reputation and one that is recognized by the major hospitals and quality medical practitioners in your country of residence. Check out the hospital that you are most likely to use and ask them which insurers they accept.
Most health insurers provide a basic plan plus a number of add-on options to choose from. Or they may provide different levels of cover – for example, standard, executive and concierge.
Within each plan there are further options – for example, the level of excess you are prepared to pay yourself for each claim, and then the level of co-payment beyond the excess. For example, you may choose to pay the first $100 of each claim and 20 per cent of the amount in excess of $100.
Some plans will not cover you at all for chronic illnesses, such as cancer. Others provide 100 per cent coverage for cancer treatment even in their standard plans. You can also add cover for pre-existing conditions. Check carefully the definition of pre-existing condition and scrutinize the policy for renewals. Will the insurer consider your pre-existing conditions to be only those that existed when you first took out the policy or is there a new test every time you renew? Does the policy cover you for treatment in your ‘home country’ – for example, back in Australia.
Are terrorism related injuries covered? Does the policy allow you to renew over the age of 70? Do premiums go up every year with age?
Age is a big factor in deciding premiums. This may be an obvious statement but premiums can double depending on whether you are aged 60 to 64 or 65 to 70.
Your health is a key factor in ensuring that you enjoy your new life in your country of choice. Buy the best insurance cover you can afford, shop around before you purchase, consider using a broker to search out the policy that suits you best, and, above all, make sure you read the fine print in the product disclosure statement.
Travel Insurance Policies
Travel insurance policies can be as cheap as $700 a year if you include an excess of at least $100 on every claim. This means that you pay the first $100 of every eligible bill and the insurance company picks up the rest. Any claim for pre-existing medical conditions are excluded from the standard policy, although it is possible to negotiate with the insurer to include certain pre-existing conditions for an additional fee. (More of that later).
Most travel insurance policies make it clear that the medical cover is only for “unexpected sudden illnesses or serious conditions’. Remember, travel insurance includes everything from lost baggage, to stolen property and flight interruptions. The emergency medical coverage is only one part of the policy. But the great attraction of travel insurance policies for expatriate Australians in Asia is that they generally include overseas evacuation costs. This cover looks generous. Standard policies boast that they will cover medical, dental and evacuation costs of up to $300,000. Surely that would cover the most dire emergency. Well, it may. But make sure you read the fine print in the policy documents. The product disclosure statement is the document that must be gone through with a fine toothcomb.
These are the traps to keep an eye on:
- Most policies won’t cover applicants over 70 years of age unless they submit to a medical appraisal test first. This can range from answering a set of questions on-line, right through to a full physical examination signed off by a medical practitioner.
- Travel insurance is usually for a maximum of 12 months and renewable for a further 12 months. Big reputable insurers, like Bupa, for example, will not renew policies after 24 months. And there is a trap in the renewal provisions. If you contracted an illness during the first 12 months of the policy, it is considered to be a pre-existing medical condition and therefore excluded, in many cases, from the coverage in the second year. This is the opposite of usual private health insurance where only pre-existing medical conditions that exist at the time you first take out the policy fall under the exclusions.
- It is worth having a close look at the definition of ‘pre-existing medical conditions’. Some policies will have a list of conditions that are automatically pre-approved including asthma, high cholesterol, high blood pressure etc. The kicker is that you must declare these conditions when you apply for the policy. If you don’t, they could be excluded from cover. When an insurer excludes a pre-existing medical condition they will also exclude any consequences of the condition. The policy often states ‘direct or indirect consequences’. The interpretation can be very broad. For example, if your travel insurance policy excluded high blood pressure as a pre-existing condition, it would not only exclude the associated medicine but also any selected subsequent conditions such as a heart attack or angina. This is one definition of a pre-existing medical condition from Health Care International. “An illness, injury or related medical condition which within the last five years you have experienced symptoms, received treatment, medication, advice or investigation.” That is pretty broad.
