Uncovering the benefits of VHIS to you, are you benefited?

Hong Kong public hospitals have been overloaded, with continuous rising medical inflations, the soon-to-be launched Voluntary Health Insurance Scheme (VHIS) could be an option for the general public. To taxpayers, tax deduction is one of the most attractive features of VHIS. However, the plan’s coverage/details, premium and tax deduction arrangement should be carefully considered. Also, your personal needs should be a factor to determine whether enrolling or converting to VHIS is the most suitable coverage to you and your family.

Two plan types under VHIS

VHIS offers two plan types: Standard Plan and Flexi Plan. Standard Plan is developed based on the minimum requirements set by the Government, providing a simple and basic medical cover. Flexi Plan is built based on Standard Plan, with additional coverage and a higher benefit limit, which in turn comes with a higher premium.

VHIS VS Personal Medical Plan – All You Need to Know

Personal Medical Plan

VHIS

Product terms are designed by individual insurance companies

Has standardised Policy terms and conditions

Typically has a lifetime benefit limit

No lifetime benefit limit; the per policy year benefit limit is no less than HKD420,000

Only certain plans accept policy renewal of the elderly aged 80 or above

Accepts applications from Insured Persons aged 15 days to 80 (attained age) and the policy is guaranteed renewable to the age of 100 (attained age)

Pre-existing conditions that occur before enrolment may be declined

Pre-existing conditions that occur before enrolment may be declined but unknown pre-existing conditions will be covered, with a benefit limit of no less than HKD420,000 per policy year.

Each medical plan has different exclusion terms

Has standardised general exclusions in the Policy terms and conditions

Covers treatment during hospitalisation, but may not cover non-hospitalised treatment

Covers treatment during hospitalisation, as well as non-hospitalised treatment

Psychiatric hospitalisation is typically not covered

Covers psychiatric treatment during confinement

Premiums are not entitled to tax deductions

Premiums are entitled to tax deductions

Are you a beneficiary of VHIS?

From the table above, the three groups of people listed below can benefit from VHIS:

  1. The middle aged and seniors
    A lot of insurance companies accept applications only from customers under the age of 65, and only around 20% of medical plans are renewable until the age of 80 or above. Thus, people without a medical plan or those insured at an older age can consider VHIS as part of their retirement strategy, and let insurance companies share the burden of medical expenses as they move forward in life.

  2. People with higher illness risks
    VHIS guarantees policy renewal until the age of 100 and does not allow insurers to adjust the premium based on the change in health status of the insured person.

  3. No “Lifetime Benefit Limit” Under VHIS Standard Plan, the annual benefit limit is fixed at HKD420,000 and this figure is reset every year. Generally speaking, the medical plans in the market have lifetime benefit limits and insurance companies can decline your policy renewal if exceeded, however for VHIS , If there’s ever a need to make a claim, you can do so knowing you’re well covered as the benefit limits reset every year.

    Cover unknown pre-existing conditions before getting insured Pre-existing conditions not known before insuring are also covered, but with a three-year waiting period: after the policy takes effect, there will be no reimbursement during the first policy year, 25% reimbursement in the second policy year, 50% reimbursement in the third policy year and 100% reimbursement from the fourth policy year onwards.


  4. Taxpayers
    Policy holders (as taxpayers) can enjoy concessionary tax deductions every year, with a maximum concession of HKD8,000 per insured person per year. Besides his enjoying tax deduction for their own policies, policy holders can also claim tax deductions on the premiums paid for specified relatives insured under VHIS plans, where a specified relative shall mean the taxpayer’s spouse and children, as well as the taxpayer’s or his/her spouse’s grandparents, parents and siblings. Tax deductions scheme may interest to those with high tax rates looking for medical plans. However, this is comparatively less appealing to lower-income taxpayers.

Is the coverage of VHIS enough?

VHIS Standard Plan has a benefit limit of HKD420,000 per year, with room and board reimbursements limited to HKD750 per day. The reimbursement of minor, intermediate, major and complex surgery fees are capped at HKD5,000, HKD12,500, HKD25,000 and HKD50,000 respectively. Anaesthetist and operating theatre costs are set as 35% of the surgeon’s fee, and miscellaneous costs are capped at HKD14,000. The government estimates that for each procedure, 80% of the fee can be reimbursed. For gastroscopy, it is 90% and for cataract operations, it reaches over 90%. Non-surgical cancer treatment offers over HKD80,000 in yearly reimbursements, which covers radiotherapy, chemotherapy, targeted therapy, immunotherapy, and hormone therapy. VHIS may be fine with covering minor procedures, but it could be insufficient for more complex operations such as cancer treatment. Moreover, VHIS only covers pre-existing conditions appearing or diagnosed after the age of 8. If a child is diagnosed with a pre-existing condition after birth, not only will the medical expense be hefty, the child will not be covered by VHIS, making this an important consideration before insuring a child with VHIS. If you want VHIS to support your medical expense but also want to have better critical illness coverage, you can consider purchasing additional critical illness plans to cover your needs.

Convert my medical plan to VHIS – Yes or No?

After VHIS launches, three types of medical plan conversation may happen in the market:

  1. The insurance company reforms individual hospital insurance plans to VHIS. The policy holder has to transfer his current insurance to a VHIS Certified Plan as mandatory and bear the price difference. The insurance company does not have the right to re-underwrite, and renewal is guaranteed up to the age of 100.
  2. The policy holder has the right to transfer his existing medical insurance plan to a VHIS Plan offered by the same company within the transfer period. If the policy holder would like to remove any exclusions from the original policy, the company has the right to re-underwrite his policy.
  3. The policy holder can transfer a non-VHIS medical insurance plan from company A to a VHIS Plan in company B, and company B has the rights to re-underwrite.

With the above predictions in mind, you should consider the Terms and Benefits and re-underwriting conditions of both your current medical insurance plan and VHIS plan because the policy holder may lose certain covers due to pre-existing conditions after re-underwriting.

Our need for a medical plan will change with age, income, health and status of the family. A good medical plan should be tailored and cover multiple needs. It is always important to consider the premium and actual coverage before purchasing insurance plan or conducting a conversion.

Remark:

The above production information is based on the Standard Plan under VHIS. The product or service terms and conditions of VHIS are subject to the government’s latest announcement. VHIS products from different insurance companies may differ. Please read and understand the product terms and conditions before making a purchase on an insurance product best suited for you. The article is for reference purposes only, and should not be considered as an offer or solicitation for any of the products or investments mentioned herein. FWD expressly disclaims all liability for the use or interpretation by others of information contained in this article (including 3rd party responsibility). You are advised to seek independent advice from appropriate professionals if you have any enquiries regarding the related information. Any insurance application with regards to relevant policies will be subject to sales and underwriting procedures and requirements. Should you have any queries, please do not hesitate to contact your advisor or call our Customer Service Hotline at 3123-3123.

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