Freelancing is becoming increasingly popular in Hong Kong. According to data from the Hong Kong Special Administrative Region Government Census and Statistics Department1, as of 2022, the number of self-employed individuals in Hong Kong has reached 220,000, accounting for 6% of the total employment of 3.657 million. It is anticipated that there are increasingly more people who will abandon the traditional employment model with companies and choose the path of freelancing, working for themselves.
What does it mean to be self-employed?
Being self-employed refers to someone who earns income by taking contracts with a business instead of working for a business. Individuals who have a variety of jobs such as free lancers, or those who work in casual labour are considered self-employed.
What are some downsides of being self-employed?
While self-employed individuals have the flexibility of working independently, there may also be some downsides.
Firstly, they do not have a stable or fixed source of income as their monthly salary would depend on the amount of work that they take up. Secondly, they do not have the benefit of a group medical insurance purchased by their employers. This means that if they were to suffer from a serious illness, they would likely have to bear the medical expenses alone.
Therefore, purchasing personal medical insurance should be part of your consideration if you intend to become a self-employed individual or already are one. By planning for what lies ahead by purchasing medical insurance, it can help relieve any potential financial burden caused by an illness as you pursue a successful career as a freelancer.
Why do self-employed individuals need personal medical insurance?
In general, personal medical insurance is a policy that reimburses medical expenses that you incurred should you be required to undergo day surgery or be hospitalised. Unsure if you should purchase medical insurance? Here are three benefits of doing so.
Three benefits of purchasing personal medical insurance.
1. Obtain more comprehensive medical protection
Freelancers or self-employed individuals experience more instability in their income, working hours and benefits compared to regular full-time employees. By planning for any potential medical expenses early and purchasing medical insurance, it can help ensure that you are able to establish a safety net for medical coverage. With the rise in the cost of medical care, it is expected that medical expenses will increase. With the unpredictable job changes and fluctuating incomes, many self-employed individuals face the threat of additional financial burden brought about by medical inflation.
2. Substitute for company group medical insurance
Despite the flexibility that self-employed individuals have to work with various companies, they do not have the same protection and benefits as a full-time employee. Thus, freelancers should think carefully about the medical protection they need. In case of an injury or illness, the absence of group medical insurance would result in a large financial burden in their life due to costly private medical services. Opting for lower-cost public medical services would inevitably result in them spending more time waiting, compromising on their flexible work schedules. Their financial burden would increase even further in the unfortunate scenario that they are unable to work due to illness and require the use of their savings to cope with the disease. Should self-employed individuals purchase personal medical insurance early, they are able to cover for the lack of company group medical insurance, enabling them to have more financial and health security.
3. Reduce occupational injury losses
According to the law, it is required for employers to purchase workers’ compensation insurance for their staff, which provides compensation for employees who meet with any accidental injuries or death. Unfortunately, most self-employed individuals do not benefit from such coverage. Self-employed individuals often undertake a variety of work, including full-time Key Opinion Leader (KOL), who often travels around for filming. During these filming sessions, there are often large machines and setups, increasing the risk of accidents. If the freelancers are hospitalised due to work-related injuries, it is often difficult to receive compensation from the companies they work with. However, if they have purchased personal medical insurance, they are able to claim for the medical expenses incurred. While medical insurance is not able to replace workers’ compensation insurance, it is still able to offer a certain level of medical protection in the event of work-related accidents, minimising losses resulting from occupational injuries.
What is VHIS?
What type of insurance can provide sufficient protection for self-employed individuals while meeting a reasonable premium budget? You can consider getting VHIS medical insurance. Here are 6 benefits of a VHIS medical insurance plan2:
Reimbursement of the actual cost
Most medical insurance plans will compensate you for a range of expenses such as surgery and hospitalisation through an actual cost reimbursement basis. Whether your expenses are for personal or work-related reasons, it can be claimed for reimbursement as long as it is covered under the insurance policy.
Coverage for unknown illnesses
Most traditional medical insurance does not provide coverage for pre-existing illnesses. However, the medical insurance plan offers different levels of protection depending on the policy year. With this medical insurance, freelancers are able to enjoy extensive illness coverage even without company group medical insurance.
According to the product regulations of voluntary medical insurance, if you are a Hong Kong taxpayer and have insured yourself and designated relatives, you may be eligible for a deduction of $8,000 per insured person per tax year based on the premiums you have paid.
A 21-day cooling-off period is part of the medical insurance plan, where you can reconsider your commitment to the plan after successful application.
No lifetime coverage limit
Coverage is guaranteed by the medical insurance plan up till the insured person reaches 100 years old. The amount of coverage can be recalculated every year, and there is no lifetime coverage limit.
Coverage for psychiatric treatment
The expenses incurred for psychiatric treatment during hospitalisation in a local hospital are also covered if the treatment is being provided by a specialist.