The majority of comments and inquiries from my last Net Worth article on expat pitfalls related to medical insurance. I note this with some interest as medical or health insurance tends to be a subject that expats love to hate, and certainly hate to think about. But it is something you should seriously evaluate.
ILLUSTRATIONS: ISTOCKPHOTO/THINKSTOCK
Many expats take the attitude that their health is good and something bad will never happen to them. They believe the status quo will never change for them. If you are one of these expats, you'd better think twice _ old age and the unforeseen eventually catch us all.
In addition, they believe that they can travel back home to get things fixed as a fallback position if anything goes wrong. If you seriously feel this is true justification for not having coverage then you are really pulling the wool over your own eyes.
Some perceive situations they may encounter as easy to cope with. A knee complaint, skin condition or perhaps that arthritis you need to consult a doctor about. What about the true emergency: a burst appendix, a heart attack that leaves you unconscious, a brain aneurysm, an accident with injuries necessitating immediate medical attention? In these cases there is no time to travel anywhere.
Procrastinating when it comes to health coverage can lead to catastrophic situations. The difference between the cost of health care and the amount you can raise is often so vast that some people will need to sell their homes, leaving themselves penniless. I described a real case in Net Worth on Sept 16, 2012: "The dangers of ignoring medical insurance".
Those expats who believe they can simply travel back to their home country may face a further shock if they are actually able to get there. They will often find that they are not entitled to any free treatment and the bill may even be higher than if they had elected to be treated in Asia. Many British expats fall into this category, thinking they are entitled to free treatment under the national health system. This is not the case once they have been abroad for two years or more.
Some say they will maintain a home address in the UK so that they can simply fall back into the system. In that case, they need to consider potential tax liabilities (see Net Worth Feb 17, 2013: "Expats beware: new UK residency tests"). The UK taxman is desperately trying to collect as much revenue as possible because it is badly needed.
What might you expect in the UK in the near future? The government recently announced a plan to offer free treatment for life to any UK citizen who has paid 10 years or more of national insurance contributions (class 1 or 2), no matter where they live. This is an initiative to remove "medical tourists" from the UK system but offer people who have made meaningful contributions value for the money they have paid in. This is only a proposal at present, albeit a very sensible one.
For those expats who realise the importance of having health coverage, congratulations. The next challenge is navigating the maze of possible opportunities and choices. As with all things in life, nothing is genuinely cheap without disadvantages.
One common belief in Thailand is that some companies offer cover for what seems like amazingly good value. But you get what you pay for: the fine print will tell you that there are limits for each element of your treatment. Thus you will only recover limited reimbursement for a specific condition.
Say you had a burst appendix. There would be a standard maximum amount reimbursed for a hospital room; a maximum for a surgeon and an anaesthetist; maximums for all other related supplies and services. When you study this carefully, you are covered for a very limited amount, leaving you with a large proportion of the bill to pay.
If you decide on a policy offering 100% reimbursement of all these costs, you will be obtaining far better value for money. You will also find that a "cheap" local policy only covers you for costs incurred in your country of residence. If you travel outside Thailand or wherever you live then you are not covered, whereas the more comprehensive policies will cover you for other territories.
A good policy can be tailored further to more specific regions _ certain parts of Asia, all of Asia, global excluding the US, worldwide including the US, and so on. As well as these geographic choices, which would give you options to seek treatment in another country within a region, there are also a number of deductibles. A deductible or excess is the amount you pay toward the cost of treatment. Thus if you opted for, say, a US$500 (15,700 baht) excess you would pay the first $500 of any claim, or sometimes the first $500 of all treatment for a year regardless of the number of claims.
These choices will give you the flexibility to reduce premiums. If you feel premiums are a little high they may be reduced to reflect your chosen area of cover and the amounts of excess you are prepared to pay. For some high net worth individuals this offers good possibilities for catastrophe cover. Perhaps you are prepared to pay the first $10,000 of a claim. If the claim were $250,000, the cover would be well worthwhile. Such options allow for premiums to be reduced significantly.
These different options are all available via your professional adviser, who can find a policy tailored to your needs and your budget. You will have access to a number of different international providers and the ability to recognise what will suit you best as an individual.
Some expats work on a rotation basis in different locations, often offshore. They usually have employer-sponsored comprehensive medical insurance provided to them while they are working. While they are well covered from the time they arrive at a worksite to the time they leave it, while travelling or on breaks they are not covered.
I have encountered a couple of situations where expats have found themselves without medical cover because of this and face serious situations that will not be covered by their employer-provided insurance. If you are in this category, I urge you to check carefully with your employer to ascertain exactly when you are covered and when you are responsible for treatment at your own expense.
Andrew Wood has been an expat in Asia for 33 years and is executive director of PFS International. His articles, which cover the complete A-Z of financial planning, are available through the PFS library to readers on request. Questions to the author can be directed to PFS International on 02-653-1971 or emailed to enquiriesthailand@fsplatinum.com.