Global Health Insurance Coverage Choices: Local Health Insurance


This article is brought to us by Cooper, Claridge-Ware, an independent International Health Insurance Brokerage headquartered in Hong Kong, China with more than 55 years of experience in helping expatriates and travellers around the world find the best insurance solutions possible.


Continuing from our Travel Insurance article last month, this month we’re going to be looking at traveler’s domestic coverage options in the event that they stay in a single location for a period of longer than 12 months.

A quick re-cap may be needed here with regards to travel insurance. Remember, a travel insurance plan will normally be tied to a specific length of time as they are intended to cover travelers for the exact duration of their trip. However, in most cases travel insurance policies cannot provide medical protection over one year in duration.

So what happens if you decide that you’d like to stay in a far flung location for more than a year? If, for example, you get to a destination like Costa Rica, Hong Kong or Thailand and want to extend your trip past the point of your travel insurance coverage, especially if you want to remain in that location for another 12 months, does that mean you will be unable to obtain health insurance protection?

Thankfully, the answer to that question is no.

In every country around the world there are local, or domestic, health insurance options; and in many cases these options will be available from the companies and brands which you know from home. Companies like Bupa, AXA, and AIG have established local offices around the world and are licensed locally in a host of countries. But what does this mean for you? Well, basically it means that there are a lot of affordable, low cost health insurance options no matter where you may be going; especially if you’re coming from a country like the USA where medical insurance can be highly expensive.

Let’s look at the following example to get an idea of how a situation may develop which could demand the purchase of a local health insurance policy in your destination country:

You’ve left the USA and have been traveling the world for the last 12 months. You’ve been from London to Bangkok, and have taken odd jobs in Barcelona, Melbourne and Auckland along the way. The final stop on this epic journey (just after you’ve done the Great China Route, obviously) is Hong Kong. From the moment you left the states, you have been covered under your trusty travel insurance policy, knowing that even if you had contracted dengue fever while trekking the jungles of Laos, or if you got Malaria whilst on your Safari in Kruger National Park, you would have access to vital healthcare.

But now you’ve landed in Hong Kong, Asia’s World City, and while you were only intending to stay there for a few days, or a week at the most, the fascinating mix of East-meets-West and the proximity of the city to the rest of this amazing continent has you considering a longer term stopover. So you look around and land a job teaching English to local students, and the school is even willing to sponsor your visa! You’re getting paid enough to afford a sweet apartment in Kennedy Town and still have enough for a comfortable lifestyle in Lan Kwai Fong and Wan Chai on the weekends, but the school isn’t offering you any sort of medical insurance protection. So what should you do?

With a skyline like this who wouldn't want to spend a year or two in Hong Kong?

With a skyline like this who wouldn’t want to spend a year or two in Hong Kong?

As unlikely as that situation may sound, there is a growing trend whereby “travelers” are choosing to stay for extended periods of time away from their home country outside of the travel schedule they identified before setting off on their trip. We’ll be looking at the various healthcare systems associated with some of the top destinations where this trend is starting to boom, but today we’ll give you a preview into Hong Kong’s healthcare system, and your options for medical insurance in the country.

The person in our example above has decided to remain in Hong Kong past the term of their travel insurance coverage, but they’ve rented an apartment and have taken a job locally so they are likely to remain in the city for at least another year. This means that travel insurance coverage, even if it is a whole new plan, is probably not suitable to their needs for two major reasons. The first is that they will probably need to buy a new travel insurance policy for the next 12 months, which could be expensive depending on the policy they initially purchased. The second, and probably the biggest reason why travel insurance won’t work, is that this individual is now resident in Hong Kong. They have a home address in the city and technically live there, even if they intend on relocating back to their home country in the future.

The good news with Hong Kong is that the city boasts an extremely high-quality public medical system which is provided at low cost to local residents. This means that medical insurance in Hong Kong is not a necessity, and that you are able to access medical services any time you need them. However, despite the high quality of the government-run medical system, it is overburdened by the problems of all national healthcare systems being overrun by bureaucratic red tape, long waiting times and a uniquely Hong Kong problem of overuse by Mainland Chinese nationals. It is for these reasons that the city’s private healthcare system is the second most expensive in the world after the USA – supply and demand means that costs are going to go up as there is more demand for a product, and even with the public system on hand Hong Kong’s private medical costs are skyrocketing.

A Hong Kong fire services ambulance. Photo credit Negi / CC BY-SA.

A Hong Kong fire services ambulance. Photo credit Negi / CC BY-SA.

So while medical insurance is not a necessity, the individual in our example may find themselves considering their coverage options in HKSAR, and they’re probably going to be looking at the city’s local health insurance products.

