One of the problems you experience as parents when living abroad is finding suitable health insurance that will meet your needs. You will usually want it to have maternity benefits, provide good coverage for hospitalization and be from a company you can trust. But is this enough? Many people neglect to read the fine print of insurance policies, relying instead on brochures and correspondence with brokers and companies to make their decision. And sometimes, if you don’t know how to ask the right questions, you may not get the information you need. We have listed below the five most common pitfalls that expat parents should look into when buying or renewing their health insurance policy. This is not your typical ‘check the financial rating of the company’, ‘get testimonials from friends’ or general advice that is usually obvious, but rather an in-depth analysis of insurance policies’ fine print that is tucked between 40 pages of insurance policies, and examples on what terms favor you in comparison to what favors your insurer.
1. Is your newborn baby covered regardless of his health status at birth?
Many insurance companies provide coverage for maternity expenses: tests, childbirth, and complications of pregnancy. But what happens when your baby is born with a congenital condition that requires ongoing treatment for a long period, sometimes years after the birth? Some health insurers only give coverage to your newborn for the first 31 days of life, and then they will need to go through underwriting – a process in which you fill in a health insurance application and your newborn’s health is assessed. This means that the insurance company has the right to deny coverage for your newborn, essentially leaving you to deal with the costs of treatments alone – even if you have been faithfully insured for a number of years. This is an example of bad wording that appears on some insurance policies: The insurance company only provides coverage for your newborn in his first 31 days of life. After that period, the newborn is considered as a new child who is added to the policy, and therefore will be required to undergo a full medical application:
“Routine and medically necessary care of the insured person- mother and her newborn during the first thirty-one (31) days of life, if the delivery of the newborn and the charges incurred are eligible for coverage and are covered under the terms of this insurance”
Another not so baby-friendly health insurer allows you to add your baby without an application, but only if it is 100% healthy at the time of birth, which essentially renders this benefit empty:
“Addition of a newborn as a dependent is possible, provided that the insurance application is made within two (2) months following the date of birth. Automatic affiliation is only possible if at the time of the application there be no indication of congenital defects or diseases.”
If the policy allows adding a newborn without underwriting, it will say so clearly. A good health insurer will allow you to add your newborn within a certain time period after the birth, without sending a health application for the baby at all. This will allow you to receive coverage for any congenital conditions, minor or severe, that your baby has or may have in the future. See this great example:
“If at least one parent has been covered by the policy for a continuous period of twelve (12) months or more prior to the newborn’s birth and the application is received by us within thirty (30) days of the newborn’s date of birth, the newborn will not be subject to medical underwriting. We will not require information regarding the newborn’s health or medical examination, and cover will begin when we confirm receipt of the application.”
2. Limitations for congenital conditions discovered after joining
During your child’s first year of development, medical conditions that were not apparent when you joined your insurance company may arise or be suspected. If you have just joined your insurance company after your baby was born, and completed the medical application, you may think you are in the clear. Insurance companies typically don’t exclude medical conditions after you have joined – if your statements were true and these conditions were not evident when you joined, they should be covered. However, some companies have a different take on this and will exclude congenital conditions whether they were present or not when you joined. This can come as a blow when you discover you require certain tests but they are not covered, even though there was no way you could have reported them before. For example:
“Coverage for congenital conditions is available only to infants born of a coverage pregnancy and having continuous coverage under the company effective as of the date of birth.”
On the other hand, health insurers that favor you will write something similar to this:
“Benefit is available congenital disorders, birth defects, and hereditary conditions up to a lifetime maximum of 250,000$. coverage up to the limit of the chosen plan will be provided for congenital disorders, birth defects, and hereditary conditions, which are first diagnosed while covered under this policy.”
The part which states ‘are first diagnosed while covered under this policy’ is the most important because it essentially treats a congenital condition like any other pre-existing condition: If you were not aware of it, you will be covered.
3. Renewal is annual, but not guaranteed
Usually, expat insurance policies are contracts with a duration of one year. Since the purpose of insurance is to provide you with peace of mind and stability for a period of several years, insurance companies offer renewals to their policies. This will enable you to extend your coverage for another year, while maintaining your seniority with the insurer, so that you don’t have to start again – fill in an application, report your medical history, etc. But not all renewals are created equal. While the purpose of renewals is to provide continuous coverage, some companies maintain at their discretion the decision to even offer a renewal – and they don’t detail the criteria for making this decision, nor do they state that you won’t personally be left out. For example:
“Renewability is at our option. if we elect now to renew, notice will be mailed at least thirty (30) days prior to the renewal date. Written notice sent to the policyholder shall be sufficient. unless this policy is renewed, it will terminate at the end of the period of insurance for which a premium has last been paid.”
