Voluntary insurance scheme aims to provide relief for health care sector

Hong Kong’s health ministry is using tax breaks and favourable terms to encourage more Hong Kongers to buy medical insurance to cover treatment and hospitalization at private hospitals.

By implementing the Voluntary Health Insurance Scheme (VHIS) on April 1, the health bureau hopes to relieve pressure on the overloaded public healthcare system by moving around 5 percent of patients to the private sector.

Under the scheme, insurance companies can offer insurance products certified by the health bureau to Hong Kongers between the ages of 15 and 80. The annual premium for a standard plan is expected to be around $5,300.

The biggest highlight of these certified insurance plans is a tax deduction for premiums paid capped at $8,000 for every insured person per year. Those who pay premiums for their dependents – no matter how many of them – will enjoy greater tax savings as each insured person is eligible for a tax deduction.

Must-have elements

The bureau requires these products have certain features. They must guarantee that the policy can be renewed up to the age of 100 despite changes to the health conditions of the insured person; that benefits will not lapse until the insured person reaches 100; and that policyholders can cancel policies with a full refund within 21 days.

These insurance plans must also cover a wide range of items, including: treatment of congenital conditions that have been diagnosed after the age of eight; outpatient surgical procedures; prescribed diagnostic imaging tests; prescribed non-surgical cancer treatments; and psychiatric treatment in local hospitals.

These products should also provide coverage for pre-existing conditions that are unknown to buyers at the time purchase.

Partial coverage will be provided – 25 percent in the second year after the policy is in force and 50 percent in the third year. From the fourth year onwards, full coverage will be provided.

To enhance premium transparency, policyholders can also access the premium schedules of all the certified plans online.

More more more

“You would find that actually there are more incentives [in our new VHIS standard plan] in terms of coverage and protection, whereas the current insurance plans have not included those items,” said Ms Sophia Chan, Secretary for Food and Health.

On Sunday, she said the VHIS has been well received by the insurance industry. It is believed that insurance products from at least 20 insurers have been certified by the health bureau and they could come to the market as early as next month.

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But industry insiders have warned people to choose products according to their needs, stressing that plans under the VHIS are just one option out of many.

“For example, the minimum compensation for non-surgical cancer treatments is $80,000 under the scheme, while the annual costs for these treatment can be as high as $600,000. The VHIS does not provide enough coverage for this kind of treatment,” said 10Life, an insurance startup that compares policies.