How To Use Health Insurance Effectively?
It has often been said that one can not cheat death but quite often in real life, sudden death is the least of our worries, it's long illnesses that can cause real havoc to our personal finances and well being. Although, during the past two decades, mankind have made an enormous progress in terms of medical advancement. Malaria, polio, yellow fever etc. are a thing of the past. Heart by-pass operations are being performed so often these days, it's almost as simple as removing an appendix. However, in spite of today's wonder drugs, cloning technology and first class surgeons, according to the latest statistics, the number one cause of death in Thailand is still cancer and following closely in third place is heart deceases. Accidental death ranks second but this is something only God can help you. (Please see table below)
As you are probably well aware that long or terminal illnesses such as cancer, heart and respiratory problems can not be cure overnight and there are, well at least not yet, no magic pills that doctors can prescribe. Treatments and major operations can take several months or years and most important of all the hospital bills alone can give you a heart attack! If you look at the table below, a by pass operation can cost anything between half a million to several million Baht depending on how complicated the operation is. Although, medical costs and hospital room rates in Thailand are still relatively cheap when compared to the rates in the US and other developed countries but over there they have a much more comprehensive medical insurance welfare for their citizens but in Thailand it remains to be seen how long the “Baht 30 Cures All” scheme will last.
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Moreover, the old 80:20 rule makes life a bit more complicated when it comes to looking after your health in old age. According to past statistics, approximately 80% of your life time medical expenses will come due during the last 2 years of your life. And for most of us, surviving until the 80's and 90's are not uncommon, which means that you will have to set aside a substantial chunk of your life long savings for what we call “long-term care” or LTC for short. So what can one do to prepare for such an eventuality? The sad answer is not an awful lot because health insurance can only protect you to a certain age. In fact most insurance companies do not want to offer health insurance because the cost is prohibitively expensive that not many insurance companies can make any real profit from it. Moreover, the term of most health insurance policy only goes up the age of 60; the exception being AIA where the term extends to the age of 70. Therefore, if you live longer than 60 or 70 years of age, which you probably will, then health insurance is of limited use and one has to rely on retirement savings to cover medical expenses as well.
Although, health insurance will not cure all of our headaches but at least some protection is better than no protection at all. So how does one go about buying a health insurance? In this issue of M&W, we have come up with a simple guide on the things you need to know when selecting the right health insurance plan for you and your family. So read on…
First of all, it is important to know that by law, life insurance companies can not sell you a “stand-alone” health insurance policy, only assurance companies can do that. No one is quite sure why the Department of Insurance (DOI) imposes such silly rules. Therefore, a health insurance policy is sold as a “term rider” with life insurance policy. Simply put, it's like buying a car with optional extra features. Essentially, there are two main choices, either a “stand-alone” policy from an assurance company or a “term rider” from any of the life insurance companies.
Getting Started:
The first step in buying a health insurance is to decide what kind of health care you are likely to need. By glancing at the Table below, will give you a pretty good idea on how much your hospital bill is likely to be. The choice is very much up to what you can afford, which can range from Baht 1,500 per room per day at Krungthon Hospital to Baht 4,000 at Bamrungrad Hospital . If you need extra facilities such as VIP rooms or even a suite, be prepared to pay up to Baht 15,000 per day! Once you've decided on the level of room rates and choice of hospitals and doctors, then you can proceed to select the right health insurance policy. Currently, there are several plans being offered but most of them fall between the range of Baht 1,000 to a maximum of Baht 5,000 per room and they cover the following charges related to inpatient hospital treatment:
• hospital room and board including nursing
• accommodation in intensive care unit (ICU)
• hospital services including drugs, dressings, x-rays, physical therapy etc.
• surgeon fees, anaesthetist and operating theatre
• inpatient physician and specialist fees
• ambulance service
• emergency room service
• outpatient follow up care
“Stand-alone” vs “Term Rider”
The choice is not always so simple because the main policies are governed by the DOI, therefore, the range of benefits are very similar but the premium tend to vary quite a bit. So if you want to go for the “stand alone” health insurance policy, the only realistic choice is from a company call BUPA Blue Cross, which is the only leading health assurance specialist company in Thailand. Founded in 1985 and in 1996 Blue Cross joined BUPA (British United Provident Association), which is one of the largest independent health care organizations in the world. However, BUPA Blue Cross is not a life insurance company, therefore, a major drawback is that their insurance premium is not tax deductible. Secondly, the fine prints in BUPA Blue Cross policy tend to be more restrictive than other companies.
As for “Term-Riders” health plans, there are 4 main factors which will determine the level of your premium:-
• Sum insured must be more than Baht 100,000 and not exceeding Baht 1 mm.
• Your professions. People in less adventurous jobs will of course pay less.
• Your age will have a direct bearing on how much your insurance premium is going to be, which can range between Baht 1,500 to Baht 45,000 per year.
• Your sex. For some peculiar reasons, it is more expensive to insure women. Hence the old running joke that women get old quicker but live longer than men.
Listed below is a table comparing the premium and benefits of some of the leading insurers. As mentioned earlier, the choice of which really depends on what you can afford and the level of services needed. In conclusion, if I have to choose, BUPA Blue Cross is a pure play but their premium is on the expensive side and it's not tax deductible. As for the term riders, AIA is the one to beat in every respect. Although AACP is also highly competitive but when it comes down to a personal choice, I would go for the term rider since I have to buy a life insurance anyway and you get more benefits for the same price plus it is tax deductible.
Until the next issue, take care of your health. One hour of exercise a day is the best insurance you can buy. Not only is it free, but it will also keep the doctors away and will save you a bundle of money in the long run.