Now, local health insurance is a catch-all term for a medical insurance plan that is created and regulated within a single country and does not provide protection outside of that country’s borders. The health insurance policies you will have encountered in Australia, Great Britain and the USA would most likely be local health insurance plans, as they are designed for use locally and won’t cover you whilst you are overseas. This can be a major drawback if you’re going to be doing extensive traveling during the course of your year in Hong Kong, as you’ll have to purchase more travel insurance if you want to take trips to Thailand, Malaysia or Indonesia. But it does have its benefits, especially in a city like Hong Kong as local medical insurance options tend to be cheap because there are only so many places for you to receive treatment.

Additionally, these policies are also relatively cost-effective as they generally tend to be experience rated, meaning that the overall premium you pay will be directly related to the number of claims you make whilst covered by the plan. Basically, the more medical treatment you receive the higher the cost of the coverage will be. This means that when you first purchase the coverage, because you have no claims history under the plan, your local health insurance policy will generally be very cheap. However, as soon as you make a claim under the plan you can expect a much higher premium when you renew the policy.

And as we’re speaking of renewals, it’s probably a good idea to mention the fact that many local health insurance options, both in Hong Kong and around the world, will have limits on the age at which you can renew the coverage. Obviously this isn’t such a big deal if you’re only planning on staying in your overseas location for 1 to 2 years, but if at any point you decide you want to permanently relocate to that destination (it has been known to happen!), you should be aware that there will come a day when you are no longer able to continue receiving medical protection under your insurance policy. This age will vary, but it is generally around 65 – 70 years old depending on the insurance company offering the plan.

Overall limits on local health insurance plans tend to be low and US$200,000 in coverage per year can be considered good value on a number of local medical insurance plans in Hong Kong and elsewhere around Asia. However, if you succumb to a serious medical condition, like developing cancer, the costs of your treatment are likely to outweigh the coverage limits of your policy meaning that you would have to either suffer through the rigors of using the local medical system or go without vital treatment (which is obviously not an option).

Furthermore, many local health insurance policies, especially in a place like Hong Kong, will have mandatory treatment networks. Hospitals and doctors at which you must receive treatment if the treatment is to be covered under the plan. So while you may prefer to see a certain doctor at a certain hospital, it may not be possible to get treatment with that doctor reimbursed through your local insurance coverage unless the doctor or hospital is within the insurance company’s settlement network. This means that if the best doctor for the condition is located outside of the plan’s settlement network you will probably have to settle for second best or pay for that treatment out of pocket.

The 400-bed Alice Ho Miu Ling Nethersole Hospital in Hong Kong's Tai Po.

The 400-bed Alice Ho Miu Ling Nethersole Hospital in Hong Kong’s Tai Po.

A local health insurance policy can be seen as cheap and offering great value at first, but the longer you hold the policy the less use it will offer. This is especially true if you decide to relocate away from the country, which is Hong Kong if we’re continuing our example, because your locally purchased health insurance policy will not be able to travel with you. This may not be such a big deal for many people, but in the rare instance where you pick up a serious medical condition while overseas (like chronic Asthma in Beijing) if you can’t take your medical insurance policy with you then that condition becomes pre-existing with any subsequent medical insurance application.

Obamacare and the AHCA aside, pre-existing medical conditions are still very much a part of the health-insurance industry landscape due to the fact that the regulations have not yet taken full affect. So if you have developed a pre-existing medical condition while outside of the country, upon your return to the USA obtaining health insurance protection which covers that condition will prove to be a challenge. However, for young, relatively healthy individuals this is probably not such a great concern. Just like the renewal age limit for many local health insurance options around the world, pre-existing conditions will probably not impact you until you are much older. However, diseases like Malaria, Dengue Fever, Typhoid and a range of other emerging threats can strike at any age and can be costly to treat depending on their severity.

The Bottom Line:

Local health insurance can be a good option for ensuring that you are able to receive high quality medical attention in the event that you decide to stay overseas, in a single location, for a period longer than 12 months. Often more cost-effective than travel insurance due to their premium calculation structures, these types of policies can have drawbacks over the long term, but should be sufficient to meet the needs of most travelers.

Next Time:

Next time Cooper, Claridge-Ware investigates full-blown international health insurance coverage options.

About Cooper, Claridge-Ware

Cooper, Claridge-Ware (CCW) is an independent International Health Insurance Brokerage headquartered in Hong Kong, China. With more than 55 years of experience in helping expatriates and travellers around the world find the best insurance solutions possible, CCW helps to simplify the process of identifying, and obtaining, high-quality medical coverage no matter where you may be.

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An International Health Insurance Brokerage headquartered in Hong Kong with 55 years of experience in helping expatriates and travellers find the best insurance solutions.