- Medical evacuation. This is the big ticket item that many expatriates fear most. For some, it is one of the two main reasons that they take out travel insurance, together with on-ground hospital treatment in the event of a medical emergency.
Once again, it is important to scrutinize the fine print in the product disclosure statement. Most policies will only cover medical evacuation costs if the insurance company’s doctor agrees with the treating doctor that you need to be moved AND if the insurance company organizes the transportation.
It is often stated that travel must be at the same fare class as originally selected by you. So, if you have booked an economy return flight, the insurance company will fly you back economy UNLESS the insurer’s doctor agrees otherwise on the basis of a written recommendation by your attending physician.
Some policies also state that the insurer will not cover the cost of a full return ticket to Australia if you have not already booked and paid for it before the company returns you to Australia. In other words, you must have a return ticket already and if you don’t then the ordinary cost of a flight back to Australia will be deducted from your claim.
You can see that there is plenty of room for ‘argy bargy’ between the insurance company and the treating doctor before a medical evacuation takes place.
This is, of course, the riskiest option. When you choose this option you are, perhaps unconsciously, making a number of assumptions. These are:
- You have enough funds to cover occasional visits to the local doctor for temporary illnesses
- If you suffer in the future from a chronic illness you will return to Australia and be treated under Medicare and/or your Australian private insurance.
- If you have a serious accident while overseas you can afford care in local hospitals, and the local hospitals are capable of providing adequate care. Alternatively, you have enough savings to cover the cost of an emergency medical evacuation. As an example, an emergency medivac from Indonesia to Australia can cost upwards of $40,000.
If you are prepared to accept these assumptions, then you need to be aware of a few facts.
The first relates to Medicare. There is no guarantee that your medical and hospital treatment will be covered by Medicare during return visits to Australia. This comes as a great surprise to many people but Medicare has quite firm rules on non-residents.
Medicare, Australia’s healthcare system, is principally designed to serve Australians living in Australia.
Theoretically, you are not entitled to Medicare benefits if you are not a resident of Australia. This is true even though you may still be lodging tax returns in Australia and are still paying the Medicare levy.
In practical terms, the Medicare system is a little more flexible. It recognizes that some residents may be ‘temporarily’ out of Australia. As a rule of thumb, if you are leaving the country for less than two years, you will be considered to be ‘temporarily’ absent and still entitled to Medicare benefits when on short visits home. You are not entitled to Medicare benefits overseas, although there are a handful of countries where Australia has a reciprocal healthcare arrangement for travellers. (The United Kingdom, Finland, Ireland, Italy, Malta, the Netherlands, New Zealand, Norway and Sweden).
The ‘two year rule’ is informal but it will work as long as you insist that your absence from Australia is temporary.
The ironclad rule is the ‘five year rule’. Once you have been living outside Australia for five years you are no longer entitled to Medicare during your visits home. When you return to Australia permanently after a five-year absence you have to convince Medicare that you are in Australia to stay before they will re-instate your Medicare card. The best proof you can offer is shipping documents to show that you have shipped household goods and furniture back to Australia. An employment contract is also strong proof. But failing either of those documents, you must present evidence of a lease on a dwelling, or if you own your house, evidence of electricity and telephone bills in your name at your current address in Australia.
Private health insurance is more flexible. You can suspend your private health insurance membership for two years. This suspension is renewable for up to six years. After six years you must resume payment of premiums or lose your cover. The beauty of suspension is that you will be covered on your return (once you have informed the health fund that you are back in the country and you resume premiums) and there are no waiting periods for the resumption of benefits and, crucially, any new illness you have contracted during the period of suspension will not be considered a pre-existing illness for the purposes of your insurance.
So, it is possible to take the risky route on health cover for up to five years. But it can devastate your savings if you have a medical emergency and need to be medically evacuated to another country. And if you contract a chronic disease, such as cancer, you will forced to return to Australia. Chemotherapy and radiotherapy don’t come cheap, even in the lowest cost-of-living countries in Asia.