That is the only thing this company decided to write about renewal. This may seem unlikely to happen, but when you have a severe medical condition and your insurance company decides that you are not profitable, this clause may allow them to terminate your policy for the next year, leaving you hanging either in the middle of an expensive treatment for your medical condition, and with a medical condition that may not be insurable with any other company. When the policy allows the insurance company to single out a specific individual for cancellation based on their age, claims or medical history, this is no longer a health insurance. Due to the many factors involved in insurance, like legalization, medical inflation, and other matters, all insurance companies have the possibility to withdraw the plan completely, change some of the benefits, or terminate coverage for a certain demographic – for example, people living in high-expense countries or regions of the world. But since this is a global change for all of their clients, it is much less likely to happen. A great example is one that is called Guaranteed Renewability, and it details exactly the thing that worries you the most: that you will not be singled out because of your age or medical conditions:
“Guaranteed renewability ensures the policyholder and his eligible dependents will not be denied renewal of their policy because of their age or claims history, provided that premiums are paid within the stipulated time.”
4. Premium may change individually
While not offering renewal is a very harsh way to throw a client out, raising premiums individually is a more polite way of showing an unprofitable client the door. Again, this follows the same logic: Certain policies have a clause that allows the insurer to change premiums for a specific individual, and they usually do that based on the claim history. This happens all the time, and we’ve seen increases of up to 40% in premiums from one year to another: And it’s so laser-targeted, that sometimes one family member gets a huge premium increase due to his claims, and other family members retain the company’s regular prices. Good companies will maintain a clause in their policy that prohibits them from changing premiums on an individual basis. They may still change their prices due to general rate increases for all of their client base, or specific changes in your demographics (for example, your premiums rise when you move to an older age group). The main difference is that both changes are transparent and global: You know when you join what prices look like in other age groups, and all the company’s clients get the same renewal rate: Bad example:
“At each renewal date, we reserve the right to alter or discontinue the benefits, terms, conditions, and premiums of this policy and we shall notify you of such changes at least twenty-one (21) days prior to the renewal date to your last known address.”
This allows the insurance company to just change the premium, and they don’t really have to explain why. Good example:
“At the anniversary date, the insurer has the right to change the premium and/or policy terms, based on any insured’s demographic or geographic change.”
This clause details exactly why your premium may change: demographics (age) or geographic location (moving to a country that is in a different pricing zone than your current one).
5. Unlimited Co-insurance
While a deductible is a set amount of money you pay before the insurance company starts to cover your expenses, co-insurance is a percentage of treatments you keep paying after the deductible. For example, you may have a co-insurance of 10%, which means that the insurance company will pay 90% of your costs and you will be responsible for the remaining 10%. This is mostly common on policies that offer coverage in the USA. Co-insurance is a good way to decrease your premium, but it should be capped to a certain limit in order to make sure that it’s not a black hole for your money. Otherwise, you may find yourself stacking up thousands of dollars in expenses for costly treatments, and sometimes even more – definitely more than what you saved on your premium. This insurance provides, on certain plans, only 80% of the coverage- meaning that no matter what the cost may be, you will be responsible for 20% of it. The client that showed this to us ended up paying 5500$ just for his treatment as co-insurance:
Outpatient Treatment in a Hospital or Clinic
|Chemotherapy and radiation||80%||100%||80%||100%|
On the other hand, when the co-insurance is capped, it looks like this:
|Co-insurance limit (Out-Of-Pocket) outside the U.S.||No co-insurance applies|
|Co-insurance limit (Out-Of-Pocket) U.S. in-Network||After the deductible, 10% of the first 5,000$ of covered medical charges|
Essentially, the co-insurance for USA treatment is at most 500$. The amount may change between plans and levels of insurance, but the important matter is that co-insurance must be capped at a reasonable amount. To summarize, you will save a lot of money and gain valuable peace of mind by making sure that:
- Your health insurance allows you to add your baby automatically, without asking you medical questions.
- Your health insurance treats congenital conditions as pre-existing conditions.
- Your renewal is guaranteed to happen, not just an annual option.
- Your premiums are not dependent on your claim history.
- Your Co-insurance is capped to a certain amount.