I speak to many brokers and IFAs about their challenges and aspirations.
One of the things we discuss is how international private medical insurance can fit within their portfolio of products. As part of these discussions, there’s generally some hesitation on several fronts, one being the familiarity of the finer detail around IPMI and what the product offers.
To help clarify some of these issues, I’ve outlined a number of the key terms that are used by market practitioners. Some terms will seem straightforward but they are key when discussing IPMI with clients for those who are new, or dip in and out, of this market.
The following terms are common, but important to understand:
- Medical networks and direct settlement
- Reimbursements
- Evacuation and repatriation
- Moratorium underwriting vs full medical underwriting
- Benefit limits
- Deductibles vs co-insurance
- Out-patient vs in-patient
Medical networks and direct settlement
Insurers establish (or contract to a third party’s) a medical network that will comprise many thousands of hospitals, clinics and consultants around the world. Networks bring significant advantages to insurers, many of which flow down to members. Costs can be better controlled, especially where agreed fees for specific treatment are pre-negotiated. Standards of treatment are more effectively managed, and hospitals that fail against these measures will usually be removed from a network. Insurers will also usually get priority access to consultants looking after their members – this enables the insurer to double-check that treatment plans are appropriate.
Reimbursements
The amount an insurer pays for a member’s treatment. This will often be 100% of the treatment cost but this can vary depending on what co-insurance, deductibles or excesses apply to the policy. Members using a medical facility within their insurer’s network will usually have their fees settled directly. If treatment is out of network, the member will need to settle the fee and claim back from the insurer.
Evacuation/repatriation
Where a required treatment is not available or appropriate in the hospital or clinic where a patient is located, the insurer will arrange for the member to be transported to the nearest appropriate medical facility. Members are sometimes able to choose the country they wish to be transported to, depending on the cover they have purchased.
Moratorium underwriting vs full medical underwriting
When insurers receive an application for international health insurance cover, they usually ask for a medical questionnaire to be completed and use this information to assess the applicant and quote for cover. This process is referred to as Full Medical Underwriting, or FMU. Alternatively, an insurer may accept the applicant straight away without a questionnaire, but exclude any pre-existing medical conditions. This is called Moratorium Underwriting.
Cover for larger groups will often provide blanket cover that includes pre-existing conditions.
Benefits limits
This is the amount an insurer will pay for specific aspects of cover as defined by the policy. International PMI usually offers higher benefit limits than domestic plans, largely due to the global nature of the cover. Insurers will also set an annual maximum benefit payment for all treatments available under the plan. For IPMI, annual limits typically vary between US$1 million and US$5 million per annum, depending on the insurer and plan option chosen.
Deductibles and co-insurance
Deductible refers to the annual amount each member must pay before their policy will begin to pay for specific benefits. Co-insurance in contrast is the amount that a member will need to contribute towards each treatment received. Co-insurance may apply to individual benefits, or across a wider number of benefits.
Out-patient vs in-patient
When treatment requires a hospital stay, the member is referred to as an in-patient. If they leave hospital and continue their treatment, or do not require a hospital stay at all, they are referred to as out-patients.
This is not an exhaustive list, but does outline a selection of the key terms that are important to the international private medical insurance industry, and those looking to be active within it. Further articles in my series will explore some of these concepts, and others not mentioned above, in greater detail.